Last week, AICPA issued a discussion paper – “Enhancing Audit Quality – Plans and Perspectives for the U.S. CPA Profession.” The paper is seeking input from all stakeholders and interested parties in the audit process of private entities. The deadline for providing comments/input is November 7, 2015. You can find a copy of the discussion paper by going to http://www.aicpa.org/interestareas/peerreview/pages/eaq.aspx.
The issuance of this paper is part of a larger initiative launched by AICPA back in May 2014 to Enhance Audit Quality (EAQ). The discussion paper focuses on near- and long-term plans and proposals to address audit quality. The near-term goals include:
- Strengthening the existing Peer Review process
- Revisiting professional standards
- Creating additional guidance, tools, learning and resources
- Reinforcing professional ethics
A longer-term goal is to transform the Peer Review Program and practice monitoring, using both technology and human oversight.
On the immediate horizon, the AICPA Peer Review Board is considering steps to improve the quality of reviewers. This includes things like:
- Initial and annual competency tests
- Expediting the process of expelling a reviewer from the program
- Enhancing qualification requirements for reviewers of certain specialized industry engagements, such as employee benefit plans
- Evaluating firms’ engagements in “new” industries promptly, rather than waiting for the next review
- Increasing communications to peer reviewers and firms while leveraging sources of engagement and firm data
Other proposals include things like:
- Examining how audit deficiencies most often occur, so auditing standards and guidance can be amended to drive quality performance
- Use of publicly available information by the Professional Ethics Division to identify deficient audits; sanctions may be applied when a firm has failed to provide Peer Review with a complete list of engagements that should be subject to review
- Making sure the CPA Exam continues to be aligned with real-world practice in auditing
- Developing CPE courses and resources based on areas of concern in auditing revealed through peer reviews
Since auditing and attest engagements are at the “core” of the CPA profession, it is critical that they be performed to a high level of quality to both protect and serve the public. These are services that are restricted to CPAs by law and are the main basis for the licensure of CPAs. The CPA profession has a long history of focusing on quality. The Peer Review Program was developed by the profession over 30 years ago to help improve quality of practice in the attest area. Initially a voluntary program, Peer Review is now required for re-licensure in nearly every state in the country.
When it comes to quality, however, you can never rest on your laurels, and this latest effort by AICPA is an attempt to continue the enhancement of quality and the improvement of auditing and the Peer Review program. I encourage all members to read this latest discussion paper and provide their input to the process. The quest for quality depends on all members of the profession.