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State Board Report

January 2015

A concept paper on what the CPA profession’s practice monitoring might look like in the future has been released by the AICPA with a comment deadline of June 15, 2015. “Evolving the CPA Profession’s Peer Review Program for the Future,” mentioned as forthcoming at NASBA’s June 2014 Regional Meetings by AICPA Senior Vice President Susan S. Coffey, describes how the current peer review program could be transformed into a technology-driven, near-realtime practice monitoring process. The AICPA predicts the envisioned concept will be changed based on feedback from the paper, pilot testing and advances in technology. Ms. Coffey is urging all interested parties to join in the concept’s development.

“We believe this visionary concept has the potential to elevate the quality of the profession’s work by using new technological approaches, creating greater transparency and establishing more connection points between the CPA firm, the reviewer and the AICPA,” Ms. Coffey stated.

As envisioned, the program would highlight potential practice quality risk indicators and detect engagement issues earlier. The monitoring program would have five components:

  1. Continuous analytical evaluation of engagement performance;
  2. Human review when system identified concerns are raised;
  3. Involvement of external monitors, when necessary;
  4. Periodic inspection of system integrity;
  5. Oversight of the system’s operating effectiveness.

The AICPA expects to first develop monitoring tools that would be pilot tested with a voluntary group of firms of different sizes. As the pilot testing goes on, the AICPA would be working with the pilot firms and peer reviewers to see how the new tools could work with the peer review process.

Several NASBA Committees are studying the concept paper and will prepare a joint response.

Early this month NASBA responded to the AICPA’s proposed changes to the current peer review standards. NASBA’s letters can be viewed in the News section of this website. Overall the letters supported the changes being proposed.

NASBA Chair Walter C. Davenport and President Ken L. Bishop thanked the NASBA Compliance Assurance Committee and the Regulatory Response Committee for their assistance in the preparation of those letters.

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