The New York State Board of Regents appointed
four of the five required members of the state’s Quality
Review Oversight Committee (QROC), the oversight body of
the state’s new mandatory
quality review program that goes into effect Jan. 1, 2012. The four are all NYSSCPA
members. The fifth QROC member will be appointed by the
Regents at a later date.
QROC
was established by state
regulations, which were adopted by the Regents
on Dec. 14, 2010 and took effect on Jan. 1, 2011, pursuant
to the New
York accountancy reform law.
The NYSSCPA strongly supported the creation
of the state’s
mandatory quality review program and worked with the State
Education Department (SED) towards the program’s
adoption.
QROC Roster
The four QROC appointees are:
The
QROC members serve five-year terms, except for the terms
of these first appointees, which are arranged so that an
equal number of terms shall terminate annually as nearly
as possible. A QROC chair has not yet been named.
Quality Review
The accountancy reform law requires that every firm that
provides attest services in New York state -- except for
sole proprietorship firms or firms with two or fewer accounting
professionals -- undergo quality review every three years
as a precondition to firm registration and registration
renewal.
Sole proprietorships and firms with two
or fewer accounting professionals may voluntarily undergo
a quality review.
The requirement to undergo a quality review will also apply
to any firm, regardless of size, that performs attest services
for any New York state governmental agency, performs a
governmental or proprietary function for the state or any
of its municipalities or performs “services specifically
required to be performed pursuant to New York state law.”
The regulations provide for the acceptance
of peer reviews administered by entities located outside
of New York state
that are deemed by the SED to be substantially equivalent
-- conducted and reported on in accordance with the quality
review standards set forth in the proposal. Those quality
review standards would include the AICPA’s Standards
for Performing and Reporting on Peer Reviews.
According to New York State Board for Public Accountancy
Executive Secretary Daniel J. Dustin, these regulations
are, in practical terms, codifying an exercise that is
already in practice.
“Actually, what the law does is make mandatory a
voluntary process that has been in place in the profession
for well over 30 years,” Dustin told the Regents
in December.
Many firms, both large and small, already
participate in the AICPA’s peer review program, so the quality
review mandate “has a very limited impact,” he
said.
QROC’s
Role
In
addition to the approval and monitoring of sponsoring
organizations, including review and approval of each
sponsoring organization’s plan of administration,
the QROC will also be charged with informing the SED
of any problems related to the quality review program
that may require the department’s intervention,
making an annual recommendation as to the qualifications
of sponsoring organizations, assessing the quality review
program overall, reviewing each quality review report
to ensure firms are complying with the standards and
ensuring that any documents received from a reviewer
or firm are confidential and do not constitute a public
record.
When a review is complete, the firm will
submit the completed quality review report to the SED.
The regulations allow
firms to submit completed reviews through the AICPA’s
website.
If the
results of the QROC’s review indicate a firm is in
compliance with applicable professional standards and has
successfully completed a quality review performed by an
SED-approved reviewer, the QROC will recommend to the SED
that the quality review report be accepted. If the results
reveal some deficiencies or indicate that the firm was not
in compliance with applicable professional standards and
the QROC finds that the quality review report warrants disciplinary
action, then the QROC may refer the firm to the Office of
Professional Discipline.
