Proposed peer review change would remove inconsistencies for engagement reviews


Changes to peer review standards proposed last week by the AICPA Peer Review Board (PRB) are designed to remove inconsistencies and improve the transparency of reports for engagement reviews.

The proposal, outlined in an exposure draft, would change the impact to an engagement review report when all of the following occur:

  • There is more than one engagement submitted for review;
  • The same deficiency occurs on each of the engagements submitted for review; and
  • There are no other deficiencies.

In this scenario, current guidance calls for firms to receive a “pass with deficiencies” rating in the engagement review report. Under the proposed changes, this scenario would result in a “fail” rating.

The “pass with deficiencies” rating for this scenario in the current guidance is the result of an exception created when new peer review standards took effect on Jan. 1, 2009. Feedback had indicated that the peer review community did not believe a “fail” rating under this scenario was fair to a firm that performs multiple engagements with the same deficiency and no others.

In response to this feedback, the PRB created the exception for multiple engagements that meet the criteria under the one scenario. But after hearing concerns from the peer review community regarding the inconsistencies in the current guidance and considering the perspective of report users, the PRB is proposing to remove the exception.

Comments on the proposal are due July 5 and can be submitted at If approved, the changes would take effect Sept. 1.

Ken Tysiac ( ) is a JofA senior editor.


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