Do prepared financial statements require peer review?

The AICPA and the California Board of Accountancy do not require peer review of a firm that only performs preparation engagements under SSARS. However, if a firm has other engagements that require a peer review, preparation engagements may be reviewed.

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What engagements are subject to peer review?

The scope of a peer review only covers accounting and auditing engagements performed under SASs, SSARSs, SSAEs, Government Auditing Standards, and PCAOB standards and does not include the firm’s engagements subject to PCAOB permanent inspection, nor does it include tax or consulting services.

When must a public accountant obtain a peer review?

The American Institute of Certified Public Accountants (AICPA) requires its member firms to undergo a peer review every three years. A peer review is a periodic external review of a firm’s quality control system in accounting and auditing and is also known as the AICPA’s practice monitoring program.

Is bookkeeping subject to peer review?

Peer review is required for all California-licensed firms, including sole proprietorships, that perform accounting and auditing services using the following professional standards: Statements on Auditing Standards (SAS) Statements on Standards for Accounting and Review Services (SSARS)*

Can non CPA prepare financial statements?

Only a CPA can prepare an audited financial statement and a reviewed financial statement. However, both CPAs and non-certified accountants, including bookkeepers, can prepare compiled financial statements.

What is accounting peer review?

A peer review is an examination of the audit work of a CPA firm by another CPA firm. These reviews are conducted under the rules of the governing state board of accountancy, and are intended to spot any instances in which audit quality is in need of improvement.

Do agreed upon procedures require peer review?

An AUP is an attest engagement, so CPAs must be independent to perform them. And AUPs are subject to peer review, so if your firm isn’t otherwise subject to peer review, the performance of an AUP engagement would subject the firm to an engagement review.

Who can perform a review of financial statements?

In a financial statement review, the accountant performs those procedures necessary to provide a reasonable basis for obtaining limited assurance that no material changes are needed to bring the financial statements into compliance with the applicable financial reporting framework.

Do accountants prepare financial statements?

Oftentimes, the certified public accountant (CPA) who performs your general accounting and/or bookkeeping and prepares your annual tax return can also prepare your financial statements and, in addition, perform the appropriate service in order to meet your bank’s requirements.

What are the different types of peer review?

The three most common types of peer review are single blind, double blind, and open peer review. Overtime, new models have developed such as transparent, collaborative, and post publication peer review, which are key variations from the standard approach.

What is a peer review on financial statement preparation engagements?

When applicable under SSARS 21 or required for licensure, a peer review on financial statement preparation engagements is more in-depth than a management-use-only engagement review. The peer review should include the following: The engagement letter. The legend on each page stating that no assurance is provided.

What is the difference between management-use-only engagement and peer review?

Are auditing and accounting engagements covered under peer review?

The engagements in a firm’s accounting and auditing practice currently covered under peer review still will be covered under the revised standards.

Can a firm attach a response to a peer review report?

There is no separate letter of comment or letter of response (as is the case with system and engagement reviews). However, a firm will not be prohibited from attaching a response to the copy of the peer review report it signed. The administering entity must technically review all peer reviews.