Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

What are a few factors to consider when selecting your peer reviewer? Getting started on a peer review, part 3

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Here are a few things to consider.

Cost. That’s a biggie. Remember to consider the direct costs for the review, any travel time, and hotel & airfare if the firm is beyond driving distance. Cost is not the only factor though.

Experience. How much experience does the team captain have as a CPA, in your industries, and as a peer reviewer?

Industry match. Your peer reviewer must have experience in the areas where you have concentrations. If there is not a complete match, the team captain will probably have to bring along a team member to fill in any gaps.

I am learning that the many peer reviewers do not have experience in pension work or single audits. As a result, they typically include a team member to look at those engagements. The creativity of this approach is that if you find a peer reviewer that you “click with” but he or she lacks some industry, pension, or A-133 experience, you could still use that firm. Just plan on having a second person on site for the peer review.

Competitor or not? If you get a peer reviewer with industry experience to match your firm, there is a really good chance you’ll wind up talking to someone who is otherwise a player in your niche.  Although the ethics rules require your peer reviewer not to have any contact with your clients, you may not want to let your competition see how you structure your work or gain insights on your staffing and billing structure. You may also not want your competitor to gain industry knowledge from your clients. If those factors are important for you, then you will need to pull in someone from outside your geographic market.

Mental flexibility. There are dozens of ways to approach audit and SSARS services. Lots of alternatives available on how to put together a quality control system. You might want to make sure your peer reviewer can handle working with the diversity that exists amongst CPA firms. The SAS, SSARS, peer review, and quality control standards must be complied with, end of discussion. At the same time, there are different ways to get to the right answer.

Teaching, learning. One of the subtle benefits of a peer review is talking to an experienced partner who runs engagements in your industry. This provides an opportunity to learn from the variety of things that the reviewer has seen. If you want, you could get feedback on how to do things better. Your reviewer obviously won’t share what he or she knows about other firms but could easily give you ideas on how to do things different or better or more efficient. Sort of like what we try to do when we give letters of recommendations to our clients, right? You might want to find out if your peer reviewer has good teacher or coach skills.

Firm size. Consider whether it is important for you to have a peer reviewer from a firm that is comparable to yours in size. Perhaps you want a reviewer from a larger or smaller firm. Some CPAs would like to have someone from a larger firm to gain insight to handle growth issues or handling more complex things in the future.

Another approach is to have someone from the same size firm because that reviewer will be particularly sensitive to the issues you deal with.  The issues are very different for sole practitioners compared to multi-partner firms, who have differences when compared to multi-office firms. The coordination issues are different. The complexity of supervising staff and creating change is different. The overall complexity and sophistication of processes are different.  On a very practical basis, the complexity of quality control systems are very different for different sized firms.  Consider what is most important for you and find a peer reviewer with that background.

The AICPA has more ideas.  See Tips for Selecting Your AICPA Peer Review Program Peer Reviewer .

Written by Jim Ulvog

July 14, 2011, 7:18 am at 7:18 am

Posted in Peer Review

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