Reforming
Peer Review: Full Steam Ahead
JANUARY 2006 - The Society
continues to proactively lead the charge in the effort to reform the current
peer review program. Just last month, the NYSSCPA’s Board of Directors
approved a whitepaper on peer review that completely reexamines the current
program and makes recommendations for reform based on what peer review should
be, not what it is.
Developed by the
Society’s Quality Enhancement Policy Committee (QEPC), chaired by
President-Elect Tom Riley, the whitepaper represents a major advance in
the evolution of peer review. Through research, discussion, outreach,
and hard work, the QEPC has painstakingly outlined the tenets of an ideal
quality review system that will promote a consistency of quality throughout
the profession upon which the public can rely.
Meaningful
Quality Review
We will now assess
the viability of the framework. An implementation plan to make peer review
consistent with the underlying concepts of the whitepaper will include
member input, and our Legislative Task Force will include it in our agenda
for the upcoming legislative session in Albany. The paper’s four
main concepts are:
- A
quality review system should be progressively disciplinary, meaning
it should be both educational and disciplinary. The system
should emphasize imparting knowledge to firms without losing sight of
the fact that some firms may lack the will to comply with high standards
without sanction. The disciplinary aspect becomes active after a firm
fails or repeatedly fails to take corrective action.
- Quality
reviews should be conducted by pooled teams of individuals from different
firms. This would replace the current firm-on-firm structure
and would allow for an exchange and learning among reviewers and reviewees.
The assignment of qualified individual reviewers, not firms, out of
a pool would obviate potential conflicts of interest that result from
the current program, in which a firm selects its own reviewer. A pooled
team of reviewers would make issues concerning firm-on-firm reviews
or the rotation of reviewers irrelevant, because a new team would be
constructed for every review. In addition, reviewers should be systematically
trained, certified, and evaluated.
- Peer
reviews should be considered part of a comprehensive quality review
process. This means reviews should take account of elements
such as tone at the top; partner evaluation, promotion, and assignment
of responsibility; independence policies; client acceptance and retention
policies; and selected audit engagements. Peer reviews should be viewed
as only one aspect of a comprehensive quality review system. Furthermore,
the goal of a quality review should be to ensure that firms are complying
with their own continuous, self-imposed systems of quality control.
- The
system must be public and open. This would entail public
reporting; comprehensive and easily accessible guidelines for reviewers;
a provision for feedback and corrective action by the reviewed firm;
a means of referral to a disciplinary body established by the Board
of Regents and the State Education Department; and documentation of
findings and recommendations.
Improving
the Profession and Serving the Public
In addition to benefiting
the public and the professional community, contributing to this bill will
take the Society to the next level in terms of legislative participation.
I encourage you to share your opinions with me about this initiative,
because the kind of dialogue that helps the Society have a positive impact
on legislation and regulation is also important to improving the Society.
Louis
Grumet
Publisher, The CPA Journal
Executive Director, NYSSCPA
lgrumet@nysscpa.org.
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