Instructions for Firms Having a Report Peer Review

.01  A report peer review is available to firms that only perform compilations under Statements on Standards for Accounting and Review Services (SSARS) where the firm has compiled financial statements that omit substantially all disclosures. However, those firms that issue compilation reports under SSARS where “Selected Information—Substantially All Disclosures Required are Not Noted” (as discussed in SSARS) are required to have an engagement review.

.02  Prior to the review, the administering entity or the assigned reviewer will ask you to provide summarized information showing the number of compilation engagements under SSARS where the firm has compiled financial statements that omit substantially all disclosures classified into major industry categories and broken down by each partner of the firm who is responsible for the issuance of reports on such engagements.

.03  Discuss with the reviewer the twelve-month period to be covered by the review. Ordinarily, the review should be performed within three to five months following the end of the year to be reviewed.

.04  The number of engagements selected should ordinarily adhere to the following guidelines:

a.       Select one engagement from each partner of the firm responsible for the issuance of compiled financial statements that omit substantially all disclosures.

b.       Ordinarily, at least two engagements should be selected for review.

.05  Within thirty days of being notified by the reviewer or the administering entity of the type of engagements selected for review, the firm should submit the following information for each engagement selected:

a.       A copy of the financial statements and the accountant’s report. The client’s name may be deleted and, if that is done, the engagements should be assigned a code number by the firm. The firm should retain a record of those code numbers to facilitate responding to any questions by the reviewer in the course of the review.

b.       A completed “engagement questionnaire.”

.06  The engagements selected should have periods ending during the agreed-upon review year.

.07  A firm may be dropped from the peer review program if it has failed to have a review by the date assigned. Therefore, if a firm fails to provide the information described in paragraph .05 in sufficient time to enable the reviewer to perform the report review prior to the required date, the reviewer should promptly advise the entity administering the review of this fact. Appropriate due process procedures will be followed in these circumstances.

.08  During the course of the review, the reviewer may have questions about the selected engagements. The firm is expected to respond promptly to questions raised during the review, whether those questions are raised orally or in writing.

.09  The reviewer should discuss with the firm, the matters for further consideration (MFC), and the comments and the recommendations prior to preparing the written report.  Therefore, the reviewer and the firm should discuss an appropriately tailored recommendation to be included in the report that the firm will agree to implement.

.10  Upon receipt of the report on the review, an authorized member of the firm is then required to sign the report, whether or not there are comments, acknowledging that there are not disagreements on significant matters and that the firm agrees to correct matters included as comments. The signed copy of the report should be submitted to the administering entity within thirty days of the date the report was received from the reviewer or by the firm’s peer review due date, whichever date is earlier.

.11  The administering entity will not make the report review available to the public. The report should not be distributed by the firm to is personnel, clients or others until the firm has received a formal notification that is has been accepted by the administering entity.

Exhibit 1

Definition of an Accounting & Auditing Practice for Peer Review Purposes

Paragraph 4 of the AICPA Standards for Performing and Reporting on Peer Reviews states:

An accounting and auditing practice for the purposes of the AICPA Standards for Performing and Reporting on Peer Reviews is defined as all engagements covered by Statements on Auditing Standards (SASs), Statements on Standards for Accounting and Review Services (SSARS)¹,1 Statements on Standards for Attestation Engagements (SSAEs) Government Auditing Standards (the Yellow Book) issued by the U.S. General Accounting Office (GAO).

1- SSARS that provide an exemption from those standards in certain situations are likewise excluded from this definition of an accounting and auditing practice for peer review purposes.