Eight ways to market your firm's peer review

By William Balhoff
Vice chair, PCPS Executive Committee

Every three years, our firms go to the trouble and expense of participating in peer review. We know why: Knot only does this process protect the public interest, but it also helps us improve client service and better manage our firms. While we, as conscientious accounting firms, may understand and appreciate the numerous benefits of peer review, this message has often escaped the greater business community. How can we increase awareness of the peer review process and its contributions to the business world?

What is peer review?

PCPS, the AICPA Alliance for CPA Firms, instituted peer review in the late 1970s as a voluntary quality assurance practice. Due to its great success, a quality review program was adopted by the AICPA in 1988 as a mandatory practice, which would further help the accounting profession to self-regulate. In 1994, the two programs were merged into the AICPA Peer Review Program. CPAs can become peer reviewers only by undergoing stringent training courses on accounting and auditing and related quality standards, as approved by the AICPA Peer Review Board. PCPS recommends that the reviewer firm, chosen by the reviewed firm, be of similar size, geographic region and practice area to the reviewed firm. Some COA firms go beyond the traditional peer review to include an assessment of their tax quality systems and provide CPE and other value-added aspects. (For more information on how to boost the value of peer review to your firm, please contact PCPS for a copy of the Roadmap to Peer Review.)

The Public File

In a recent small business survey, PCPS learned that business owners trust their CPAs above all other business advisors. This type of trust stems from firms' independence, integrity and self-regulation. CPA firms take responsibility for their own business practices and, as a profession, the practices of their peer firms. One key component of self-regulation, and one of the most distinctive features of a PCPS firm's peer review, is the Public File. Here, potential clients and users of financial statements can view peer review reports. The Public File includes only PCPS firms' peer review reports, encouraging member firms to be conscientious, because their results ultimately will become public knowledge.

For users of financial statements, the Public file is a valuable source of information. Results posted there can give a fundamental assurance of the quality of financial statements prepared by PCPS firms. Our evidence shows that when financial institutions become more familiar with the Public file, they return regularly to check the credentials of the firms with which they interact.

How can we use peer review results?

So, how can we underscore the importance of peer review to the greater business community? PCPS does its part in the education process by advertising the benefits of peer review in the top banking publications, such as American Banker. The purpose of these ads, which have been running since 1998, is to raise awareness among bankers and other fiduciary gatekeepers of the value of peer review to their work. The AICPA Peer Review Board has joined PCPS in the promotion of the benefits of peer review to bankers.

PCPS encourages rigorous training courses, offered by the AICPA Peer Review Board, through local state societies, to prepare reviewer firms for conducting peer reviews. This extensive educational program shows the dedication of the accounting profession to high standards and quality service.

But what can firms do?

Banker outreach: As individual firms, we can further the education of financial institutions by having lunches with bankers to discuss the benefits of peer review. Once lending institutions are made aware of the peer review process, they appreciate the quality of statements prepared by reviewed firms.

Proposal qualifications: when writing new business proposals, we can also include a description of the peer review process and invite potential clients to peruse our firms' results in the public file. This allows us to provide one more professional attribute to our clients.

Worthy of framing: When a PCPS firm receives an unmodified review, it is awarded a certificate, which can be posted in its office. Firm managers can hang plaques and other forms of certification, highlighting positive portions of the peer review for employees as well as clients to see.

Kudos: Additionally, we can publicly recognize members of our firms who have contributed to the success of the peer review. Firm managers can reward outstanding employees monetarily through bonuses, complimentary lunches or other privileges, such as extra time off, and then highlight these rewards in the firm newsletter.

How-to information: Firms can direct referral sources to the public file by providing contact information and instructions for accessing peer review reports. Send a letter to let your best contacts know how to use this valuable resource.

Brag to clients: To spread the word to clients, a firm can send an announcement that the firm has successfully completed its peer review. This communication can include a description of the peer review process as well as the results from the firm's latest review.

The power or PR: For visibility outside our firm walls, we can draft and distribute press releases letting the local media know that the firm has gone through another successful peer review.

Tell the world: Another way to take full advantage of a great peer review report is to take out an advertisement in a local newspaper, congratulating the firm on its success.

What does a company do when it earns a not-so-glowing report? It uses the review as a starting point for dramatic improvement. While peer reviews are generally undertaken every three years, firms can request accelerated reviews. During this process, a firm may petition its state society or other administrative body for an earlier review. When the firm participates in its second review, it has the opportunity to correct all negatively rated procedures from the first. Thus, the firm has proof that is has improved and met all required standards.

The dawn of strategic review

Reviewed firms respect the reviewer firms' expertise and hold them in high professional esteem. At the close of a formal peer review, the reviewed firm typically asks additional assistance and information from the reviewer firm. Over the years, reviewer firms have come to assume a management consulting role, offering professional advice above and beyond that of the initial peer review.

This informal second step has inspired PCPS to examine the value of adding a strategic review option to the existing peer review. The strategic review would involve the reviewer firm analyzing the reviewed firms' management practices, ranging from human resources to new service offerings. The reviewer firm can then make suggestions to the reviewed firm. If need be, they can help refocus the business to ensure it is growing in the right directions. Look for news on the development of the strategic review option from PCPS soon.

PCPS members appreciate the many benefits of peer review. Our next challenge is to educate the greater business world about the value added by this process. There are many ways we can deliver this message to bankers and other lending institutions that use financial information prepared by accounting firms. As CPA firms, we need to bring our peer reviews to the table. We need to present the results and explain the benefits of the process to the users of our services. We all understand the sometimes inconvenient commitment involved in peer review. We should use the process to add the most value possible. This involves using the peer review and its results as marketing and management tools.

For more information about the peer review program, contact Claire Blevins at (800) 782-2036 or claire@macpa.org.