Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Choose your Peer Review year-end cutoff carefully

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Here is an idea if you are just getting into the peer review cycle because of mandatory review:  pick your peer review cutoff date carefully.  This might also help if you already have peer reviews but the timing causes a time crunch.

Consider having your peer review date about 3 to 5 months after the busiest year-end for your clients.  This is because the peer review covers all your reports for client year-end dates before your peer review date, not when the work was performed or the report was released.  Since the report is due to your administering entity (usually the state society) six months after the peer review year-end date, the peer review field work will probably be performed 2 to 5 months before the due date to the administering entity.

Let’s walk through an example.  Let’s say the peak of your practice is December 31 year-ends.  This means you are really busy from, oh, let’s say mid-January through April or May.  If you go for a peer review cutoff of April 31st, then the report will be due October 31st.  That would make it easy to have the peer review field work in June, July, August, or maybe even September.  That leaves you and your review team with lots of flexibility.

How could you be in a jam?  Let’s say your peak client work is for December 31st.  Your peer review date is December 31st.  Your report is due June 30th.  You will have a narrow window for field work – it will probably have to start about as soon as you roll out of busy season.  That could make things tough if either you or your peer reviewer encounters any unexpected time crunches.  We all know how likely that can happen!

Other complications to work through would be if you have a lot of government clients with, say, September 30 year-ends and you do the single audit work after the first of the year or in the spring.  That 6 month due date could make timing complicated if you picked a fall date for peer-review year-end.

So where does this leave you?  Plan carefully for your first peer review.  Pick a year-end that fits well with your work load and getting the reports wrapped up.

Written by Jim Ulvog

December 8, 2010, 15:21 pm at 3:21 pm

Posted in Peer Review

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