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Glossary/Quality and peer review

Peer review

Peer review is an independent evaluation of a CPA firm's accounting and auditing practice by another qualified CPA. Firms that audit generally need one every three years under the AICPA program.

CORAA TeamUpdated November 5, 2026

Definition

Peer review is a periodic review of a firm's accounting and auditing practice by a reviewer independent of the firm. In the AICPA program there are two kinds. A system review looks at the firm's system of quality control (and, as SQMS No. 1 takes effect, its system of quality management) and tests a cross-section of engagements, and applies to firms that perform audits or similar engagements. An engagement review looks only at selected engagements, for firms that do not perform audits but do reviews, compilations or preparations.

Why it matters in an audit or review

Peer review results are confidential by default, but a firm may give copies of its latest accepted report to clients, lenders and state boards, and many boards ask for them or have access through the AICPA's facilitated state board access process. A modified or failed result can affect licenses, bids and government work. The firm chooses the review team: a firm-on-firm review or an association review, and for engagement reviews in certain states a committee-appointed team.

Example

Illustrative: a firm with 6 audit clients and compilation work has a system review scheduled for the year ended June 30. It chooses a firm-on-firm review, picks a reviewer with experience in its industries, and gives the reviewer the prior quality documentation and a list of engagements. The reviewer selects a sample including one audit with a single audit component (illustrative).

Common mistakes

Preparing for the review the month before. Documentation of the system and file evidence has to exist from the time the work was done.

FAQ

How often is a peer review required?

Generally every three years for firms enrolled in the program. A subsequent review is ordinarily due three years and six months after the year-end of the previous review, on a schedule set by the administering entity.

Sources

  • AICPA, Standards for Performing and Reporting on Peer Reviews
  • AICPA, Questions and Answers About the AICPA Peer Review Program (June 2025): enrollment, due dates, review team options, public file and facilitated state board access

Definitions paraphrase AICPA and FASB guidance; read the standard itself before relying on a requirement. Example figures are illustrative. This page is guidance, not professional advice. Report an error

Standards

AICPA Standards for Performing and Reporting on Peer Reviews

Related terms

  • AICPA Peer Review Program
    The AICPA Peer Review Program is the practice-monitoring program run by the AICPA and administered by state CPA societies and other entities. Firms that audit generally enroll and are reviewed every three years.
  • Peer review ratings
    Peer review ratings are pass, pass with deficiency(ies) and fail. A pass means the firm's system was suitably designed and complied with. A fail means significant deficiencies show it was not.
  • Matters for further consideration
    Matters for further consideration (MFCs) are issues reviewers note during a peer review that need evaluation but are not yet findings. They are documented on a form that can be elevated.
  • SQMS 1
    SQMS No. 1 is the AICPA standard requiring a CPA firm to design, implement and operate a risk-based system of quality management for its accounting and auditing practice. It replaced SQCS No. 8.

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