Peer review can be a stressful experience for some firms. However, it is also an important way that the profession identifies problems and provides firms with the opportunity to learn and optimize their processes to deliver better audits. Accordingly, Wolters Kluwer created a complimentary eBook, 6 Tips to Better Peer Reviews, to provide best practices for passing peer review. This eBook delivers insights and real-world experiences from the AICPA, peer reviewers, and successful audit firms. It features information from:
- Deana Thorps, Manager of Audit Quality Initiatives, AICPA
- Carl Mayes, Associate Director of CPA Quality and Evolution, AICPA
- Troy Coon, CPA, Partner and Peer Reviewer, Watson Coon Ryan
- David Duckwitz, Director of Quality Control, RubinBrown
- Kyle Rustin, Principal, K•Coe Isom
- Matthew Reiter, Audit Quality Control Partner, Whitley Penn
- Jason Miller, Partner, Anglin Reichman Armstrong
AICPA EAQ Initiative and peer reviews
The AICPA Enhancing Audit Quality Initiative seeks to evaluate the performance of peer reviewers and provide education and feedback that helps reviewers more accurately identify firms with audits that do not conform to professional standards. To that end, the EAQ Initiative has the profession focused on improving audit quality as demanded by current audit standards.
To begin with, in 2014 peer reviewers only detected 22% of problem engagements, according to Deana Thorps at the AICPA. However, after reforms in the AICPA EAQ Initiative, reviewers caught 80% of nonconformity in 2019. Consequently, peer reviews have become tougher to pass in recent years. Therefore, it’s never been more important for firms to ensure their internal processes, auditor training, and audit technology combine to deliver the highest possible quality audits.
Most common deficiencies uncovered during peer reviews
With attention to audit quality, the AICPA EAQ Initiative focuses on a number of priority issues each year. Particularly, AICPA seeks to build awareness around areas where peer reviews reveal where firms make the most auditing missteps. Specifically, most auditor missteps commonly occur in three areas.
In the first place, risk assessment is one of the two areas where the greatest amount of nonconformity takes place. Simply put, when auditors do not assess risk at a client, they cannot adequately support their audit opinion. Further, those risks need to be clearly linked to audit program steps.
Secondly, 40% of audit issues occur because the auditor fails to understand a client’s internal control. Moreover, this can happen in two different ways. Either the auditor can mistakenly believe the client has no internal controls, or the auditor can fail to understand which controls are relevant to the audit.
Thirdly, the new ASC 606 standards made auditing revenue recognition more complex. Specifically, peer reviews have shown some firms fail to assess risks related to material estimates. Additionally, some auditors fail to evaluate the design and implementation of controls as well as fail to compare to previous year estimates.
Leverage audit technology to improve audit quality
Audit technology can make it much easier to achieve the quality audits your firm strives for and your clients demand. Passing peer review is one of many benefits firms can realize when they use Wolters Kluwer’s Integrated Audit Approach. CCH Axcess™ Knowledge Coach or CCH® ProSystem fx® Knowledge Coach, combined with TeamMate® Analytics, can help auditors gain a better understanding of risks while maximizing efficiency.
Get 6 tips to passing peer review
When you read the eBook, you will discover six tips for improving audit quality at your firm. These tips explain how to enhance risk assessment, gain a better understanding of internal controls, and leverage analytics for a more data-driven audit. Finally, each tip addresses the ways audit technology can increase audit efficiency and elevate quality to help with passing peer review.
Download the 6 Tips to Better Peer Reviews eBook.