One of the pillars of the CPA profession is closing in on its 40th anniversary, and like many of us who pass the big 4-0, it’s going through a bit of a mid-life crisis.

I’m talking about peer review. Its importance in ensuring audit quality has never been greater. Neither has the scrutiny it faces, and changes are on the horizon.

“(T)he status quo is untenable,” Allison Henry writes for the Pennsylvania Institute of CPAs. “A variety of changes are being explored that could dramatically transform the current peer review program to a more rigorous practice monitoring system.”

The AICPA recognized the need for changes earlier this year when it launched its “Enhancing Audit Quality” initiative. The two-pronged effort will focus on both near-term improvements and “the transformation of the current peer review process.”

And sure, there’s room for improvement — a lot of room, actually. Regulators for the Government Accountability Office and the Department of Labor, for instance, are finding many more audits that are considered “not acceptable” than are peer reviewers.

Still, Henry writes, many of the complaints lodged against the peer review system — including the notion that the work performed by PCAOB-registered firms is superior to the work done by other peer-reviewed firms — are unfounded.

“It is imperative that the profession counteract the misperception of higher quality among PCAOB registrants by demonstrating the rigor of the AICPA peer review program,” Henry writes. “Only the commitment of high-quality CPA firms who have a vested interest in retaining this self-regulatory program can fight this inaccuracy.”

Strengthening the profession’s history of self-regulation requires some serious soul-searching for practitioners who are thinking about taking on high-risk engagements. Henry suggests asking these questions:

• Does your firm have the appropriate level of expertise?
   
• What are the applicable regulations?
   
• Is there an audit guide?
   
• Are there relevant continuing professional education courses that provide the industry fundamentals?
   
• Does the AICPA produce an industry-related audit risk alert that is relevant to the client’s business?
   
• Are external resources needed to ensure compliance?

“Having an engagement quality control review (EQCR) for high-risk engagements, or engagements in a practice area outside of the firm’s ordinary practice area, can be a great way to achieve high quality,” Henry writes.

Read Henry’s thought-provoking article in its entirety, courtesy of the PICPA.