Over the course of years, it can be seen that the importance of audit has considerably increased because of the high degree of importance it has pertaining to the provision of assurance regarding fair play within the organizations.
Therefore, it has enabled a certain level of trust between corporations and the relevant stakeholders, relating to the fact that the financial statements (and the organization) have been taken care of by the auditors, and hence, there is no evidence of malpractice within the firm.
However, given the fact that this responsibility is entrusted by the accountants, it can be seen that there is a need to ensure that accountants are duly accounted for in order to gauge their performance and reliability on a larger scale.
The purpose of the peer review can be defined as a review of accountants, by their fellow accountants, in order to promote quality in the accounting and auditing services, which are provided by CPA firms.
It is mainly carried out in order to ensure that firms are performing at a high standard, which can ensure that they are able to offer opportunities to the firms when it comes to ensuring quality protocols.
It further provides areas for improvement, which can be worked upon by the employees in order to ensure that they are able to improve their service protocol.
The peer review helps to monitor these firms, accounting, and auditing services, which can facilitate higher practice monitoring, as well as the program itself.
Furthermore, it is directed towards improving the overall quality of accounting and finance-related services that are provided by the members, and their respective firms.
In this regard, the primitive goal is to serve the larger public interest, as well as enhance the overall credibility and integrity of the membership of the accounting body.
Who can conduct a Peer Review Audit?
In order to conduct a Peer Review Audit, mostly licensed CPAs, who have completed their training, are eligible to audit. Additionally, they are also supposed to meet a few other requirements, which mainly include being an active member of the association, as well as being currently active in public practice at a supervisory level.
In the same manner, the auditor should also have a minimum experience of at least five years of recent experience in public accounting. These eligibility requirements ensure that the auditor has sufficient integrity and experience so that the review is credible and worthwhile.
What are the reasons to conduct a Peer Review Audit?
There are a number of reasons, because of which a peer review audit is conducted. These reasons are based on the rationale that includes the following:
- Ensuring high quality services provision to clientele: This is created as a scrutiny based tool, in order to ensure that best services are provided to the clientele. If accountants, or the accounting firm knows about the peer review, they know they would be held accountable, and this reasonably increases their accountability to provide top notch audit and assurance services.
- Review of optimization of internal services: The review helps organizations to optimize their services, and ensure that they are able to identify subsequent areas of improvement. This mainly includes an insight about the existing weaknesses of the firm, which needs to be worked upon, in order to ensure that they are able to work on them in the coming years, for a better service delivery protocol.
- Provides firms with insights, as well as recommendations for efficiency improvements: In addition to optimization, it also provides the company with valuable resources, which can help users to opt for efficiency when it comes to service delivery and protocols. Hence, it ensures better utilization of services, which directly results in increased efficiency within the service delivery.
Therefore, it can be seen that the peer review audit can be seen as a highly important part that works for the benefit of both, the public stakeholders, as well as the accountants.
It is a highly important qualitative tool, which can help users to identify top areas for quality improvement, which can help them to learn and grow as a team, so that they can provide better services to their clients, to say the least.
Furthermore, it can also be seen that there is a need to conduct a Peer Review Audit so that there is an audit of the auditor himself. This increases the overall level of accountability in the field of accountancy and gives the public a reason to trust the audit reports.