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The AICPA is updating its standards for peer review as part of its multiyear process of introducing new risk-focused quality management standards, which organizations have until late 2025 to implement.
The AICPA’s Peer Review Board voted Nov. 4 to publish an update to the peer review standards, applicable to peer reviews “with years ending on or after Dec. 31, 2025,” according to the Journal of Accountancy, an AIPCA publication. The peer review standard, Reviewing a Firm's System of Quality Management and Omnibus Technical Enhancements, “is expected” later this month, the JoA reported.
Long time coming. The AICPA in May approved the last in a pack of updated quality management standards that were published starting in 2022. According to the JofA, the new standard “introduces a risk-based approach that provides a scalable methodology to quality for all firms, from sole practitioners to large multinational firms.”
To comply with the new standard, firms will need to “[perform] a risk assessment and [. . .] implement a customized system of quality management” by Dec. 15, 2025, the JofA reported.
In a June JofA podcast, AICPA Auditing Standards Board chair Sara Lord said the QM standard, by then published, was “the final step” in a multi-year process to revisit “all our different standards and applying the quality management standards.” The update affects attest standards, reviews, compilations, and preparation, she said, and clarifies terms for different practitioner roles in an attest engagement.
Refresher. Lord, partner and chief auditor at RSM, previewed the changes in a 2022 JofA podcast. The first of the new QM standards, published in 2022, “[c]overs audits, reviews, compilations, attestation work and really helps ensure that you're thinking through all of the different aspects of quality,” Lord said, from “the firm’s tone at the top” to how it monitors the engagement. The second standard, released with the first, outlines what engagement quality reviewers should be doing “as a response to quality risks,” she said. The third and penultimate update, which would be released in 2023, deals with the responsibilities of engagement leaders for supervision, delegation, and review.