AICPA Approves Peer Review Measure

AICPA Approves Peer Review Measure
An Opening Move in the Gambit for Greater Transparency

New York—The council of the American Institute of CPAs voted overwhelmingly in favor of a resolution that will eventually lead to greater transparency in peer reviews.

Attendees of the spring council meeting in Scottsdale, Ariz., May 23 to May 25, voted to launch an education program on peer review, to assess the desire for transparency and to incorporate their feedback into the process of developing a more open peer review program.

“The resolution was supported by the New York State Society of CPAs,” Jeff Hoops, immediate Society past president, said. “We thought it was the right combination that addressed an issue by setting up a mechanism providing education to the members.”

The council’s endorsement advances the work of the AICPA’s Peer Review Committee, which in December recommended to the AICPA Board of Directors that the peer review program include fully transparent peer review files. According to Robert Bunting, the committee’s chair, the board was reluctant to make such a change because of the existing conditions of the 16-year-old peer review program.

“The board of directors said, ‘We don’t think the members are ready for that’ and ‘We have a covenant with them that we wouldn’t make (peer review) public, that’s how we got them to do it in 1988,’” Bunting, the AICPA’s chairman-elect, said in a telephone interview.

“Sometimes we all underestimate the members of our profession,” he added. “I’m not sure why we do that. We have to remember that in 1988, the members voted overwhelmingly to subject themselves to peer review. That was a pretty amazing thing to do.”

Since that time, Bunting said, the nature of peer review has evolved as states increasingly have made it part of the qualification for licensure. Currently, 36 states require peer review, and another 10 states have some kind of legislation or regulation pending that would make peer review a part of the licensing process. New York is one of those states.

According to its website, the AICPA’s current peer review mandate requires practitioners engaged in public accounting to practice in firms enrolled in an AICPA-approved practice-monitoring program if the peer review services and the reports are in accordance with AICPA standards.

Members using the Private Companies Practice Section and Center for Public Company Audit Firms peer review programs already have a public file requirement that includes a firm’s most recent peer review report, and letter of comments and responses, if any.

The resolution allows the AICPA to launch a grassroots Member Education program; directs the Peer Review Board to assist members in meeting their state regulatory requirements; directs staff to create a consistently informed membership and prepare for a member referendum based on member feedback and subject to council’s approval; affirms council support for increased transparency; and allows the profession to be responsive to state boards of accountancy by seeking ways to assist member compliance with state licensing laws, among other provisions.

The AICPA couldn’t provide a vote count on the resolution, as of this writing.

Bunting said that there weren’t more than a handful of council members who voted against the resolution.

“The feedback I got was people were energized by the opportunity to let the world know that (CPAs) accept our responsibility to serve the public interest,” Bunting said. “The council is energized by the chance to show leadership and to make the profession better.”