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Society Studies Ethics and Peer Review Reorganization

By Robert H. Colson, Managing Director of Quality Enhancement

NEW YORK—The recommendations of a task force on quality control and ethics will be forwarded to the New York State Society of CPAs Board of Directors for consideration.

At its Jan. 14 meeting, the Executive Committee agreed to advance to the board the recommendations of the task force that was created in December 2002 to study the roles of peer review and ethics enforcement. Led by former NYSSCPA President Brian Caswell, the task force delivered its report to the Executive Committee in October 2003, whereupon the committee directed the Society staff to make the report available for feedback from the membership.

The Society featured the report in The Trusted Professional, placed it prominently on its website and mailed it to every member with a request for reactions and comments. The Executive Committee considered the report and comments from members at its December and January meetings, and took the following actions at its Jan. 14 meeting:

Interstate Compact

The task force recommended that the Society support the creation of an interstate compact to bring authority and standardization to ethics, peer review and continuing professional education (CPE). The Executive Committee decided that further evaluation was appropriate and deferred recommending such support pending further study and development by the Society staff.

Mandatory Peer Review

The task force recommended that peer review be required for all members performing engagements under SASs, SSAEs or SSARS. The Executive Committee indicated its support for this change, which would require a change in the Society’s bylaws.

Senior Policy Committee

The task force recommended the creation of a new standing senior policy committee focused on membership standards for quality monitoring and ethics. This new committee would not replace either of the current peer review or ethics committees, nor would it serve as an oversight committee for them.

The ethics committee would focus on investigations and discipline decisions. The peer review committee would focus on report acceptance. The policy committee would focus on the membership requirements for ethics and peer review. The new committee would be composed of NYSSCPA members and members of the public.

The Executive Committee supported the creation of the senior policy committee and recommended that its activities should also include:

  •   Determining whether existing or new peer review programs for accounting and auditing engagements satisfy NYSSCPA membership requirements.
  •  Periodically reviewing, updating and amending NYSSCPA membership requirements as they relate to quality monitoring, ethics and CPE (i.e., minimum requirements if performing accounting and attest services).
  • Developing new conceptual models for quality monitoring in areas of CPA practice and employment not covered by existing peer review.
  • Creating a disciplinary capacity to handle ethics cases that fall outside JEEP, the American Institute of CPAs’ Joint Ethics Enforcement Program.

Quality Enhancement Support Team

The task force recommended that the Society form a support team to assist members in preparing for peer review, creating or expanding their quality control programs, and expanding their competence for new accounting and attest engagements.

The quality enhancement support team (QEST) would consist of volunteers and staff who would field questions and provide support to members in their efforts to meet requirements for ethics and peer review. The QEST would be organized separately from the peer review and ethics committee. The Executive Committee supported the formation of the QEST.

Ethics Support and Investigations

The Executive Committee adopted the task force recommendations for greater cooperation with New York state in ethics investigation, for continued participation in JEEP and for an expansion of low-cost CPE offerings for ethics through the Society or its Foundation for Accounting Education.

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