Time to clean up our act – peer review update part 5

This is the last in a series of posts exploring the implication of peer review reports getting withdrawn because firms did not have pension audits included in the scope of the review.

Pensions aren’t the end of the issue

There are hints in the air that the Department of Labor IG staff aren’t the only ones thinking there are firms that didn’t have must-select engagements included in their peer review. As my wild guess, I’m thinking the Department of Education will be trying to figure out some way to match A-133 reports of colleges and universities with peer review reports of their auditors. I’ll go out on a limb and guess there are other agencies thinking about that also.

If I understood comments in the peer review update webcast, the AICPA Peer Review Board is looking at ways to match to A-133 reports. Did anyone hear that differently? Please comment if you have thoughts on that idea.

Bigger issues

The comments in the peer review update webcast indicate the national Peer Review Board believes there are firms cutting corners from several directions:

  • Not participating in program – It is possible some firms are avoiding peer review completely, even though they are performing covered attestation services and have an obligation to participate. These firms, assuming this situation exists, aren’t getting a peer review but should.
  • Not reporting audits – It is possible some firms are not reporting audits at all even though some are performed. Assuming this is the case, some firms are getting an engagement review instead of a system review.
  • Not reporting must-selects – It is already know that some number (reportedly in the hundreds) of firms are not reporting pension audits. Speculation is there are firms not reporting audits under government auditing standards, audits of carrying broker dealers, or performance of SOC 1 or SOC 2 engagements. Those firms are not having the reviewer look at those must-select engagements.

As a not-so-wild guess, I’ll venture to say there are likely issues in all three areas. That there are firms operating in one of those categories is a problem.

Time to clean up our act

Peer review is a self-regulatory program. That means those of us in the accounting profession get to run the program ourselves. No federal agency runs the oversight for us.

Ladies and gentlemen of the profession, it is time to clean up our act before someone else cleans it up for us.

No guess involved here: I am absolutely positive we don’t want anyone else running peer review.

Posts in this series:

What do you think? Comments welcome, provided they stay professional.

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