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Peer Review – What’s going on
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Agenda
- AICPA Audit Quality Initiative
- Peer Review Future
- How to Have a Successful Peer Review
Chris Rouse Windham 1 Brannon, PC Peer Review Whats going on - - PowerPoint PPT Presentation
Chris Rouse Windham 1 Brannon, PC Peer Review Whats going on - - PowerPoint PPT Presentation
Peer Review Whats going on, and how to get through it Presented by Chris Rouse Windham 1 Brannon, PC Peer Review Whats going on Agenda AICPA Audit Quality Initiative Peer Review Future How to Have a Successful Peer
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AICPA Audit Quality Initiative
- Initiated in 2014 in response to concerns of users of
financial statements about the quality of the work of practitioners of public accounting
- Significant changes and efforts proposed included …
- Competence and due care
- Aligning CPA exam with real world practice
- Ensure auditors adhere to the Code of Conduct
regarding competence and due care
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AICPA Audit Quality Initiative
- Auditing and Quality Control Standards
- Monitor application of Standards and provide
guidance, tools and education to meet needs of profession
- Identify and understand where and how deficiencies
- ccur so revisions can be to Standards and resources
- Guidance, Tools, Learning and Resources
- Enhance curricula, content and methods of instruction
to support areas the profession serves
- Release a rigorous, profession-wide competency
framework validated by users and regulators
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AICPA Audit Quality Initiative
- Practice Monitoring (Peer Review)
- Enhance and expand peer review procedures
- Address risks posed by low-volume auditors of high-
risk and complex engagements
- Evaluate certain engagements promptly
- Enhance the quality of peer reviewers
- Develop peer review process that provides firms near
real-time feedback on their accounting and audit practice
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AICPA Audit Quality Initiative
- Ethics Enforcement
- Use available information to proactively identify
deficient audits and require corrections
- Consider sanctions for firms not properly disclosing
their practice to peer review
- Dialogue and Feedback
- Engagement of all parties with interests in private
entity audits
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Peer Review Future
- AICPA considering results of inspections performed by
regulators
- President’s Council on Integrity and Efficiency
- Study of +/-400 A-133 audits revealed about 50% with
deficiencies
- Department of Labor
- Over many years DOL inspections show about one-third
- f employee benefit plan audits are deficient
- Sample of 400 audits from 2011 had almost 40%
deficiency rate
- PCAOB inspections
- Consistently result in 20-30% deficiencies
- Recent broker/dealer inspections were even higher
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Peer Review Future
- AICPA Peer Review Committee enhanced oversight
program
- Inspections currently being performed of engagements
when submitted but before going to Acceptance Body
- Results are consistent with findings of regulator
- versights
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Peer Review Future
- The Future of Practice Monitoring
- Phase One
- Firms push engagement data to master server
- The system continuously process the data and measures
it against engagement quality indicators
- Firm’s internal dashboard gets real-time performance
snapshots
- System would generate flags when performance not
meeting expected metrics
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Peer Review Future
- The Future of Practice Monitoring
- Phase Two
- Dashboards could be shared with and customized for
- ther users
- “Seals” would show firm’s overall performance
measures
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How to Have a Successful Peer Review
- What is a successful peer review?
- Improves your ability to perform engagements in
conformity with professional and firm standards
- Provides new knowledge about professional standards
- Offers new perspectives on implementing standards
- Suggests tips for preventing deficiencies
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How to Have a Successful Peer Review
- How to prepare for peer Review
- Starts when you finish your peer review
- Rework you Quality Control Document
- Complete and use the AICPA QC Questionnaire as a
basis
- Tailor the QC Document practice aid using the QC
Questionnaire responses
- For your engagement inspections, use the AICPA
Engagement Checklists
- Use all the A&A supervisors to perform engagement
inspections
- Use the AICPA website resources
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How to Have a Successful Peer Review
- Chris’s Top 10 Peer Review Deficiencies
- 1. Inadequate partner involvement
- Manage the planning meeting
- Go beyond “how’s it going”
- Answer the question, “If you only had one day to do
this audit, what would you do?”
- 2. Inadequate relevant CPE
- Appropriate for level
- Appropriate for industry
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How to Have a Successful Peer Review
- Chris’s Top 10 Peer Review Deficiencies
- 3. Failure to consult with others
- Not just “when you’re unsure”
- Reading vs Internal vs External
- Early partner involvement
- 4. Not tailoring audit and review work programs
- Key is excellent risk assessment
- Purchased practice aids are never right
- Vision a planning meeting where you tailor the
programs
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How to Have a Successful Peer Review
- Chris’s Top 10 Peer Review Deficiencies
- 5. Misunderstanding sampling
- Study practice aids and Audit Sampling Guide
- Understand not sampling, attribute sampling and
monetary sampling
- 6. Conversational review of workpapers is not effective
- Knowing its right isn’t enough
- Focus on accounting and audit matters first
- Focus on staff development second
- Don’t forget client service
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How to Have a Successful Peer Review
- Chris’s Top 10 Peer Review Deficiencies
- 7. Inadequate Engagement Quality Control Review
- A cold pre-issuance review of financials, key area
workpapers and discussion with engagement partner
- The EQCR policy should help manage your
engagement risk
- 8. Inadequate communications with management and
governance
- Find the value in the engagement for the client
- Use a written Agenda
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How to Have a Successful Peer Review
- Chris’s Top 10 Peer Review Deficiencies
- 9. Documentation, documentation, documentation
- Staple or upload yourself to the workpapers
- Put a picture of your peer reviewer behind you and
imagine him/her looking over your shoulder while you prep the workpapers
- 10. Ineffective monitoring
- Ongoing for functional areas
- Focused inspection for engagement performance
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So, once again, what is a successful peer review? One that … Improves your ability to perform engagements in conformity with professional and firm standards Provides new knowledge about professional standards Offers new perspectives on implementing standards Suggests tips for preventing deficiencies Key to success – Find a peer reviewer that knows more than you know
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