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What Peer Reviews Are Revealing as the New Quality Management Standards Take Hold

Writer: Michael Bryant
Michael Bryant
Oct 26
5 min read
Illustration of peer review with three people and sticky notes on a whiteboard; headline says What Peer Reviews Are Revealing

Firms built their risk assessments, wrote their policies, assigned responsibilities, and put a system of quality management in place. For many, it was one of the biggest internal projects in years.


Now comes the part that matters more. Showing that the system actually works.


Last October, we shared a readiness checklist to help firms prepare for the deadline. This is the follow-up: what recent peer review 2026 results reveal, and what reviewers will be looking for as quality management moves from a project to a practice.


First, What’s Different Now?

The new standards, led by SQMS No. 1, A Firm’s System of Quality Management, replaced the prior quality control standards with a risk-based approach. Firms set quality objectives, identify the risks to achieving them, design responses, and monitor and remediate on an ongoing basis.


As the Journal of Accountancy reported, the peer review process itself isn’t changing. Peer reviewers are asking different questions.


Two shifts stand out:

  • Leadership owns it. The firm’s managing partner or CEO assumes ultimate responsibility for the system of quality management.

  • The system gets evaluated. At least annually, the firm must evaluate its system and conclude whether its objectives are being achieved.


For many firms, that first annual evaluation falls within about a year of the December 15, 2025 implementation date.


That timing matters. A firm can’t credibly conclude its system operated effectively if monitoring didn’t happen throughout the year.


What Recent Results Are Telling Us

The most recent published results reflect reviews of work performed under the prior standards. But they’re still a useful guide, because the issues they surface don’t disappear under quality management.


  • System reviews: 93% pass, 7% pass with deficiencies, 0% fail

  • Engagement reviews: 74% pass, 22% pass with deficiencies, 4% fail

That’s one state’s data, not a national figure. However, the gap is worth thinking about.


Same profession. Very different results.


The difference makes sense once you consider what each review looks at. Engagement reviews go straight to the work product: the report, the financial statements, and the documentation behind them. When something’s missing there, it’s sitting right on the page.


The Findings Aren’t Exotic

The MNCPA’s prior-year summary of common findings reads like a checklist any firm could work through this month:

  • Reports that didn’t conform to professional standards, including reports that weren’t properly modified

  • Missing financial statement disclosures

  • Analytical procedures without documented expectations

  • Gaps in applying revenue recognition (ASC 606) and lease (ASC 842) requirements

  • Inadequate risk assessment procedures

  • Monitoring that wasn’t effectively implemented


None of these are unusual. They’re the everyday, avoidable issues that a fresh set of eyes tends to catch.


“Designed” Isn’t the Same as “Operating”

Many firms did excellent work documenting their systems by the deadline.


However, a documented system isn’t the finish line. Peer reviewers will be looking for evidence that the system is actually functioning: responses being performed, monitoring happening throughout the year, and findings being evaluated and remediated.


The oldest rule in peer review still applies, maybe more than ever. If it isn’t documented, it’s very hard to show it was done.


A monitoring activity that happened but was never recorded, or a root-cause discussion that never made it into writing, is difficult for a reviewer to credit.


Remediation Is the System Working

Finding a deficiency in your own system can feel like a setback. It isn’t.


The standards expect firms to identify issues, investigate root causes, and fix them. A firm that finds and remediates its own problems is demonstrating exactly what quality management was designed to do.


The firm that should be concerned is the one that hasn’t found anything.


Five Questions to Ask Before Your Next Peer Review 2026

1. Who owns our first annual evaluation, and when is it due?

Put it on the calendar, assign it, and decide now what evidence will support the conclusion.


2. What monitoring has actually happened since December 15, 2025?

If your monitoring plan says “year-end,” that may leave too little time to evaluate findings and remediate before the evaluation.


3. Are our report templates and disclosure checklists current?

Pull a sample of recently issued reports and financial statements. Check report language, required modifications, and disclosure completeness against current standards.


4. Have our quality risks changed since implementation?

New staff, new technology, new service lines, or a shift in client base can all create risks your system should address.


5. Do our higher-risk engagements get extra attention?

Single audits and specialized-industry engagements often warrant additional scrutiny relative to their risk.


Frequently Asked Questions

When is the first annual evaluation under SQMS No. 1 due?

SQMS No. 1 requires firms to evaluate their system of quality management at least annually. Since systems had to be designed and implemented by December 15, 2025, most firms should plan to complete their first evaluation within a year of that date and have monitoring evidence to support it.


What’s the difference between a system review and an engagement review?

A system review evaluates a firm’s system of quality management and is required for firms that perform audits or certain attestation engagements. An engagement review is for firms that perform only reviews, compilations, or certain other services, and it focuses on whether selected engagements comply with professional standards.


Does SQMS No. 1 apply to small firms and sole practitioners?

Yes. SQMS No. 1 applies to all firms that perform engagements under AICPA standards, including audits, reviews, compilations, and attestation work. The standard is designed to be scalable, so a small firm’s system can be simpler, but it still has to be designed, operating, monitored, and evaluated.


What is SQMS No. 2?

SQMS No. 2 addresses engagement quality reviews: who can serve as an engagement quality reviewer and how those reviews are performed and documented. The annual evaluation of a firm’s system of quality management is a requirement of SQMS No. 1, not SQMS No. 2.


Treat 2026 as Your Practice Round

The firms that walk into peer review with confidence aren’t necessarily the largest or the most resourced.


They’re the ones that looked at their own work first.


At BryMar CPA, we perform System, Engagement, and Quality Control peer reviews for CPA firms. We review firms of different sizes and practice areas, we see these patterns firsthand, and we understand how the new quality management standards are being applied in practice, not just on paper.


Whether your firm is preparing for its first review under the new standards or simply wants a collegial second set of eyes on its system and engagement files, we’re glad to help. We approach every engagement as a conversation among peers.


Know when your evaluation is due. Know what your monitoring shows. Fix what you find while there’s still time.


Connect with the BryMar team to talk through your firm’s peer review timeline and what to expect.


About the Author

Michael Bryant, CPA, is Co-Founder and Managing Partner of BryMar CPA, LLP. He leads the firm’s direction and brings deep audit and attest experience to client relationships, technical guidance, and team development, helping organizations understand their financials and approach audits with clarity and confidence.


Sources & Further Reading

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