Center for Public Company Audit Firms (CPCAF) Outline of Peer Review Program (PRP) Background and Oversight Procedures

CPCAF enrollment:

800 – 900 firms approx 500 are registered with & inspected by PCAOB, remainder are voluntary participants in the Center

8 firms have over 100 issuer clients

40 firms have over 200 professional staff 23 firms have over 400 professional staff

The CPCAF Peer Review Program consists of firm-on-firm reviews of the non-SEC practice A & A work – Effective 1/1/09 under Standards promulgated by AICPA Peer Review Board

CPCAF PRP Peer Review Committee (PRC) a/k/a National Peer Review Committee

15 member volunteer committee representing cross section of Center firms

Expect to add regulatory representation on the PRC in 2009

PRC’s Oversight Task Force is a subcommittee charged with monitoring the oversight processes that are conducted principally by AICPA staff. The subcommittee approves an annual oversight plan developed by staff and results are reported to the PRC.

CPCAF PRP is not administered by the state CPA Societies

AICPA staffing assigned to the CPCAF Peer Review Program:

Director, five managers, three staff + consultants as needed

AICPA staff approves and monitors scheduling and status of each peer review

Oversight Model

Objective is to provide reasonable assurance that peer reviews are being performed and reported upon in accordance with applicable peer review Standards.

Oversight Procedures

Panel Reviews

A panel of PRC members oversee the peer reviews of the 8 member firms with over 100 issuers and, when deemed appropriate, of some other selected firms’ reviews. The panel and AICPA’s staff participate in the planning, interim and final phases of the review and a presentation to the PRC. Scope is approved by the panel before the peer review commences.

On-Site Oversight of Peer Reviews

Applied to a sample of 10 – 15% of CPCAF Peer Reviews performed. All firms having over 100 issuer clients and firms with over 400 professional staff have on-site oversight procedures applied.

Performed by AICPA staff or consultants during the peer review itself:

Review of risk assessment, scope and engagement selection,

Concurrent re-performing of the peer review engagement checklists, & Participation in closing meetings to evaluate the process

AICPA staff performs a “full working paper review” of some documents generated by the peer review team for all reviews. Peer Reviews meeting certain criteria also will have additional concurring technical reviews performed by AICPA staff.

March 23, 2011