AICPA proposes modifying peer review reports, firm representation letters

By Ken Tysiac

The AICPA Peer Review Board issued a proposal Wednesday that would modify the current peer review report so that it would clearly indicate if a single audit was selected.

In an exposure draft, the AICPA also proposed that the firm representation letter be modified to reflect all must-select engagements, including single audits.

The Peer Review Board has identified certain types of engagements as so significant to the public interest that at least one of each type must be selected for review as part of a firm’s peer review if the firm performs these engagements. These types of engagements are referred to as “must-select.”

A single audit is one type of must-select engagement and is a rigorous, organizationwide audit or examination of an entity that expends $750,000 or more of federal assistance received for its operations in a fiscal year.

A firm’s representation letter is a letter signed by firm leadership attesting to the accuracy and completeness of the information provided to the peer reviewer. Interpretation 63-1 of the AICPA Peer Review Standards describes the types of engagements that are required to be selected for review in a peer review.

The exposure draft recommends several measures to align with Interpretation 63-1 and provides additional accountability for the performance, selection, and identification of all must-select engagements during peer review.

The proposed revisions would require that:

  • The “Required Selections and Considerations” (must-select) paragraph in the system peer review reports should be modified to specify, when appropriate, the selection and review of a single audit in the scope of the review.
  • The representation letter provided by the firm should be modified for consistency to address all must-select engagements, including single audits, when performed by the firm and selected by the peer reviewer.

“As we continue our efforts to better detect firms and engagements subject to peer review, we have discovered that some firms are not enrolled in the program as required by AICPA bylaws or state law,” Jim Brackens, CPA, CGMA, AICPA vice president–Ethics & Practice Quality, said in a news release.

“We also have found that certain must-select engagements have been omitted from the scope of peer review. Bringing all audit firms into the peer review fold and having a complete population of engagements, including those that are must-select, will result in a more effective peer review process and improved work by practitioners.”

Comments will be accepted through Sept. 30 and can be made to Pending approval of the revision to the illustrative peer review reports and the illustrative firm representation letter, the proposed revisions would take effect for reviews beginning on or after Jan. 1, 2017.

Ken Tysiac ( is a JofA editorial director.


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