Society Supports Legislation Requiring Mandatory Peer Review for All Firms

By:
Ruth Singleton
Published Date:
Jun 8, 2017

IMG_6313-3NYSSCPA members and lobbyists participate in the Society’s inaugural Lobby Day on May 9, in support of mandatory peer review legislation: (l-r) Bill McCarthy, a lobbyist at Bolton-St. Johns; Kevin McCoy, chair of the NYSSCPA Legislative Task Force; Susan Barossi, a former NYSSCPA vice president; NYSSCPA Immediate Past Present F. Michael Zovistoski; Northeast Chapter President Jennifer Pickett; and John McCarthy, a lobbyist at Bolton-St. Johns.

 
New York State is the only state in the country that does not require mandatory peer review for all CPA firms that take on attest engagements for clients. The NYSSCPA is advocating for legislation (S6026A/A7895A), now pending in both chambers of the state Legislature, to change that.

New York currently exempts firms with two or fewer CPAs from mandatory peer review—periodic, third-party evaluation of a CPA firm’s accounting and auditing practices—unless they provide attest work for any governmental agency. (In that case, they must undergo an external peer review in conformity with governmental auditing standards of the U.S. comptroller general (yellow book).) The Society supports extending mandatory quality review/peer review to all firms, regardless of size, in order to the protect the public interest by ensuring best practices among all CPA firms that perform audits.

“This is a public protection issue,” said NYSSCPA President Harold L. Deiters III. “New York, a state known for the strength of its consumer protection laws, is the only state that permits this lack of oversight for smaller firms. Smaller firms have fewer resources at their disposal, so it just makes sense that these firms undergo a peer review of their quality controls, just like larger firms do.”

The bill also seeks to streamline the language used to describe the review process, using the term “peer review” throughout rather than “mandatory quality review.” This change was made because the process is known as peer review throughout the country among the public accountancy profession. 

The New York State Education Department’s (SED’s) Quality Review Oversight Committee has recommended for a number of years in its annual report to the SED to remove the small firm exemption.

In furtherance of its advocacy for this legislation, the Society, on May 9, held its inaugural Lobby Day at the capitol in Albany. Included among the 20 legislators members visited was Assembly Member Al Stirpe, who is one of the two sponsors of the legislation to eliminate the mandatory peer review exception. Sen. Pamela Helming is the other sponsor of the bill. Helming, a Republican from District 54, , introduced Bill No. S6026A, on May 10. Stirpe, a Democrat, from District 127, introduced Bill No. A7895A on May 18.

NYSSCPA leaders in attendance at Lobby Day were F. Michael Zovistoski, at the time the NYSSCPA president; Kevin J. McCoy, chair of the NYSSCPA’s Legislative Task Force; Susan M. Barossi, at the time an NYSSCPA vice president; and Jennifer Pickett, now president of the Northeast Chapter. Also attending were Society members Kenneth J. Hall, Heather Mowat and Edward A. Wells. They were joined by John McCarthy and Bill McCarthy, both lobbyists at Bolton-St. Johns. Society members divided into two groups, each of which met with 10 legislators, one at a time, in their chambers, from 10 a.m. to a little after 3:30 p.m. In total, the two groups visited 20 legislators: seven senators and 13 Assembly members.

The Society’s members who attended the event were pleased with responsiveness of the legislators they met.

“While I expected the representatives to be receptive, they were also engaged and asked great questions. Additionally, they acted on our request significantly faster than expected.  I highly recommend everyone to get involved with future lobby days,” Zovistoski said.

McCoy was likewise impressed: “We had a great Lobby Day that consisted of meetings with several legislators to gather support for the priority item on our legislative agenda for 2017, revisions to the mandatory quality review section of the law.  The legislators were all interested in what we proposed and had excellent questions.  Hopefully we will get the added support we need to get the bill passed in the current legislative session.” 

Update: On June 14, the Assembly passed the legislation by a vote of 108-0. The Senate bill has moved from the Higher Education Committee to the Rules Committee.


rsingleton@nysscpa.org

 

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