Society of Louisiana
Certified Public Accountants

2400 Veterans Blvd.,
Suite 500
Kenner, LA 70062
(504) 464-1040
1-800-288-5272

Peer Review General Information

Both the Society of Louisiana CPAs and the American Institute of CPAs (AICPA) require all firms engaged in the practice of public accounting to enroll in the Peer Review Program.

Firms that do not perform audits, reviews or compilations must also enroll, but the practice will not be reviewed and the firm will not be subject to any of the costs related to the program. If a firm begins to perform an audit, review and/or compilations, it must notify the Society immediately and have a review approximately 18 months after taking on the engagement. Doing just one audit, compilation or review will require a peer review.

The Society charges an annual fee to cover expenses related to administration of the program. There is no additional fee for scheduling or acceptance of the reports. The Peer Review Committee in Louisiana, with support of the Society's Board of Directors, adopted the annual fee rather than administrative charges because the administrative effort for all firms is very similar. All firms whose employees are members of the Society or AICPA will pay the annual fee. The fees are designed to provide a break-even program funding.The annual administrative fees are:

  • $180 per year for sole practitioners
  • $255 per year for firms with two to five professionals
  • $330 per year for firms with six to ten professionals
  • $405 per year for firms with more than ten professionals.
Firms will receive an invoice for the annual fee each February. Firms failing to pay the fee will be dropped from the AICPA and the Society. Employees of firms dropped from the peer review program will not be eligible for membership in the AICPA or the Society.

Through legislation in 1988, Louisiana was the first state to assure only one level of review. The Society's Peer Review Program will be acceptable to the State Board for compliance with its positive enforcement program. You meet this requirement by simply stating that you participate in the peer review program on your firm's annual registration form with the State Board. The results of your review will not be communicated to the State Board.

The only exception to this approach is if your firm is already under investigation by the State Board for quality or reporting deficiencies that were discovered through the positive enforcement program or by other means. In these rare cases firms will still have to submit sample reports or other information to the State Board as well as participate in the Peer Review Program.

The review normally covers a one-year period mutually agreed upon by the reviewer and the firm having the review. Engagements selected for review would be those with years ending during the year under review, unless financial statements covering a more recent year have been issued. The review period ordinarily must not end before the end of the previous calendar year.

If the firm has been reviewed previously, the same year end must be used for subsequent reviews, unless a change in the firm's practice requires a year end change. Any changes in the year end should be discussed with the Peer Review Department.

Committee Appointed Review Teams (CART)
Only available for Engagement and Report Reviews.  The Society randomly selects a reviewer based on geographical location and and firm size. The firm being reviewed can reject chosen reviewers for sufficient reason. Once a reviewer is selected, an engagement letter is prepared which includes the billing rate and number of engagement to be selected.. Billings rates are set by the Society, not by the reviewer.

Firm on Firm Arrangement
The firm being reviewed hires another CPA firm to conduct the peer review. This option gives firms more direct control over cost of the review.

The firm chosen to perform the peer review must be approved by the Society BEFORE commencement of the review. All reviewers are required to meet certain standards before performing peer reviews and they must also have expertise in the same practice areas as the firm being reviewed. If the review begins without approval, the firm could be subject to another review at their expense if the reviewer is not appropriately qualified.

It is the reviewed firm's responsibility to determine that the reviewer selected meets the qualifications to perform the review. The reviewer must be approved by the Society prior to commencement, even if the reviewer is selected from the AICPA website.

The following is a list of industry areas from the “Request for Scheduling Information" form.  Any areas that you select should be carefully matched with the reviewer to determine that he/she has the appropriate expertise to conduct your firm’s peer review.

1
 SEC Rules and Regulations
3
 Prospective Financial Information
5
Audits Under Government Auditing Standards (Yellow Book) (Excluding Single Audit Act (A-133) Engagements)
7
Audits of Federally Insured Depository Institutions (with more than $500 million or greater in total assets)
8
Audits of RUS Borrowers (formerly REA)
9
Other Audits
10
Audits of Employee Benefit Plans
11
Attest Services (excludes Prospective Financial Information)
13
Single Audit Act (A-133) Engagements Under Government Auditing Standards (Yellow Book)
14
Audits of Non-SEC Registrants under PCAOB Standards
126
FDIC Banking
222
HUD Program
320
School Districts
325
State and Local Government
380
Defined Contribution Plans Full Scope
385
Defined Contribution Plans Limited Scope
390
Defined Benefit Plans Full Scope
395
Defined Benefit Plans Limited Scope
400
ERISA Health and Welfare Plans
410
Other ERISA Plans
420
Industries Covered Under Single Audit Act A-133
110
Agricultural, Livestock, Forestry and Fishing
115
Airlines
125
Banking
135
Brokers and Dealers in Securities
140
Brokers and Dealers in Commodities
155
Common Interest Realty Associates
165
Construction Contractors
175
Credit Unions
180
Extractive Industries - Oil and Gas
186
Extractive Industries - Mining
190
Finance Companies
200
Property and Casualty Insurance Companies
205
Government Contractors
210
Health Maintenance Organizations
216
Hospitals
217
Nursing Homes
230
Investment Companies and Mutual Funds
240
Life Insurance Companies
250
Mortage Banking
260
Not for Profit Organizations
268
Personal Financial Statements
295
Real Estate Investment Trusts
300
Reinsurance Companies
308
Rural Utilities Service Borrowers
310
Savings & Loan Associations
330
Telephone Companies
335
Utilities

When selecting a reviewer, be certain to check his/her areas of experience.

For more details on Peer Review visit the AICPA's Web site.

To obtain a list of reviewers interested in performing reviews, please visit
http://peerreview.aicpaservices.org/resume/default.asp.  You can obtain a list of all reviewers or select industries specific to your needs.

Peer Review Standards have specific requirements that a reviewing firm and reviewers must meet to be eligible to perform reviews of other firms. We urge you to review the Standards for Performing and Reporting on Peer Reviews http://www.aicpa.org/members/div/practmon/2005_stds_notes.htm to determine whether a firm has the necessary qualifications to perform your firm's review.

The fee for an engagement or report review is based on a flat rate of $500 for the first engagement reviewed, and $250 for each subsequent engagement reviewed. The firm is required to pay the fees directly to the Society. The reviewer receives the entire amount the firm pays. No part of this fee kept by the Society.

This type of review is for firms that perform review, compilation engagements with full disclosures or compilation engagements in "Selected Information – Substantially all disclosures required by GAAP are omitted." These firms are not required to have a system review and are not eligible to have a Report review. The objectives of an engagement review will include whether the reviewed firm's working paper documentation conforms with the requirements of Statements on Standards for Accounting and Review Services (SSARs) and the SSAEs. Some examples of the documentation on a review engagement include the management representation letter and the documentation of the matters covered in the accountant's inquiry and analytical procedures. This will allow the letter of comment findings to be documentation or performance related.

Engagement Selection
One engagement for each area of service performed by the firm must be selected:

  • Reviews (historical financial statements)
  • Compilations with Disclosures (historical financial statements)
  • Compilations without Disclosures (historical financial statements)
  • Attestation engagements (prospective financial statements or assertions)

At least one engagement from each partner/owner issuing reports above must be selected. However, one of every type of engagement does not have to be selected as along as all levels of services are covered among the selected engagements.

Engagements selected will be those with periods ending during the year under review.

A minimum of at least two engagements must be selected for the firm.

This type of review is available to firms that perform only compilations that omit substantially all disclosures. However, firms that perform compilations classified as "Selected Information - Substantially All Disclosures Required by Generally Accepted Accounting Principles Are Not Included" under SSARs must have an Engagement Review. The objective of the report review is to enable the reviewed firm to improve the overall quality of its compilation engagements that omit substantially all disclosures. The reviewer will provide a report with a list of comments and recommendations based on whether the financial statements and related accountant's report appear to conform with the requirements of professional standards in all material respects. The types of comments are not limited to those that would result in a modified peer review report in an engagement review. The reviewer will identify any comments that were also noted during the firm's previous review.

Engagements selected will be those with periods ending during the year under review. A minimum of two engagements will be selected.

System reviews cover complete workpapers, including personnel and administrative files. The review will cover the firm's auditing, review, and compilation services as covered by Statements on Auditing Standards, Statements on Accounting and Review Services, Statements on Standards for Accountants Services on Prospective Financial Information and standards for financial audits contained in Government Auditing Standards issued by the US General Accounting Office. Other segments of a firm's practice, such as providing tax services or management advisory services are not encompassed by the scope of the review except to the extent they are associated with financial statements, such as reviews of tax provisions and accruals contained in financial statements.

The review will cover a cross section of the firms accounting and auditing hours and will include:

  • Engagements in which there is a significant public interest, such as financial and lending institutions and brokers and dealers in securities.
  • Government audits.
  • Engagements that are large, complex, or high-risk or that are the reviewed firm's initial audits of clients.
  • Engagements in specialized areas such as audits of employee benefit plans

The objective of the review is to help the firm improve the quality of its practice. When deficiencies are found, the firm is expected to identify and take corrective measures to prevent the same types of deficiencies from happening in the future. Such actions could include making appropriate changes in its quality control system or having its personnel take additional continuing professional education in identified areas. In addition, the peer review committee may ask the firm to agree to certain other actions the committee deems appropriate in the circumstances, such as the submission on an inspection report or a revisit by the reviewer.

Your review is not considered complete until the peer review committee has voted to accept the report and, if applicable, the letter of comments and letter of response.

You should not publicize the results of the review or distribute copies of the report to your personnel, clients, or others until you have been advised that the report has been accepted. It ordinarily takes 60 to 90 days to process a review once the report, letter of comments, letter of response and working papers are received.

Listed below are deficiencies commonly committed by reviewers:

  • Failure to properly address and recognize repeat findings
  • Failure to reference modified/adverse in Letter of Comments
  • Failure to recognize and identify significant deficiencies on engagement/report reviews
  • Failure to properly address system problems
  • Failure to "close the loop" on system reviews
  • Untimely submission of workpapers. All materials, including the firm's response must be submitted within 30 days of the exit conference or by the due date, whichever is earlier.
  • Failure to properly complete MFCs
    • Failure to include Professional Standards Reference in the MFCs
    • Failure to identify significant deficiencies in the MFCs
    • Failure to include checklist page and engagement number on MFCs
  • Failure to explain "No" answers
  • Failure to address the type of report to be issued with the firm prior to the exit conference.
  • Use of outdated program material and checklists
  • Improper completion of SRM
  • Failure to properly identify documentation deficiencies
  • Failure to identify substandard engagements
  • Failure to properly document risk assessment
  • Improper completion of Section IV Overall Findings and Conclusions.
  • Failure to include "although not required by professional standards" when recommendations go beyond the requirements of professional standards
  • Read the report and, if applicable, the letter of comments and letter of response associated with the prior review to be certain that the firm has taken actions outlined in your letter of response.
  • Prepare the applicable quality control policies and procedures questionnaire.

Peer Review Enrollment Form