Transparency as a Means to Serving the Public

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JANUARY 2005 - In our October 2004 issue, AICPA Chairman Robert L. Bunting discussed current AICPA initiatives to reform the peer review and quality assurance systems for all CPA firms, not just those registered with the Public Company Accounting Oversight Board (PCAOB). The NYSSCPA supports these plans because they foster greater transparency in the accounting profession. Transparency is critical because it gives the public greater confidence in the integrity of audits and the accountability of auditors.

Peer Review’s Role in Transparency

For more than 25 years, peer review has shown significant value to its participants and has worked to protect the public. Statistics show marked improvement in peer-reviewed firms’ accounting and auditing practices. There has also been an increased reliance on peer review by government agencies, as well as growing public demand to see the results of the reviews.

Last year, the AICPA restructured and renamed its SEC Practice Section (SECPS) to create the Center for Public Company Audit Firms (CPCAF). The CPCAF peer review program is the successor to the SECPS peer review program, with the objective of administering a peer review program that evaluates and reports on the non–SEC-issuer accounting and auditing practices of firms that are registered with and inspected by the PCAOB, which created an inspection program to periodically evaluate registered firms’ SEC-issuer audit practices. The AICPA now has two practice-monitoring programs: the CPCAF peer review program (about 900 participating firms), and the AICPA peer review program (about 33,000 firms). The AICPA reports that about 6,400 of these firms currently post their peer review results on the AICPA website. These files are accessible to everyone via www.aicpa.org/centerprp/publicfile01.htm.

According to the AICPA, currently 43 of the 54 states and territories either mandate peer review for licensure, give the state accountancy board the authority to do so, or are considering moving in that direction. The NYSSCPA has supported legislative proposals to make peer review a requirement for licensure in New York, and the State Senate has passed such a bill twice.

Improving and Expanding What Works

The AICPA is discussing a member referendum that would recommend broadening peer review to become a requirement for CPA licensure. All CPA firms subject to peer review would be required to place certain information, such as their peer review report, letter of comments, and letter of response, in an electronic file maintained by the AICPA. The AICPA is also developing a member-education program to inform CPAs about peer review and assess their desire for greater transparency.

As part of his mission, AICPA Chairman Bunting has called on his fellow CPAs to be “catalysts for change,” with a focus on high expectations. The frank analysis of peer review past and present in an AICPA white paper (available at www.aicpa.org) demonstrates that. The Institute recognizes the peer review system’s strong points and shortcomings. It is building on what works, and not expecting solutions to come easily.

The leadership of the AICPA and Bunting in this area goes beyond mere political expediency. It shows that they recognize the importance of peer review to a universe of people that now includes regulators, clients, credit grantors, and the public that all CPAs serve.

Louis Grumet
Publisher, The CPA Journal
Executive Director, NYSSCPA
lgrumet@nysscpa.org

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



The CPA Journal is broadly recognized as an outstanding, technical-refereed publication aimed at public practitioners, management, educators, and other accounting professionals. It is edited by CPAs for CPAs. Our goal is to provide CPAs and other accounting professionals with the information and news to enable them to be successful accountants, managers, and executives in today's practice environments.

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