Peer Review Engagement Letter Template for the United States

A Peer Review Engagement Letter is a legally binding contract that formalizes the relationship between a reviewing CPA firm and the firm being reviewed under the AICPA's mandatory peer review program. This document serves as your roadmap for navigating the complex quality control review process while ensuring compliance with professional standards and protecting both parties' legal interests.

When do you need this document?

You need a Peer Review Engagement Letter when your CPA firm is required to undergo its mandatory triennial peer review under AICPA standards. This applies whether you're conducting system reviews for firms with audit and attestation engagements or engagement reviews for firms performing only compilation, review, or preparation services. The letter is also required when you're the reviewing firm taking on peer review engagements for other practitioners. Additionally, if your firm is transitioning between different types of peer reviews due to practice changes, you'll need a new engagement letter reflecting the updated scope and requirements.

Key legal considerations

The engagement letter must clearly define the scope of work, specifying whether it's a system review or engagement review and the exact period being covered. Professional liability protection is crucial, so include clear limitations on the reviewing firm's responsibilities and potential exposure. Confidentiality provisions are essential given the sensitive nature of client information that may be reviewed, requiring compliance with the Gramm-Leach-Bliley Act and state privacy laws. Fee arrangements should be detailed to avoid disputes, including provisions for additional costs if the review scope expands. The letter should also address document retention requirements, as peer review workpapers must be maintained for specific periods under professional standards.

Legal requirements in United States

Under United States law, peer review engagement letters must comply with AICPA Standards for Performing and Reporting on Peer Reviews, which establish minimum requirements for review procedures and reporting. State CPA societies impose additional requirements that vary by jurisdiction, including specific reviewer qualifications and administrative procedures. The AICPA Code of Professional Conduct governs the ethical obligations of both parties, particularly regarding independence and objectivity. Contract law principles apply, meaning the letter must meet state-specific requirements for valid contracts, including consideration, mutual assent, and proper execution. Professional licensing regulations require that reviewing firms maintain appropriate qualifications and that reviewed firms cooperate fully with the process. State Boards of Accountancy may have specific requirements for peer review documentation and reporting that must be incorporated into the engagement terms.