With all that’s going on in the world, you probably were quite excited to see that your firm could have extra time to complete its 2020 peer review. Nearly 4,000 CPA firms with original peer review due dates between Jan. 1 and Sept. 30 were given a six-month deadline delay option as they manage through the coronavirus pandemic. Eligible firms should have received emails from the AICPA Peer Review Program in May.
“Firms don’t have to do anything to take the extension, they’ve got it,” said Jim Brackens, CPA, CGMA, AICPA vice president–Ethics & Practice Quality. “My best advice to firms with a delayed peer review deadline is to plan for the review now — don’t wait.” Peer reviews normally due in 2021 will be happening as well and the firms with extensions must make sure they get their reviews completed on time, he said.
Besides the deadline, what else is different? In light of COVID-19, all 2020 peer reviews can be conducted remotely. Previously, system reviews were done on-site but remote reviews could be done with prior permission from the administering entity (e.g., AICPA or state CPA societies). Now, all can automatically be off-site reviews. “Firms need to figure out if and how they can do the peer review remotely,” Brackens said. And while travel expenses would be avoided, the peer review’s cost is expected to be consistent with on-site reviews.
In case you think a remote review could be inefficient, your firm can make sure it isn’t. Technology platforms such as Zoom enable collaboration, shared document viewing, and real-time interactions. Explore your options immediately if you do not think your current virtual meeting solution would work for your peer review.
All else remains the same with the peer review. Engagements to be reviewed must have been performed during the original review period, for example (that is, the year under review doesn’t change). The next peer review will be due three years from the original peer review due date.
How to keep peer reviews effective and efficient
You can take certain steps now to stay on track with your firm’s new peer review deadline. Here’s how to make the most of the additional time and improve the efficiency of your peer review.
Set up your peer reviewer
“The first thing firms should do is contact their peer reviewers and lock down their availability,” said Brackens. “If your usual reviewer is not able to perform the review when you want, then expand your search to include more locations around the U.S., which is possible now because of remote reviews.”
Whichever reviewer you meet with, the reviewer will ask the firm questions to determine whether they believe they can perform the remote review effectively. The AICPA Peer Review Program is training peer reviewers on how to explain their processes and controls for a quality remote peer review.
Block the day
Now that two to three days for the review are booked, Brackens suggests that firms and reviewers should, in essence, pretend that the review is being done on-site. He said to be most effective, firms should “block the day” so staff are present and fully available to the reviewer, as they are when the review is on-site. “We tell reviewers the same thing,” said Brackens. “You sit there just as you would for an on-site review.”
Schedule time for the fieldwork
Get going on the work that can be done in advance of your review — what would normally be done the first couple of days of an on-site review. “The reviewer will give the firm instructions for what they need to gather for the reviewer in advance for planning purposes,” Brackens said. “Forms will need to be completed as well as information provided about the partners, the staff, the engagements, etc.,” he said.
Once the reviewer analyzes that data, oftentimes the reviewer asks the firm questions before doing the fieldwork and telling the firm which engagements they're going to examine.
Get your workpapers digital-ready
After the reviewer notifies the firm of the engagements selected for review, the reviewer will begin looking at the engagements, interviewing staff, and moving through the review process.
In a digital environment, you won’t be able to pull out paper documents and point to text that shows the reviewer how you addressed an issue or complied with a standard. But you can provide, usually either through email or by sharing the screen during your virtual meeting, a Word or PDF file of your workpapers. Consider converting Word files into PDFs so they are not editable by others. Any handwritten documents or notes will need to be scanned into the computer so they are accessible and sharable during a remote review.
If your firm has an integrated set of workpapers, you won't have to go searching for the PDF file. You can just click on a link and get right to the information you want instead of trying to find the PDF you sent to the reviewer. “It’s not quite as easy as being in person, but it’s close,” said Brackens.
Finish the review 30 days prior to the due date
After the reviewer completes the fieldwork, the reviewer has additional work that could take up to 30 days and may need input from the firm. That brings you to the due date, which is the date that the peer review report and workpapers must be handed over to the administering entity. Be mindful of the due date when scheduling your firm’s review. “You should figure on finishing the review at least 30 days before the due date,” said Brackens.
Some tips
Firms that have required corrective actions from their most recent peer reviews are encouraged to complete them by their stated deadlines, although the six-month extension does apply. However, Brackens emphasizes that the corrective actions are to help firms learn, and the sooner they do the remediation, the better off they will be going forward.
Kim Ellis, manager–Peer Review Projects & Communications for the AICPA, advises firms to go into PRIMA (the peer review management system) as soon as possible to get the process underway. “One of the initial screens in PRIMA is the peer review information (PRI) form, where firms have to verify data pre-populated from their prior review and complete additional information to begin the review’s scheduling process,” she said.
As part of completing the PRI form in PRIMA, the managing partner or peer review contact must attest to the accuracy of the firm’s information, including the entire engagement population for the year under review. All other information must be complete and correct as well — don’t leave any blanks. “Know what’s going to be needed because it’s essential in preparing for your peer review,” Brackens added.
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— Ellen Goldstein is the Association’s director–Communications & Special Projects. To comment on this article or to suggest an idea for another article, contact her at Ellen.Goldstein@aicpa-cima.com.