The best strategy for peer review these days might be, “Back to the basics.”
The AICPA requires members who do audits, reviews or compilations to undergo a peer review every three years. The General Assembly passed a law in 2005 making it mandatory for Maryland CPA firms.
But there’s still come confusion out there about the process, says MACPA Peer Review Committee Chair Michael Manspeaker.
Topping the list are a slew of new peer review standards that introduce a new ratings system, provide more transparency and impact the ways in which engagements are selected and performed. But because the changes went into effect in early 2009, “there is still a significant number of firms that have not undergone a peer review using the new standards,” says Manspeaker, director of accounting and auditing and quality control at Smith Elliott Kearns and Company.
Beyond that, there are a number of common peer review deficiencies that continue to plague firms, and according to Manspeaker, most of them boil down to some pretty basic stuff. That includes basic disclosure deficiencies; errors in financial statement measurement, presentation and disclosure; and a failure to be up to speed on new pronouncements. “You have to pay close attention to make sure there aren’t changes in, for instance, disclosure requirements that would be applicable to your clients’ financial statements,” Manspeaker said.
Manspeaker spoke with me briefly about the latest in peer review after his presentation at the 2010 Maryland CPA Summit. Here’s what he had to say:
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