Peer Review General Information

Annual Report on Oversight

All Public Accounting Firms Required to Enroll in the Peer Review Program

Both the Society of Louisiana CPAs and the American Institute of CPAs (AICPA) require all firms which perform attest services 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.

In accordance with State Board Rules all CPA firms which perform attest services in Louisiana must undergo and complete a peer review at least once every three years. In addition, Title 46, Chapter 15 1503 5a provides that all peer review reports for reviews commencing on or after January 1, 2009 shall be made available to the board via a secure website within 45 days of acceptance. The Society’s Peer Review Committee has established procedures to ensure firms are in compliance with this rule.

Enrollment Cost

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:

$230 per year for sole practitioners
$335 per year for firms with two to five professionals
$440 per year for firms with six to ten professionals
$550 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.

Requirements of the State Board of Certified Public Accountants of Louisiana

All information related to State Board requirements can be found at the following link, including rules, news and more.
http://www.cpaboard.state.la.us

Period Covered by Review (year-end)

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.

Types of Reviews

Committee Appointed Review Teams (CART)

Committee Appointed Review Teams (CART)
Only available for Engagement Reviews. The Society randomly selects a reviewer based on geographical location 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. Billing 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.

Selecting a Reviewer - Areas of Experience

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)
	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
	18	Other Banks
	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
	405	Other Employee Benefit 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
	185	Extractive Industries - Mining
	186	Federal Financial Assistance Program
	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.

List of Reviewers

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.

Rates for Engagement Reviews

At your request, the Society will appoint a reviewer under a CART (Committee Appointed Review Team) approach for engagement reviews. The fee 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.

Engagement Reviews

This type of review is for firms that do not perform engagements under the SASs, Government Auditing Standards, examinations of prospective financial statements under the SSAEs, or audits of non SEC issuers performed pursuant to the standards of the PCAOB. However, firms eligible to have an engagement review may elect to have a System review. The objective of an engagement review is to evaluate whether engagements submitted for review are performed and reported on in conformity with applicable professional standards. It will include reading the financial statements or information submitted by the reviewed firm and the accountant’s report thereon, together with certain background information and representations.
Engagement Selection:
One engagement for each area of service performed by the firm must be selected:

Reviews of historical financial statements (performed under SSARS)
Compilation of historical financial statements with Disclosures (performed under SSARS)
Compilation of historical financial statements that omits substantially all disclosures (performed under SSARS)
Engagements performed under the SSAEs other than examinations of prospective financial statements.

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.

System Reviews

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

Peer Review Results

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 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 and, if applicable, the letter of response and working papers are received.

Common Reviewer Deficiencies

Listed below are deficiencies commonly committed by reviewers:

Failure to properly address and recognize repeat findings
Failure to recognize and identify significant deficiencies
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.

Preparing for a Subsequent Review

Read the report and, if applicable, the 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.