The Latest on Peer Review

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In December, Executive Vice President Wendy Garvin shared an important update with member Boards of Accountancy on behalf of NASBA’s Peer Review Compliance Committee, which could require board action. This update included information regarding the following Peer Review developments:

The AICPA Peer Review Board recently approved Peer Review Standards Update No. 2, Reviewing a Firm’s System of Quality Management and Omnibus Technical Enhancements (PRSU No. 2). Important changes were made to account for new Quality Management Standards (QM Standards) issued by the Auditing Standards Board (ASB).

Quality management related revisions included in PRSU No. 2 are effective for peer reviews with years ending on or after Dec 31, 2025. Firms have until Dec 15, 2025, to establish a QM system in alignment with AICPA QM Standards. Early implementation is permitted.

Boards may wish to review their statutes and rules, in coordination with their legal counsel, for any definitions or references to “Quality Control” and/or “Quality Control Standards” and consider whether changes may be needed to add references or definitions that align with the new QM Standards.

It is important to note and consider that the Public Company Accounting Oversight Board (PCAOB) intends to continue using terminology related to a firm’s System of Quality Control as outlined in the new QC 1000, A Firm’s System of Quality Control, effective Dec 15, 2025.

Examples of items to look for may include…

“System review” means a peer review evaluating whether there is reasonable assurance that: (1) the system of quality control of the individual or firm being reviewed is designed and operated in such a manner as to meet professional standards;
Experience requirements for attest services. Each permit holder who supervises attest services or who signs or authorizes a person to sign a report on any audit, attest, review, or compilation engagement, on behalf of a firm shall meet the requirements set forth in the “statements on quality control standards” issued by the Auditing Standards Board of the American Institute of Certified Public Accountants and contained in the “AICPA professional standards,” as adopted by reference
A certified public accountant shall: (1) Comply with the Statement on Quality Control Standards, issued by the American Institute of Certified Public Accountants Auditing Standards Board, as incorporated by reference.
A certificate holder, or an individual granted practice privileges, who is responsible for supervising attest services, or who signs or authorizes someone to sign accountant’s reports on behalf of the firm, shall meet the experience and competency requirements for a “practitioner in charge” as set forth in AICPA Quality Control Standards;

Please email [email protected] with any questions or to request support from NASBA.