AICPA Approves NYSSCPA Peer Review Program

The Newspaper of the NYSSCPA

AICPA Approves NYSSCPA Peer Review Program

By Mark Rachleff, CPA, NYSSCPA Peer Review Manager

The AICPA Peer Review Board (PRB) oversees the peer review programs administered by individual state societies nationwide. The AICPA recently concluded its oversight of the NYSSCPA peer review program administration for the 12-month period ended June 30, 2007. The AICPA Oversight Task Force concluded that the NYSSCPA “…has complied with the [peer review program] administrative procedures and standards in all material respects.”

“I am very pleased with the clean bill of health we received on the oversight and congratulate Peer Review Committee Chair David Moynihan on his stewardship of the committee’s activities over the past year,” said NYSSCPA President David A. Lifson. “The Board of Directors and I enthusiastically support the committee’s broad objectives for the upcoming year. We are firmly committed to continue improving the quality of our administrative and technical support capabilities to better serve the needs of program constituents—peer reviewers and reviewed firms alike—and the committee.”

Peer Review: What Is It?

A firm enrolled in the AICPA’s peer review program generally has its accounting, auditing and attest practices reviewed by another enrolled firm (“peer”) every three years. The review is designed to detect whether the reviewed firm’s financial statements (engagement reviews and report reviews) conform in all material respects with professional standards or, in a system review, whether the firm’s system of quality control provides reasonable assurance of complying with professional standards in all material respects.

The program’s ultimate objectives are twofold: education, and—when the peer review result warrants corrective action of the reviewed firm—remediation. With an ever-increasing number and complexity of professional standards, the program takes on greater importance as an additional learning opportunity for both the reviewed firm and the peer reviewer to share views and experiences.

AICPA Oversight: A Brief Look

Among other things, the goals of the AICPA state society oversight program are to determine whether:

The state society has complied with the administrative procedures established by the PRB;

Reviews are conducted and reported upon in accordance with peer review standards;

Reviews are conducted and accepted applying peer review standards on a consistent basis;

Information being provided to enrolled firms (via state society Web sites and other sources) is timely and accurate.

The PRB discharges its oversight responsibility through periodic offsite reviews of completed peer review reports and selected documentation as well as the biannual onsite visit to the society’s offices.

In the above context, here are the highlights of the NYSSCPA’s oversight results:

The oversight noted minor departures from program requirements with respect to correspondence with the Committee Report Acceptance Body task forces, reviewers and reviewed firms in the areas of dating of acceptance letters, follow-up action reminder letters to reviewed firms and certain other administrative matters.

Additional minor departures were noted in file retention procedures.

The oversight also commented that “greater attention” should be dedicated to program requirements for peer reviewer oversights.

The Society analyzed the oversight findings and implemented corrective action in all the cited areas.

“With continuing legislative efforts to make peer review mandatory in [New York State], the sustainability of the program will be dependent on the ability of the NYSSCPA peer review and information technology staff to develop more efficient and innovative processes and procedures to handle an increasing volume of peer reviews,” Moynihan said. “This past year, in response to the increased transparency of the program, increasing complexity of standards and greater demands for information, critical changes were made to our processes and procedures, our staff and our peer review committee membership. By continuing to add members to our peer review committee and providing additional guidance and training at committee meetings, the efficiency and effectiveness of the peer review acceptance process has improved significantly. In addition, we established two new task forces, staffed by senior committee members, to deal with special situations. The results of the oversight are a clear reflection of the success of NYSSCPA committee member and staff efforts over the past year.”

Mark Rachleff, CPA, NYSSCPA Peer Review Manager, can be reached at mrachleff@nysscpa.org.