Task Force Submits Report

Task Force Submits Report
Sees Mandatory Peer Review, With Support for Members

Continued from the Home Page

The New York State Society of CPAs’ Ethics and Quality Control Task Force, in a report to the Society’s Executive Committee, proposed dozens of initiatives under the general categories of ethics, practice-monitoring and peer review.

A pivotal initiative would establish a Policy Committee to “provide a focus” for considering ethics requirements and peer review frameworks specific to the different services CPAs provide, such as tax consulting.

Other initiatives include seeking an interstate compact for standardizing ethics regulations, establishing a Quality Enhancement Support Team (QEST) to help members prepare for peer reviews, and fostering greater cooperation with state authorities.

“What we (the task force) kept coming back to was one concept,” Task Force Chair Brian Caswell said. “Given all the events that have played out in the media in the last two years, and the reaction by regulators, could we, focusing on what the Society controls…have prevented or reduced what happened?”

“What we can do is try to prevent this from happening in the future,” Caswell said.

Former President Jo Ann Golden launched the task force in 2002. The nine-member group conferred over those months, hashing out what one Executive Committee member described as a “three-legged stool” for the Society to tackle peer review and ethics issues. Caswell in October presented the group’s findings to the Executive Committee, which is expected to make modifications before sending it off to the board of directors for approval.

The report calls for mandatory “quality monitoring” for all NYSSCPA members to build “consistent professionalism,” an inherently complex process that will take much time to put into effect. The task force recommended the Society start the process by making the existing peer review program a requirement for members performing accounting and attest engagements.

Caswell said the Policy Committee and free counseling through the QEST—which would be comprised of volunteer members and support staff—are two important suggestions the task force made.

According to the task force’s report, the committee would monitor membership requirements for ethics, peer review and CPE and consider changes to such requirements, giving Society members a voice to weigh in on those issues. The committee would integrate ethics and quality control across all activities.

“What may be the greatest recommendation is the Policy Committee,” Caswell said. “We’re saying that all members should be peer reviewed, not just those with audit and accounting practices, but there’s no model to do that kind of peer review.”

It would be the Policy Committee’s charge to consider peer review models for different services, such as adopting the American Institute of CPAs’ proposed tax practice model, Caswell said.

Caswell says the task force suggested founding the free QEST service to make adaptation easier for practitioners who might look upon peer review with trepidation. The QEST would assist members in preparing for peer reviews, creating quality control programs and “expanding their competence” for new engagements.

“Everyone on the task force said when you go through your first peer review, you’re scared to death,” Caswell said. “We’re providing a way to reduce that fear.”

The task force also recommended that members performing accounting and attest services be required to take at least a minimum number of CPE hours in those topics. The Policy Committee would periodically review the CPE to determine if the requirement is adequate.

Finally, the task force made three “ethics recommendations.” The report calls for the NYSSCPA to cooperate as much as possible with the New York State Education Department’s Office of Processional Discipline in regard to ethics investigations. There also is a call for continued participation in the AICPA’s Joint Ethics Enforcement Program. The Policy Committee would consider what process should be followed for ethics cases that might take place outside the program. The Society, meanwhile, should consider expanding its CPE offerings in ethics, with the NYSSCPA underwriting some of the cost to members, the report states.

At the request of the Executive Committee, a copy of the task force report was mailed to the entire membership for its feedback.