New York Mandates Accounting Firm Quality Reviews
New York State’s Accounting Reform law makes quality reviews of the attest services of accounting firms mandatory as of Jan. 1, 2012. The mandatory quality reviews apply to firms with three or more accounting professionals. With the recently enacted law, New York will be joining 44 other states and jurisdictions in which peer review is mandatory.
The new law does exempt many small firms (those with two or fewer professionals) from the mandatory quality review requirement. The “small firm” exemption from mandatory quality review is not available, however, to small firms that perform engagements under Government Auditing Standards.
The New York State Education Department mandatory quality review regulations permit organizations that administer quality reviews in New York State to use standards for performing and reporting on peer reviews that have been promulgated by a recognized national accountancy organization such as the American Institute of CPAs.
As a result, firms already enrolled in and having completed a peer review under the AICPA program may use their most recent peer review report and acceptance letter to meet the “quality review” filing requirements when the firm re-registers if the review was accepted within three years of the date the firm registers or re-registers with the New York State Education Department.
The Education Department has established a Quality Review Oversight Committee to oversee the mandatory quality review program and perform various functions enumerated in the regulations. The quality review regulations authorize the Oversight Committee to approve one or more sponsoring organizations to administer the quality review program in New York State. It is expected that the quality review program will be administered in a manner similar to the AICPA peer review program as presently administered in New York State by the New York State CPA Society’s Peer Review Committee and NYSSCPA peer review staff. NYSSCPA is in the process of applying for approval as a sponsoring organization for the mandatory quality review program in New York State.
The accountancy reform law requires that every CPA firm that provides attest services in New York State, except firms with two or fewer accounting professionals, obtain a quality review every three years and submit copies of the report and acceptance letter from the sponsoring organization to SED.
The requirement to be registered and undergo a quality review will also apply to any firm, regardless of the number of accounting professionals, that performs attest services for any New York State governmental agency, performs a governmental or proprietary function for the state or any of its municipalities, or performs services specifically required to be performed pursuant to New York State law.
Sole proprietorships and firms with two or fewer professionals (defined to be CPAs) may also voluntarily undergo a quality review. A firm that is headquartered outside New York State but performs attest services within the state is also subject to the mandatory quality review law and regulations.
To enroll for a peer review, a firm should submit a NYSSCPA Peer Review Program Enrollment Form, which is available at http://nysscpa.org/peer_review_forms/Fillable-Enrollment-Form.pdf, to the NYSSCPA. By enrolling, a firm agrees to have a peer review of its accounting and auditing practice once every three years.
Once a firm enrolls in the peer review program, the NYSSCPA will send a letter to the managing partner of the firm regarding the firm’s peer review due date six months prior to the due date.
New competency standards from the Board of Regents require that firm owners and employees authorized to sign attest reports for the firm must complete at least 1,000 hours of experience providing attest services or reporting on financial statements within the previous five years. They must also complete 40 hours of CPE in accounting, auditing or attest subject matter during the prior three calendar years, or in the calendar year in which the attest service is performed. This is in addition to meeting all professional standards relating to the attest services performed.
- Global Ethics Code Playing Catch Up with Latest Technology Developments
- Regulator Launches an Inquiry into Operations of a Birmingham Based Charity
- Leading UK Furniture Business Collapses into Administration
- How Technology is Shaping the Future of Financial Services for the Better
- ICAEW Signs MoU with ICAI
- Companies House Updates the Penalty Appeal Proceess for Late Filing
- In The Next Recession, You Can Make Money Rather Than Lose It