I recently went through my first peer review for my CPA practice. I must confess, the preparation was a lot more stressful than I had anticipated. Not as difficult as preparing for an IRS audit, but nonetheless, I wanted to make sure my information was in perfect condition for the peer reviewer. I even asked a colleague of mine to review my financial statements and documentation and offer his suggestions. And, the preparation paid off, my firm received a peer review rating of “pass”. While it doesn’t sound impressive, “pass” is the highest rating you can receive.
What is a Peer Review?
CPA firms who provide attest services are required to participate in the peer review program through their state board of public accountancy. Attest services include things like compiling financial statements, reviewing financial statements and performing audits. While I most definitely specialize in tax planning and compliance, I have a few clients I prepare compiled financial statements for. During my peer review period, I only had one client; however, subsequent to the May 31 cutoff date, I’ve acquired a few more compilation engagements.
The peer review program requires CPA firms to submit samples of their work, including work papers and other documentation used to prepare financial statements, to either another CPA firm who offers peer review services, or to the committee-appointed review team (CART). The reviewer makes sure the CPA firm is in compliance with all the rules and regulations associated with the level of service they are providing. For example, I don’t perform audits and have no desire to grow my practice in that direction, so my peer review was limited to my compilation engagements.
If you are looking for a CPA firm, you may want to inquire about their last peer review. They are required every three years, my next review due date is November 30, 2016. Sounds far away, but it will be here before I know it!