A firm must have a system of quality control for its accounting and auditing practice that meets the requirements of Statement on Quality Control Standards no. 2, System of Quality Control for a CPA Firm s Accounting and Auditing Practice. A peer review monitors a firm s compliance with its quality control system. If it is engaged to perform one of these services, it must have a peer review within 18 months of the fiscal yearend of the first audit or accounting clients accepted. Firms that perform only compilation or review engagements may have offsite reviews. Firms that perform one or more audits must have onsite reviews to ensure the audits were in accordance with generally accepted auditing standards.
Audits receive special attention because third parties rely on the financial information.
Sole practitioners often find it difficult to accommodate onsite reviews in tight office space. A firm whose prior review is unqualified and that has four or fewer professionals can bring all of the normally required material to the reviewer s office or another mutually acceptable location. The sole practitioner and the reviewer can discuss the responses to the quality control policies or procedures questionnaire, the engagement findings and the reviewer s conclusions in person or over the phone. CPA societies that administer their reviews of this change and would not ordinarily be required to have an onsite peer review. Members of firms receiving unqualified opinions on their peer reviews may become peer reviewers themselves provided they have undergone a reviewer training course and meet other requirements.