The Value of Self-Regulation and the Tools that Help Drive It
Successful organizations know the importance of learning from the past while, at the same time, looking forward. For the past 25 years, the AICPA Peer Review Program has helped firms do just that by evaluating firms’ accounting and auditing practices and providing them with opportunities for improvement through combined educational and remedial aspects.
The core value of the Peer Review Program is self-regulation. Aside from allowing CPAs to learn effective practice techniques from one another, self-regulation comes with many other benefits that positively affect firms, clients, the profession and the public, including:
- Monitoring adherence to the highest professional standards;
- Uncovering and helping to correct firm service deficiencies and inefficiencies; and
- Educating reviewed firms in professional standards and sharing best practices.
However, we must continue to examine our work to make sure that confidence doesn't wane. That’s why the Peer Review Team at the AICPA has recently released two resources that help firms analyze their own audit methodologies more deeply, understand common auditing deficiencies and more effectively address those deficiencies: the 2013 Annual Report on Oversight and the newly launched Matter for Further Consideration and Disposition of Matter for Further Consideration forms.
2013 Annual Report on Oversight
The Peer Review Board monitors peer reviews performed across the country through its oversight program and provides an overview of the program through its Annual Report.
What can you learn from the 2013 Report? Take a look at Exhibit 5 (pages 25-26), which highlights the most common matters found in peer reviews performed from 2010 through 2012. Exhibit 6 (page 27) summarizes the number and type of reasons (by elements of quality control) for report modifications on system reviews performed during the same three-year period.
Matter for Further Consideration and Disposition of Matter for Further Consideration Forms
While the Annual Report on Oversight looks at historical performance to help firms identify areas for improvement, the Peer Review Board has also developed a tool to provide faster feedback and assist firms in understanding and addressing areas of concern. After substantial testing with the help of state CPA societies, the AICPA rolled out its new online Matter for Further Consideration and Disposition of Matter for Further Consideration forms in July 2013.
Through the online versions of these forms, we can aggregate areas where the entire population of firms is experiencing difficulty applying professional standards and analyze the data to determine trends. Then, we can provide meaningful information to other AICPA teams for the development of timely tools and education to improve the quality of accounting and auditing engagements performed for the profession as a whole. At the AICPA, we're improving our processes so that you can improve yours.
I’m very excited about this new development in Peer Review and about the work that Peer Reviewers perform for the profession to benefit the general public. Self-regulation has always been the impetus behind the AICPA’s Peer Review Program. While almost all states require peer review for licensure, it’s imperative that we, as members of the profession, continue our commitment to quality and continuous improvement so the profession maintains its ability to self-regulate.
James Brackens, CPA, CGMA, Vice President – Ethics and Practice Quality, American Institute of CPAs.