The American Institute of CPAs is looking for advice on ways to revamp its peer review program for the future to leverage technology to do continuous monitoring of how CPA firms perform audit and accounting work.
The AICPA has issued a concept paper in an effort to improve the way CPA firms evaluate each other and their accounting and auditing engagements to see if they can be transformed into a technology-driven, near-real time practice monitoring process.
“Peer review is at the heart of the profession’s commitment to enhancing the quality of accounting and auditing services,” said AICPA president and CEO Barry C. Melancon in a statement. “It has evolved over the course of 35 years to ably serve the profession and the public. The concept paper, provocative by design, presents a significant leap forward in practice monitoring. It challenges the profession and its stakeholders to imagine a more timely and transparent process that offers insights into quality, in some instances even before an engagement is completed.”
The AICPA said the concept as currently envisioned will change based on feedback from the paper and from pilot participants, and as technology evolves. The concept’s primary goal is to increase public protection through enhanced accounting and auditing effectiveness by highlighting potential quality risk indicators and detecting engagement issues earlier; reviewing all firms that perform accounting, auditing and attestation engagements; and monitoring all engagements subject to review
As currently designed, the concept would be powered by five activities:
1. Continuous analytical evaluation of engagement performance
2. Human review when system-identified concerns are raised
3. Involvement of external monitors, when necessary
4. Periodic inspection of system integrity
5. Oversight of the system’s operating effectiveness
“We believe this visionary concept has the potential to elevate the quality of the profession’s work by using new technological approaches, creating greater transparency and establishing more connection points between the CPA firm, the reviewer and the AICPA,” said AICPA senior vice president of public practice & global alliances Susan S. Coffey. “I urge all interested parties to join the dialogue to help shape practice monitoring of the future.”
The AICPA anticipates the practice-monitoring concept would be developed and implemented in multiple phases. During the first phase, monitoring tools would be developed and piloted by a select voluntary group of small, midsize and large firms. Throughout the pilot, the Institute would work with the pilot firms and peer reviewers to consider how to incorporate the concept’s new tools into a more robust interim peer review process.
The AICPA is inviting stakeholders to provide their comments and respond to questions on the
