In the world of public accounting, maintaining high standards of quality and integrity isn’t just best practice – it’s a professional obligation. This responsibility is evident every day, as investors, company leaders, regulators, and the public rely on the accuracy and objectivity of reports issued by firms.
But how can stakeholders be confident that firms truly meet these standards in practice? It’s not enough to simply take their word for it. The American Institute of Certified Public Accountants (AICPA) established the Peer Review Program in the 1970s to provide independent oversight and help ensure these professional standards are consistently met.
What Is a Peer Review?
According to the Pennsylvania Institute of Certified Public Accountants (PICPA), a peer review is a periodic outside evaluation of a firm’s accounting and auditing practice that works to ensure public trust. The peer review process looks at how well the firm follows professional standards and develops the system of quality management to address key areas including ethics, client relationships, and engagement performance.
Per the AICPA’s Clarified Standards for Performing and Reporting on Peer Reviews, there are two types of peer review:
- System Review: In a system review, a peer reviewer evaluates the CPA firm’s system of quality management for performing accounting and auditing work. This includes an examination of a sample of the firm’s engagements.
- Engagement Review: In an engagement review, a sample of the CPA firm’s accounting work is studied and appraised. CPA firms that undergo engagement reviews do not perform audits, but perform other accounting work including reviews and compilations, which represent a lower level of service than audits.
Peer reviews are conducted by a qualified CPA firm and overseen by the AICPA or a state CPA society. At the end of the review, the reviewing firm issues a formal report with one of three outcomes: pass, pass with deficiencies, or fail. If deficiencies are identified, the review report will include recommendations and corrective actions.
In essence, a peer review is an audit of the auditors to ensure CPA firms maintain a functioning system of quality management and adhere to the highest ethical and professional standards.
Why Are Peer Reviews Important?
Peer reviews are a cornerstone of quality assurance in public accounting. Key outcomes of peer reviews include:
- Ensuring Compliance – Peer reviews verify firms’ adherence to standards like GAAP and GAAS, reinforcing both the technical accuracy and public credibility of their work.
- Identifying Weaknesses ؘin Processes and Controls – Reviews can uncover deficiencies in areas such as documentation, audit planning, and risk assessment. Addressing these gaps can help improve service quality and proactively manage risks.
- Driving Continuous Improvement – Constructive feedback from peers gives firms the opportunity to update methodologies, adopt best practices, and invest in ongoing training.
Ultimately, peer reviews are more than a pass or a fail, they’re about progress. By embracing the process, firms can strengthen their credibility, deliver higher-quality services, and contribute to a more transparent financial landscape.
Quality Assurance at GYF
Our firm has established a system of quality management to ensure that our services are rendered at the highest professional level.
- GYF follows specific procedures to ensure we are independent with respect to our clients.
- Every engagement includes a high level of partner and manager involvement.
- All financial statement drafts and reports are subject to a concurring partner review.
- We utilize practical technology solutions to maximize audit efficiency and effectiveness, including paperless audit documentation stored on our firm’s protected network.
- Information exchange between GYF and the client is facilitated through a secure portal.
- The firm is committed to providing continuing education and training to our professionals to ensure best practices.
Click here for GYF’s most recent peer review report.
