Reforming Peer Review: Full Steam Ahead

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JANUARY 2006 - The Society continues to proactively lead the charge in the effort to reform the current peer review program. Just last month, the NYSSCPA’s Board of Directors approved a whitepaper on peer review that completely reexamines the current program and makes recommendations for reform based on what peer review should be, not what it is.

Developed by the Society’s Quality Enhancement Policy Committee (QEPC), chaired by President-Elect Tom Riley, the whitepaper represents a major advance in the evolution of peer review. Through research, discussion, outreach, and hard work, the QEPC has painstakingly outlined the tenets of an ideal quality review system that will promote a consistency of quality throughout the profession upon which the public can rely.

Meaningful Quality Review

We will now assess the viability of the framework. An implementation plan to make peer review consistent with the underlying concepts of the whitepaper will include member input, and our Legislative Task Force will include it in our agenda for the upcoming legislative session in Albany. The paper’s four main concepts are:

  • A quality review system should be progressively disciplinary, meaning it should be both educational and disciplinary. The system should emphasize imparting knowledge to firms without losing sight of the fact that some firms may lack the will to comply with high standards without sanction. The disciplinary aspect becomes active after a firm fails or repeatedly fails to take corrective action.
  • Quality reviews should be conducted by pooled teams of individuals from different firms. This would replace the current firm-on-firm structure and would allow for an exchange and learning among reviewers and reviewees. The assignment of qualified individual reviewers, not firms, out of a pool would obviate potential conflicts of interest that result from the current program, in which a firm selects its own reviewer. A pooled team of reviewers would make issues concerning firm-on-firm reviews or the rotation of reviewers irrelevant, because a new team would be constructed for every review. In addition, reviewers should be systematically trained, certified, and evaluated.
  • Peer reviews should be considered part of a comprehensive quality review process. This means reviews should take account of elements such as tone at the top; partner evaluation, promotion, and assignment of responsibility; independence policies; client acceptance and retention policies; and selected audit engagements. Peer reviews should be viewed as only one aspect of a comprehensive quality review system. Furthermore, the goal of a quality review should be to ensure that firms are complying with their own continuous, self-imposed systems of quality control.
  • The system must be public and open. This would entail public reporting; comprehensive and easily accessible guidelines for reviewers; a provision for feedback and corrective action by the reviewed firm; a means of referral to a disciplinary body established by the Board of Regents and the State Education Department; and documentation of findings and recommendations.

Improving the Profession and Serving the Public

In addition to benefiting the public and the professional community, contributing to this bill will take the Society to the next level in terms of legislative participation. I encourage you to share your opinions with me about this initiative, because the kind of dialogue that helps the Society have a positive impact on legislation and regulation is also important to improving the Society.

Louis Grumet
Publisher, The CPA Journal
Executive Director, NYSSCPA




















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