Mandatory Peer Review for Public Accounting Firms

Firms that provide any attest services are required to participate in the Mandatory Peer Review Program.

Attest services include audits, reviews and examinations conducted under the following standards: Statements on Auditing Standards, Statements on Standards for Accounting and Review Services, Statements on Standards for Attestation Engagements, Government Auditing Standards, and audits of Securities and Exchange Commission (SEC) and non-SEC issuers performed pursuant to the standards of the Public Company Accounting Oversight Board (PCAOB).

In more common terms, attest services include Audits, Reviews, Attestation Engagements and Agreed-Upon Procedures Engagements.

Education Law §7410 requires firms to be enrolled in the Mandatory Peer Review Program as this service is considered an attest service. Therefore, the firm is required to enroll in the American Institute of Certified Public Accountants (AICPA) Peer Review Program and firms that perform engagements under PCAOB standards are required to have their peer review administered by the National Peer Review Committee. Annually the firm will review its engagements, including the level of service and industries that it performs in the AICPA’s Peer Review Integrated Management Application (PRIMA).

No. Compilation or Preparation Engagement services are not considered attest services. Firms that  provide only these services are  not mandated to participate in the Mandatory Peer Review Program but are encouraged to do so.

Initial performance of attest services means when the firm or a professional in the firm first begins the process to perform an attest service. This could include the receipt of a signed engagement letter from a client, the initial planning for an audit or other service, or the start of engagement fieldwork, whichever occurs first.

Firms that offer these services become subject to the Mandatory Peer Review Program and must complete specific actions as outlined below.

Firms MUST take the following actions:

• Within 30 days of the initial performance of attest services
  • Notify the Department, and
  • Provide proof of enrollment in the American Institute of Certified Public Accountants’ peer review program; and
• Within 18 months of the initial performance of attest services complete the peer review process.
   

Currently, the accepted Mandatory Peer Review Program is the American Institute of Certified Public Accountants’ (AICPA) Peer Review Program. The firm must enroll using the AICPA’s Peer Review Integrated Management Application (PRIMA), and follow the procedures posted on the AICPA’s website for enrolling in the peer review program.

Firms can enroll in the AICPA’s peer review program by submitting the AICPA’s Public Accounting Firm Creation Form. The form must be submitted to an Administrating Entity to enroll in the peer review program. Additional enrollment information can be found on the AICPA’s website at: www.aicpa.org/interestareas/peerreview.html

The enrollment letter will be issued to the firm when complete. The firm must submit the enrollment letter with its notification to the Department.

No. Firms that are not members of the AICPA are allowed to enroll in the peer review program.

Yes. Firms located in another state can enroll in that state’s peer review program as long as it is the American Institute of Certified Public Accountants’ (AICPA) peer review program. Your firm will need to make your documents accessible to the New York State Board for Public Accountancy and the Peer Review Oversight Committee. You may do this through the AICPA’s PRIMA website by selecting NY or you may submit copies of the documents via email.

The Administering Entity is the entity (usually a committee of a state society) responsible for administration of the AICPA Peer Review Program generally for firms in particular regions or states.

The firm owners must cooperate with the peer reviewer and administering entity. Once the peer review documents are issued, firms must make them available to the Department. The documents may be made available via the American Institute of Certified Public Accountants’ Peer Review Integrated Management Application (PRIMA) within thirty days of the date of issuance. If the documents cannot be provided via PRIMA, the firm must provide copies of the peer review documents to the Department by email within ten days of receipt of the documents.

A firm can receive the following peer review report ratings: pass, pass with deficiencies, or fail.

The American Institute of Certified Public Accountants (AICPA) Peer Review Standards outline the implications of receiving a rating other than pass. Please access the AICPA’s website for additional information.

The Peer Review Oversight Committee monitors firms which have received a rating other than pass. See the Peer Review Oversight Committee information below.
 

The licensee who supervised attest services must have had at least 1,000 hours of experience within the previous five years in providing attest services or reporting on financial statements gained through employment in government, private industry, public practice, or an education institution satisfactory to the State Board for Public Accountancy.

The peer review documents consist of the following: the Peer Review report issued by the reviewing firm, acceptance letter issued by the Administering Entity, letter of response (if applicable), and completion letter (if applicable).

The Peer Review Oversight Committee (PROC) reviews all firms that are dropped from the peer review program by the AICPA. The PROC will send the firm a letter and CPA Form 6PR – Peer Review, Competency, and Annual Statement seeking information about the firm’s decision to reenroll in the peer review program, the change in the services the firm performs, or other circumstances. As required by the Rules of the Board of Regents, the firm is required to respond within 30 days. 

A firm is not authorized to drop out and reenroll into the program to circumvent the Mandatory Peer Review Program requirements. Firms that have performed attest services and were dropped are not considered to be in compliance with the Mandatory Peer Review Program and may be referred to the Office of Professional Discipline for potential disciplinary action.
 

Firms that do not provide attest services are required to notify the Department that the firm does not perform attest services and it is not required to participate in the Mandatory Peer Review Program. Annually, firms are sent a CPA Form 6PR – Peer Review, Competency, and Annual Statement to report this information. Firms are required to return the form within 30 days of its receipt to the Department.

The Peer Review Oversight Committee (PROC) is a committee comprised of six members, with five of them required to be a Certified Public Accountant. The PROC is separate from the State Board for Public Accountancy (Board). The PROC is charged with overseeing the Mandatory Peer Review Program in New York State. Annually it reports to the Board and the Department on its monitoring activities and issues related to the peer review program.

The Department monitors the status of all firms that are required to be enrolled in the Mandatory Peer Review Program. As noted above, the PROC monitors those firms that receive a rating other than pass on its peer review report.
 

Your firm is required to respond to the monitoring letter within 30 days of its receipt to acknowledge that the PROC will monitor your firm’s compliance with the corrective actions prescribed by the administering entity.

The Peer Review Oversight Committee (PROC) will contact the firm regarding its noncooperation and evaluate the firm’s response. A failure to cooperate with the peer review program may be considered unprofessional conduct and may be subject to disciplinary action.

A firm that has been terminated or expelled from the peer review program by the American Institute of Certified Public Accountants (AICPA) will be referred by the Peer Review Oversight Committee (PROC) to the Office of Professional Discipline for potential disciplinary action.

Firm owners can contact the State Board for Public Accountancy or the Peer Review Oversight Committee for additional information. You may call, write, or email if you have questions regarding the Mandatory Peer Review Program. 

New York State Education Department
State Board for Public Accountancy / Peer Review Oversight Committee
89 Washington Avenue
2nd Floor, East Wing
Albany, New York 12234-1000
Phone: 518-474-3817, ext. 160
Fax: 518-474-6375
E-mail State Board for Public Accountancy: cpabd@nysed.gov
E-mail Peer Review Oversight Committee: PeerReviewCPA@nysed.gov