A special task force of the American Institute of Certified Public Accountants has released recommendations intended to enhance the transparency of the Institute's Peer Review Program.
The task force acknowledged the increased demand for peer review information by regulators and other users, and recommended that the peer review reporting model be simplified. Another recommendation is that in the cases of firms that have received a second consecutive modified and any adverse peer review report, direct access be given to the state boards that license those firms to practice.
Others recommendations are:
- Peer review reports should be as concise as possible, and written in "plain English." The "grading" terminology should be simplified, and the report should be a stand-alone document that discloses the significant matters affecting the type of report issued.
- All state boards of accountancy should require peer review as a condition of licensure.
- The AICPA should conduct a comprehensive peer reviewer recruitment campaign to attract new, quality peer reviewers, and to educate firms on the benefits of having owners and staff members involved in performing peer reviews.
The recommendations are being submitted to the Peer Review Board for consideration, analysis, and possible execution. In addition, the AICPA Board decided to bring to its March Council meeting a recommendation that Institute members should be asked to agree that peer review reports of firms be provided to state boards in those states where peer review is required for continual licensure.Right now, the peer review rules differ state to state, so if the recommendations of the task force are adopted in addition to increased transparency, there will also be greater uniformity.
Hopefully, it will also allow interested parties a greater ability to compare firms. When I was college we received letter grades A through F for most of our courses. However, for two non-required courses, we were allowed to elect to be graded on a pass/fail basis. I wish I could have taken that Calculus course and German language course on a pass/fail basis. Those two "Ds" stood out like sore thumbs on my transcript.
It will be very interesting to see exactly the type of information that will be disclosed, and to whom it will be disclosed, as a result of this attempted reform of the peer review process.
