Peer Review FAQ

Who needs to be enrolled in the peer review program?

All firms in public accounting that perform work within the scope of the AICPA practice monitoring standards need to be enrolled in the peer review program. This is a requirement under both AICPA and MNCPA bylaws, and is also required by the Minnesota Board of Accountancy as a condition for obtaining a firm permit for firms that perform attest and/or compilation engagements.

Does my firm have to enroll in a peer review program if the only engagements it performs are engagement to prepare financial statements under AR-C section 70 (preparation engagements)?

No, a firm that only performs engagements to prepare financial statements is not required to enroll in a peer review program. However, for firms already enrolled in the peer review program, engagements to prepare financial statements would fall within the scope of peer review.

Do I need to be enrolled in the peer review program if my firm doesn't perform any audit or accounting engagements?

Firms that do not perform any reviewable engagements (audits, reviews, compilations with or without disclosures or other attest engagements) do not need to be enrolled in the program. If a firm chooses to be enrolled in the program, but does not perform any reviewable engagements, they must annually confirm this status with the MNCPA by returning the confirmation letter that is sent to them.

When is my firm's initial peer review?

A firm's initial peer review is due 18 months after either the year-end of the firm's first reviewable engagement or 18 months from the report date of the firm’s first engagement subject to peer review. The peer review administering entity (AICPA or MNCPA) will provide guidance on the due date for the initial review. A peer review covers a 12-month period, and the firm is given six months in which to have a review and submit it to the administering entity. Example: a firm's initial engagement has a year-end of December 31, 2016; the first peer review year would end December 31, 2017 and the firm's peer review would be due to the administering entity by June 30, 2018.

What are the two types of peer reviews and what type does my firm need?

There are two types of peer reviews: System reviews and Engagement reviews. The type of services performed by your firm will determine what type of peer review your firm is required to have.

What is a system review?

A System review includes determining whether the firm's system of quality control for its accounting and auditing practice is designed and complied with to provide the firm with reasonable assurance of performing and reporting in conformity with applicable professional standards, including SQCS 8, in all material respects. This type of review is for firms that perform engagements under the Statement on Auditing Standards (SASs), the Government Auditing Standards (Yellow Book) or examinations of prospective financial information under the Statement on Standards for Attestation Engagements (SSAEs) or audits of non-SEC issuers performed pursuant to the standards of the PCAOB.

The scope of the peer review does not encompass other segments of a CPA practice, such as tax services or management advisory services, except to the extent they are associated with financial statements, such as reviews of tax provisions and accruals contained in financial statements.

In a system review, the reviewer will study and evaluate a CPA firm's quality control policies and procedures that were in effect during the peer review year. This includes interviewing firm personnel and examining administrative files. To evaluate the effectiveness of the system and the degree of compliance with the system, the reviewer will test a reasonable cross-section of the firm's engagements with a focus on high-risk engagements, in addition to significant risk areas where the possibility exists of engagements being performed and/or reported on that are not in accordance with professional standards in all material respects. The majority of the procedures in a System review should be performed at the reviewed firm's office.

What is an engagement review?

This type of review is for firms that are not required to have a system review and only perform services under SSARS or services under the SSAEs not included in the System reviews. The objective of an Engagement review is to evaluate whether engagements submitted for review are performed on in conformity with applicable professional standards in all material respects. An Engagement review consists of reading the financial statements or information submitted by the reviewed firm and the accountant's report thereon, together with certain background information and representations and, except for compilation engagements performed under SSARS, the applicable documentation required by professional standards.

This type of review does not cover the firm's system of quality control, so the reviewer cannot express an opinion on the firm's compliance with its own quality control policies and procedures or compliance with AICPA quality control standards.  

My peer review due date is coming up this year. What do I need to do?

The firm’s Peer Review Contact will be notified via email 210 days before its peer review due date to log in to the Peer Review Integrated Management Application (PRIMA) and complete its Peer Review Information (PRI) form. Submission of the PRI is the first of multiple steps that the firm will be prompted to complete in PRIMA.

The firm needs to make arrangements with the peer reviewer directly. A list of qualified peer reviewers is available. 

How does my firm select a peer reviewer?

A list of qualified peer reviewers is available on the MNCPA website. Many firms select as a peer reviewer a firm that is similar in size and practice. The firm needs to make certain that the peer reviewer is qualified to review any specialized area of its practice, such as governmental audits. CPA colleagues can also be a good referral source for selecting a peer reviewer. In addition, the AICPA has an article on tips for selecting a peer reviewer.

Which engagements will my peer reviewer select for my type of peer review?

The reviewer will send an engagement letter to the firm prior to the commencement of the peer review. He/she will select the types of engagements based on the type of review.

System review selections
The AICPA Peer Review Program Standards require engagements selected for review to provide a reasonable cross section of the reviewed firm's accounting and auditing practice, with greater emphasis on those engagements in the practice with higher assessed levels of peer review risk.

Examples of the factors considered when assessing peer review risk at the engagement level include size, industry area, level of service, personnel (including turnover, use of merged-in personnel, or personnel not routinely assigned to accounting and auditing engagement), communications from regulatory, monitoring, or enforcement bodies; extent of non-audit services to audit clients, significant clients' fees to a practice office(s) and a partner(s) and initial engagements.

In addition, at least one of each type of engagement subject to Government Auditing Standards (GAS), Employment Retirement Income Security Act (ERISA), the Federal Deposit Insurance Corporation Improvement Act (FDICIA), audits of carrying broker dealers and examinations of service organizations must be selected for review.

Engagement review selections
The review captain or the administering entity ordinarily should select the types of engagements to be submitted for review in accordance with the following guidelines: One engagement should be selected from each of the following areas of service performed by the firm:

  1. Review of historical financial statements (performed under SSARS)
  2. Compilation of historical financial statements, with disclosures (performed under SSARS)
  3. Compilation of historical financial statements that omits substantially all disclosures (performed under SSARS)
  4. Engagements performed under the SSAEs other than examinations of prospective financial statements
  5. Preparation engagements in some situations

One engagement should be selected from each partner, or individual of the firm, if not a partner, responsible for the issuance of reports listed. Ordinarily, at least two engagements should be selected for review.

The preceding criteria are not mutually exclusive. One of every type of engagement that a partner, or individual if not a partner, responsible for the issuance of the reports listed above does not have to be reviewed as long as, for the firm taken as a whole, all types of engagements performed by the firm are covered.

My peer reviewer has completed his or her work. What do I do next?

After the peer review is completed, the firm’s Peer Review Contact should watch for email notifications to log in to PRIMA and complete any additional steps such as responding to any Matters or Findings noted by the reviewer. 

Why does my review need to go to a technical reviewer?

When the peer review has been completed and all required documents have been uploaded into PRIMA, the review is sent to a technical reviewer for review. This is to ensure that the review was performed in accordance with the AICPA Standards for Performing and Reporting on Peer Reviews.

What is the peer review acceptance process?

At completion of the technical review, a review is ready for consideration at a Peer Review Committee RAB (Report Acceptance Body) meeting made up of volunteer peer review committee members. The RAB will evaluate, based on the work of the peer reviewer and technical reviewer, whether to accept the review as complete or request the firm to complete corrective action.

If the review is accepted by the committee as complete, the review is closed and the firm’s Peer Review Contact will receive email notification to log into PRIMA to acknowledge and download the peer review acceptance letter. The firm's next review will be due in three years and six months from the firm's most recent peer review year-end.

If the RAB decides corrective action is appropriate, the firm’s Peer Review Contact will log in to PRIMA to download a letter outlining the required corrective actions and the due date by which these actions must be completed. The firm must first acknowledge in PRIMA its agreement to the required actions. When the actions have been completed, the firm will upload to PRIMA documents supporting completion of the actions. The documents are sent to a technical reviewer for review and may be presented to a RAB for acceptance. Once it is determined that the firm has completed the required corrective action, the review will be closed and a letter sent to the firm through PRIMA. If the firm does not successfully complete the required follow-up actions the first time, the committee will request additional follow-up until it has been successfully completed.

My firm received the RAB acceptance letter. What do I need to send to the State Board?

  • Peer Review Report (including the firm’s letter of response, if applicable)
  • RAB acceptance letter (signed by the firm if the letter specified corrective action)
  • RAB letter accepting corrective action as complete (if applicable)

Send the required documents to:

Minnesota Board of Accountancy
85 E. Seventh Place Ste. 125
St. Paul, MN 55101

What is the impact on my firm's peer review when my firm completes its first audit engagement after the completion of my engagement review?

When a firm, subsequent to the year-end of its engagement review, performs an engagement under the SASs, Government Auditing Standards or examination of prospective financial statements under the SSAEs, or an audit of a non-Securities and Exchange Commission issuer performed pursuant to the standards of the PCAOB that would have required the firm to have a System review, the firm should (a) immediately notify the administering entity and (b) undergo a System review. The System review will ordinarily be due 18 months from the year-end of the engagement (for financial forecasts and projections 18 months from the date of report) requiring a System review or by the firm's next scheduled due date, whichever is earlier. However, the administering entity will consider the firm's practice, the year-ends of engagements and when the procedures were performed, and the number of engagements to be encompassed in the review, as well as use its judgment to determine the appropriate year-end and due date. Firms that fail to immediately inform the administering entity of the performance of such an engagement will be required to participate in a System review with a peer review year-end that covers the engagement. A firm's subsequent peer review ordinarily will be due three years and six months from this peer review year-end. 

The firm will report the change by logging in to PRIMA and updating information under "Manage My Firm".