Increasing Transparency in Peer Review: Members Speak Out
At its spring 2004 meeting, the AICPA's governing council approved a resolution in support of increased transparency in the peer review process. It also authorized a member awareness program to inform members about peer review and the related transparency issues and to assess their desire for greater transparency. Two principal options for increasing transparency of peer review information under consideration are (1) creating a public file that would be available for the general public to view similar to that which exists today for member firms of CPCAE PCPS and the new employee benefit plan and government audit quality centers and (2) a state regulatory file that would provide access to peer review information only to regulators. This article is the result of an informal survey of members from small firms practicing in 10 states about increasing transparency by making peer review information public. More information is available at www.aicpa.org/transparency/index.htm. Members also are invited to submit comments to peerreviewtransparency@aicpa.org. In 1989 Gray & Co. PC, a CPA firm with four professionals in Norman, Oklahoma, was competing with two local firms for an important financial institution client. "The other firms had never been through peer review, and I'm convinced that made the difference in our getting the job," says Janice Gray, CPA, a Gray & Co. principal. "Since then, in all our literature, and every time we respond to a request for a proposal, we not only provide a copy of our peer review information, but also try to educate clients and prospective clients as to what it means. We've made our peer review information public for almost twenty years, and I really think it's helped us." "We brag about our peer review reports," agrees Diane Conant, one of three partners in the Las Vegas CPA firm, Conant, Nelson and Conant. "It's a matter of pride. We want to be looked at as a quality firm. In fact, I suggest to prospective clients they request peer review reports from all firms they are considering." SUPPORT FOR PUBLIC DISCLOSURE While many firms already place their peer review information in a public file, and many others provide it to clients, currently under discussion is whether the AICPA should require all firms to make the information available to a wider audience. "Making our peer review report public shows we're confident about the quality of our work," says Bert Denny, CPA, a partner at Regier Carr & Monroe LLP, which has offices in Arizona, Kansas and Oklahoma. Because the firm is a member of PCPS, its peer review report is in a public file on the AICPA Web site, accessible to anyone with an Internet connection. "That's an incentive to do everything necessary to retain that positive report," Denny notes. "We're constantly reminding staff and partners that it's critical to comply with quality control policies and to keep ahead of standards. I firmly believe our public peer review has made us better auditors. The quality of your firm's work improves when people know a reviewer is going to come in every three years and that the information is going to be made public." Bob Bezgin, CPA, a sole practitioner in Pennsylvania, uses Olympic drug testing as an analogy. "If you want to start a race, you want to make sure everyone is clean," he says. "Making results available forces accountability, forces firms to stand up and say my practice is clean." Many small firms say they wouldn't mind sharing the idea that the peer review process is a simple way to monitor the quality of their work. "I've never had one client ask me if I was 'peer-reviewed,' but I wouldn't hesitate to disclose the report," says Steven Saxenian, CPA, part of a two-person tax practice, Carlisto & Saxenian in Mamaroneck, New York. "We don't do audits, we just have report reviews. Our state board doesn't require us to be peer-reviewed, but we do it because it gives us assurance that we're completing financial statements correctly. …