When I talk to small firm owners around the country, some of their most common concerns relate to peer review. Practitioners generally support peer review and quality management standards, but they continue to face several challenges, including:
Affordability, particularly for firms that perform only a small number of attest or assurance engagements each year.
Scalability. Many sole practitioners and niche firms feel requirements could be better scaled to a firm's size, engagement volume, risk profile, or area of specialization.
Balancing improvement and compliance. Firms value constructive feedback and are committed to delivering high-quality services. At the same time, they would like the process to be more efficient, practical, and focused on helping firms improve, while still meeting documentation and compliance requirements.
The good news is that there are steps firms can take to minimize these challenges and enhance the value that peer review can provide.
Focus on the benefits. Remember that the ultimate goal of peer review is to support quality and protect both firms and the clients they serve. Peer review provides you with an independent perspective that can help uncover issues before they become larger problems. When viewed as an opportunity for continuous improvement rather than a compliance exercise, peer review can help to identify inefficiencies, strengthen processes, and reduce future risk.
For example, a firm may receive an observation related to documentation or inconsistencies in its engagement process. Rather than simply correcting the finding, the firm can take a step back and ask what caused the issue and how to prevent it from happening again. In many cases, the solution might be implementing a standardized template, checklist, or workflow that improves consistency across engagements. Not only can this reduce the likelihood of future peer review findings, but an established system will also save staff time, reduce busy season stress, and make onboarding and training more efficient.
Get a head start. Firms that have the most productive peer review experience are proactive in their approaches. Rather than waiting until a review is approaching, they prepare throughout the year by maintaining documentation as they go and addressing issues when they arise.
Firms also benefit when they build quality management processes into the firm throughout the year. Many firms see quality management requirements as a real challenge, particularly sole practitioners and smaller firms with limited time and resources. They struggle with translating the requirements into a practical, scalable process that fits their size and complexity.
The good news is that firms can realize benefits from the effort. I’ve spoken with firms that have used peer review feedback to improve their processes and strengthen the quality of their engagements. By taking the time to understand what may have contributed to an observation and implementing changes to address it, firms can improve consistency, reduce risk, and spend less time scrambling to gather documentation when the next review cycle came around.
By integrating quality management into their day-to-day operations, firms can regularly assess risks and make quality considerations part of their firm's culture rather than a once-a-year project. I've seen firms benefit from starting small, focusing first on the risks that are most relevant to their practice, and then building from there.
Don’t go it alone. Because the AICPA recognizes the challenges these requirements can pose for small firms, it offers a variety of quality management resources, toolkits, guidance, and implementation aids designed specifically to help firms navigate the standards in a practical and scalable way.
Small firms can also benefit by connecting with firms that have successfully navigated the process and can share practical tips and lessons learned. Learning from peers can help firms avoid common pitfalls and identify approaches that work in practice.
A more sustainable practice
I know some firms are considering whether to continue offering audit and attest services because of the challenges associated with peer review and quality management. Every firm must make that decision based on its own circumstances, client needs, and long-term goals.
Whether you're weighing those decisions or simply looking for ways to reduce the burden of peer review, taking a more proactive approach can help you get greater value from the process. Peer review should not be viewed solely as a compliance requirement. At its best, it is an opportunity to learn from peers, identify areas for improvement, strengthen quality, and build a more efficient and sustainable practice.
When firms use peer review feedback to address root causes, improve processes, and strengthen quality management, the benefits often extend well beyond the review itself. The result can be stronger engagements, more consistent processes, reduced risk, and greater confidence for both the firm and the clients it serves. Viewed through that lens, peer review becomes more than a compliance requirement. It becomes a tool for continuous improvement and long-term sustainability.
Stephanie Otero, CPA, is the Association’s Vice President—Small Firm Advocate. Have questions for Stephanie? Contact her directly at stephanie.otero@aicpa-cima.com. To stay ahead on issues affecting CPA firms, the PCPS Small Firm Success Series offers strategies on staffing, technology, compliance, and practice management. The series is free to AICPA members and provides CPE.
We welcome your suggestions and feedback on how the AICPA can better support small firms.