Society can help you navigate
new quality review law
By RICHARD E. PILUSO, CPA
NYSSCPA President
On Jan. 1, a new law requiring most firms to undergo a peer review of their attest services went into effect, implementing the final piece of the 2009 accountancy reform law and marking an important milestone in the state’s history of holding CPAs to a standard of exceptional performance and professional conduct.
The state now requires most New York CPA firms to obtain a peer review—or what the state is calling mandatory quality review—of its attest services. The state will also require firms to submit the quality review report and acceptance letter to the New York State Education Department every three years when firms reregister with the state. Attest services, according to the SED, include audits, reviews and examinations performed under the Statements on Auditing Standards, Statements on Standards for Accounting and Review Services, Statements on Standards for Attestation Engagements, Government Auditing Standards and audits of non-SEC issuers performed according to PCAOB standards.
Some firms are exempt from the MQR requirement. Unincorporated sole proprietors and firms with two or fewer CPAs that don’t perform attest services for state or municipal governments, or that do not perform attest services pursuant to New York state law, might be eligible to opt out of MQR—but these firms can also choose to voluntarily undergo quality review. New York state firms providing attest services for a government agency, board or division, municipality or public corporation, or providing attest services that are required by state law, are required to comply with MQR, regardless of the size of the firm.
Once you have determined whether you must comply with the new MQR law, your firm’s next step should be to enroll in the peer review program of a sponsoring organization. By enrolling, your firm agrees to have a review of its accounting and auditing practices performed once every three years. The NYSSCPA has applied—and is expected to be approved —to administer peer reviews with the Quality Review Oversight Committee, the five-member panel established to approve and monitor sponsoring organizations and generally oversee the MQR program. As a quality review sponsor, the NYSSCPA will determine an appropriate due date for your firm’s first review (within 18 months of enrollment, as required by law) and will provide additional instruction on how to complete the peer review at least six months prior to the due date.
For firms enrolled in the AICPA’s practice monitoring program, there is good news: In most cases, such firms are already satisfying the new MQR requirements for acceptable review. The NYSSCPA will continue to administer the AICPA review program, so firms currently enrolled and participating in this program should not need to take additional action to comply with the new MQR law.
Previously, the NYSSCPA performed approximately 1,800 peer reviews in every three-year period, or about 600 reviews annually, as a sponsor of the AICPA’s practice monitoring program.
As a result of MQR, we estimate that in 2012 the NYSSCPA will perform an additional 1,000 reviews every three years, for a total of 2,800 during each three-year period or more than 900 each year. Statewide, we expect to see a 67 percent increase in the number of CPA firms in New York seeking quality reviews under the new law.
The Society is currently seeking qualified professionals to help perform these reviews. The NYSSCPA provides training for those interested in helping to improve audit quality in New York; contact Peer Review Administrator Theresa Campbell at tcampbell@nysscpa.org or Peer Review Technical Manager Mark Rachleff at mrachleff@nysscpa.org for information about upcoming training sessions.
This is certainly an exciting time for the profession. I hope that you, like me, find the state’s demand for superior performance, as illustrated by the implementation of MQR, to be a point of pride in our profession.
This new law will impact many firms that were previously exempt from peer review, and the MQR requirement, like any major change in the way we work, can seem complicated and overly complex at first. For those firms that have never had a peer review, I would recommend that you consider doing an assessment, or “unofficial review,” of your quality control procedures, or have someone do it for you. This should give you a good indication of any reportable deficiencies that may exist in your practice, and while it will incur some extra cost to you, it could also be a dose of preventive medicine.
There are sure to be questions for many CPAs, so know that the NYSSCPA is here to help. The Society’s Peer Review staff is highly trained and familiar with the MQR requirements, and is ready to offer guidance to help you navigate these most recent changes to our profession.
For additional information or to enroll in the NYSSCPA Peer Review Program, visit www.nysscpa.org/page/government-affairs/ mandatory-quality-review or call 212-719-8300 to speak with our Peer Review staff.
