AICPA's Peer Review Board is asking for public comment on its amended peer review program that would centralize conducting peer reviews of firms that operate under alternative practice structures such as those with investments in private equity, according to a release.
“Changing business structures create both opportunity and risk for the profession,” noted Susan Coffey, the AICPA’s CEO of public accounting. “Making sure firms have quality management systems designed to comply with professional standards is foundational to protecting the public interest. The administration of these reviews by the National Peer Review Committee assures the appropriate and consistent degree of oversight of APS audit practices over the next several years, as more firms take on private equity investment.”
The amendment—set out in the Peer Review Standards Update (PRSU) No. 3, proposal—will be mandating firms under non-traditional business models to have their peer reviews done by the AICPA’s National Peer Review Committee instead of one of the 23 state administering entities.
The update was created to encourage consistency in how peer reviews are conducted and evaluated as the profession modifies these fresh operating structures. This change promotes quality while protecting the public.
The proposed change to the standards gives the Peer Review Board leeway to require certain peer reviews be administered by the National Peer Review Committee—comprising a panel of 15 to 17 practitioners who have wide-ranging and countrywide experience and expertise—by issuing application guidance.
The exposure draft for the proposal says that stakeholders have stated their worries regarding private equity investment. These concerns include the challenges of operating separate attest and nonattest entities, keeping track of compliance with independence and other professional standards, and maintaining quality of services.
The National Peer Review Committee administration of APS reviews will give time for the state administering entities' development of guidance and training.
Aside from the APS-related provision, the proposed standards update also comprises a change to qualifications for peer reviewers of firms that conduct or help in engagements under PCAOB standards. The change is established to make sure that practitioners who have a deeper familiarity with those standards are assigned to those review teams.
The AICPA Peer Review Program requires firms to be reviewed every three years, a process established to give reasonable assurance they are sticking to AICPA and other professional standards. It also ensures that the robust quality systems are in place.