The American Institute of CPAs has begun publicizing the revised set of peer review standards that it quietly issued earlier this year.The new standards are designed to be more principles-based and less of a checklist-based process than older peer review standards. A key difference is the elimination of letters of comment and the old three-tier system of unmodified, modified and adverse grades given to firms by reviewers. The new standards require a simple grade of “pass,” “pass with deficiencies” or “fail.”
The new reports are designed to be more user-friendly by clarifying whether a firm has satisfactorily designed a quality control system and is complying with it. The reports will also make clear whether a firm has deficiencies in that system or whether it has no system at all.
The AICPA is developing additional guidance for the approximately 30,000 accounting firms nationwide that will be subject to peer review under the new standards, and the 2,000 peer reviewers who will apply the new literature.
The new standards apply to firms that do audit work for private companies, government agencies, nonprofits and employee benefit plans, as well as to firms that do reviews, compilations and other attest work.
The revised standards and interpretations are effective for peer reviews commencing on or after Jan. 1, 2009.
