July 2011
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To Protect and Serve
This new mandate … raises the bar for audit quality and adds transparency to a process that has traditionally been opaque when it comes to negative review reports.
Beginning January 1, 2012, nearly every CPA firm that provides attest services in New York State will be required to undergo a mandatory quality review—historically referred to as a peer review—once every three years. This important check on the performance of attest services will not only lead to a higher level of audit quality, independence, and objectivity, but it also represents a unique opportunity for New York State CPAs to help build a better profession in New York.
Never before in New York's history have audit firms been required to undergo a mandatory peer review. This new mandate, a provision of the 2009 accountancy reform law that introduced sweeping regulatory changes to the CPA profession in New York, raises the bar for audit quality and adds transparency to a process that has traditionally been opaque when it comes to negative review reports. With this new state requirement, a firm's failure to comply with the system of quality control over its attest services may now be reviewed by a newly created committee—the Quality Review Oversight Committee, a public board holding open public meetings—for possible referral to the Office of Professional Discipline for further action. If that referral results in a State Education Department (SED) hearing and the accompanying documents are admitted into evidence during that hearing, those documents will become public information, accessible to anyone who requests them.
An Invitation to Service
The AICPA has been requiring peer reviews of its member firms for years, and the Society has long been an administrator of that program in New York State—last year, approximately 75 NYSSCPA reviewers conducted nearly 600 peer reviews for the AICPA, almost all of the reviews conducted in New York. With the implementation of mandatory quality review, the Society expects the number of CPA firms in New York State seeking quality reviews to climb by approximately 67% to almost 1,000 reviews a year. To meet this need, the NYSSCPA, which SED officials confirmed will most likely become a sponsoring organization, or an organization that administers the state's mandated quality review program, is recruiting more reviewers to conduct these reviews.
So consider this an invitation: If you are licensed or otherwise authorized to practice public accountancy in this or any state, possess knowledge of professional standards applicable to attest practice, and are interested in improving audit quality, consider becoming an NYSSCPA quality reviewer. As an NYSSCPA member, you are already held to a higher set of ethical standards, as required by the Society's Code of Professional Conduct. Quality reviewers perform a paid service that results in a report that the public and audit firm clients might rely on as a seal of approval of a firm's system of quality control. Like all auditors, CPA quality reviewers must have high integrity and be meticulous, skeptical, and experienced—even more so if they are quality review team captains. The state requires these review leaders to have at least eight to 16 hours of introductory training relating to quality review performance, depending on the type of review required, as well as additional experience providing attest services.
Quality review training at the NYSSCPA begins with a two-day introductory course, followed by another, more advanced course three years later and then update courses every three years after that. As an administering entity, the NYSSCPA conducts peer review training about every six months. Contact NYSSCPA Quality Assurance Manager for Peer Review Mark Rachleff at mrachleff@nysscpa.org or contact Quality Assurance Administrator Theresa Campbell at tcampbell@nysscpa.org if you are interested in attending the next session. Your time commitment will be manageable, and the measure of service you provide to the profession and public will be invaluable.
Joanne S. Barry. Executive Director. The CPA Journal.