As audit firms prepare for the upcoming season, peer review challenges remain at the forefront. Changes in standards, increased regulatory scrutiny, and advancements in audit technologies are shaping the landscape and leaving firms wondering how they can stay ahead.
To address these concerns, we’ve compiled insight on the new peer review standards alongside actionable strategies so your firm can approach the year ahead with confidence.
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| Adapting to elevated audit peer review standards |
| Preparing as peer review season approaches |
| Audit planning: spotting common deficiencies |
| Encouraging inherent risk and procedure discussions |
| Harnessing technology to address audit peer review challenges |
Adapting to elevated audit peer review standards
With the new Statements on Quality Management Standards (SQMS) effective December 15, 2025, audit firms must adopt a risk-based approach and enhance their systems of quality management. Early preparation is crucial to avoid compliance risks, operational disruptions, reputational damage, and financial losses.
SQMS broadens “resources” to include human, technological, and intellectual resources. Firms must invest in training, technology, and methodological tools to maintain audit quality. Firms may utilize service providers when obtaining resources.
However, many firms are unprepared, believing they have time. This underestimates the effort needed for risk identification, policy updates, and training. Delaying your firm’s preparation can result in peer review deficiencies, operational inefficiencies, and reputational damage.
Preparing as peer review season approaches
As the audit peer review process grows more demanding, both firms undergoing reviews and the peer reviewers whose files are scrutinized as part of the peer review approval process face concerns on whether the process could become punitive, potentially putting firms at risk.
If your firm is like most, key challenges include ensuring thorough documentation to allow work papers to clearly demonstrate the basis for risk assessments and audit procedures. A common issue is the lack of clear linkage between these elements. Additionally, the reactive nature of peer reviews, which often examine files completed months earlier, adds to the complexity.
According to the Thomson Reuters Institute 2024 Audit Survey, most respondents agreed that their audit firms must evolve in their adoption of progressive technology like AI to keep pace with evolving peer review practices and audit standards. While no single obstacle stands in the way of audit firms adopting next-generation technologies, the delay in adoption could stem from a variety of challenges, including lack of resources, staff, or quite simply the time to integrate new technologies into their operations.
Audit planning: spotting common deficiencies
Due to gaps in identifying and documenting risks, many audits fail to comply with standards. While teams may understand their clients and recognize potential risks, they frequently fail to document these risks adequately in engagement tools or audit files, resulting in non-compliance.
A significant issue is the lack of specificity in risk identification. Many audit teams overlook evolving risks or fail to adjust their responses to audit risks from year to year. Current standards emphasize the need to assess risks at the relevant assertion level and directly link those risks to the nature, timing, and extent of audit procedures. Yet, many teams default to blanket assessments, such as categorizing everything as high risk, without fully considering or documenting inherent risk rationales or effective responses.
Another critical deficiency involves the documentation and understanding of controls designed to address significant risks. The challenge isn’t a lack of expertise but a gap in linking knowledge to effective procedures and risk assessments.
Encouraging inherent risk and procedure discussions
Not providing enough information or documentation is the main struggle in peer reviews, and often these tasks rely on the less experienced team members within the firm. How do you guide these individuals to utilize the proper technology and find risks when they do not have 30 years of experience under their belt?
To support less experienced staff members, firms should emphasize robust planning meetings where teams discuss risks, maintain lists of inherent risk discussions, and plan specific procedures to address identified risks. Early and thorough preparation helps teams align on their responsibilities and enhances efficiency during audits. Additionally, reviewing and challenging past procedures ensures they effectively meet audit goals, reducing the need for intensive supervision.
Bottom line? Preparation is everything. Having these robust discussions, and having them early, enables your team to hit the ground running. You should not only be looking at risks, but your procedures. This will bring more efficiency to your audits and minimizes the depth of supervision needed.
Harnessing technology to address audit peer review challenges
As the peer review process becomes more rigorous, auditors must harness technology to enhance risk assessment quality and comply with evolving standards. This means integrating new tools like data analytics, AI, and guided methodologies.
Enter Thomson Reuters Cloud Audit Suite, which integrates risk assessment, documentation, and procedural linkage to not only streamline workflows but also ensure that risks and responses are systematically documented, reducing compliance deficiencies and improving overall audit efficiency.
Partnering with a trusted provider like Thomson Reuters ensures an evolutionary transition, minimizing disruption to existing processes and maximizing the benefits of AI-driven audit technologies. Alongside a robust strategic plan, your audit firm can meet evolving peer review demands quickly while enhancing audit efficiency and quality.
