New Chair, Renewed Commitment to Transparency at AICPA

New Chair, Renewed Commitment to Transparency at AICPA

By Kate Prouty

We have succeeded in earning respect for peer review,” Robert Bunting, the newly elected chair of the American Institute of CPAs Board of Directors, said in his Oct. 26 inaugural speech. “Now we must open it up to the people who have invested confidence in it.”

An increasingly wide swathe of people—regulators, clients, credit grantors and others—call on peer review as a guide for evaluating CPA firms. For the year that Bunting is chair of the AICPA, he expects the profession to answer that call with amplified dialogue in support of peer review transparency.

Peer review was originally designed as a remedial program to strengthen quality control, a learning experience to correct deficiencies and prevent recurrences of problems.

The AICPA Board of Directors was initially reluctant to support increased transparency because it would alter the 16-year-old program’s original remediation focus. The NYSSCPA, however, vocalized support of full transparency. Now more CPAs in more states are also poised to back the transition.

When it began, “members expected confidentiality. But what was accepted as confidentiality in the past is seen as secrecy today. And it is no longer tenable,” Bunting said in calling for greater acceptance of transparency.

In October 2003, the AICPA reevaluated its standards for performing and reporting on peer review. The revised standards it decided on then—including revisions to reporting transparency, new interpretations and additional guidance—will apply to peer reviews starting on or after Jan. 1, 2005.

“The AICPA’s revisions to peer review standards are a positive change,” said Society member David Pitcher, “because they will make it easier for the public to understand peer review.” Pitcher chaired the Society’s Peer Review Committee last year and on Jan. 1, 2005, will replace Raymond Nowicki as a member of the AICPA’s Peer Review Board. Pitcher also helped write a Society comment letter supporting increased public access to peer review, sent to the AICPA Peer Review Board in August 2003.

Pitcher says he has “always heartily supported full disclosure of peer review.” But he also recognizes the complications it may present to small firms or sole practitioners.

“It can be an imposition for smaller firms to go through a peer review,” Pitcher said. “And with full disclosure, a system review can be misinterpreted or mischaracterized.” A system review—required when audit or tax functions are performed—includes an opinion at the end, unlike engagement or report reviews, which evaluate a single engagement or a small number of engagements selected by the practitioner.

“The public needs education to understand these differences,” Pitcher added.

According to Bunting, 46 of the 54 U.S. states and territories mandate peer review, or give the state accountancy board authority to do so, or are considering moving in that direction.

New York falls into the third category. However, the NYSSCPA-approved reform bill calling for mandatory peer review (S-302D) that passed unanimously in the New York State Senate stalled on the Assembly floor in June. Society members strongly opposed the alternative proposition (Assembly bill A11695), which would not mandate peer review.

In his inaugural speech, Bunting said he hoped CPAs will become more aware of the opportunities they have to improve the profession, possibly with a “successful member referendum” on peer review transparency. He also touched on the importance of building bridges with regulators and governing bodies as a way to protect and better inform the public.

“The good news is that more federal, state and other agencies than ever before believe that the work of CPAs is critical to the functioning of our economy. Our challenge is to ensure that we have a seat at every table when laws and regulations are made,” he said.

Bunting, who succeeds S. Scott Voynich as AICPA chair, will hold the volunteer position for one year, according to an October AICPA press release. He has served the AICPA for more than 20 years, with membership on many volunteer committees, including a three-year term on its board of directors.