Utah Admin. Code 156-26a-303a

Current through Bulletin 2021-19, October 1, 2021
Section R156-26a-303a - Renewal Requirements - Peer Review
(1) General.

In accordance with Subsections 58-1-308(3)(b) and 58-26a-303(2)(b), there is created a peer review requirement as a condition for renewal of licenses issued under the Certified Public Accountant Licensing Act, providing for review of the work products of CPA and CPA firm licensees.

(a) The purpose of the program is to monitor compliance with professional standards.
(b) The program shall emphasize education and may include other remedial actions when non-compliance is found.
(c) If a licensee is unwilling or unable to comply with or intentionally disregards professional standards, the administering organization shall refer the matter to the Division for consultation and determination of appropriate action.
(2) Scheduling of the Peer Review.
(a) A firm's initial peer review shall be assigned a due date to require that the initial review be started no later than 18 months after the date of the issuance of its initial report as defined in Subsection 58-26a-102(20).
(b) At least once every three years a firm engaged in the practice of public accounting shall undergo, at its own expense, a peer review commensurate in scope with its practice.
(c) The administering organization shall assign the year of review.
(d) A portion of the peer review may be performed by a regulatory body if the Board approves the regulatory body as an administering organization. This does not by itself satisfy the peer review requirement unless the other standards as specified in this rule are fulfilled by the regulatory body.
(3) Selection of a Peer Reviewer or inspector in the case of inspections mandated by law or regulatory bodies.

A firm scheduled for peer review shall engage a reviewer qualified to conduct the peer review. Regulatory bodies shall assign inspectors.

(4) Qualifications of a Peer Reviewer and inspectors.
(a) Peer reviewers must provide evidence of one of the two following minimum qualifications to the administering organization:
(i) acceptance as a peer reviewer by the AICPA; or
(ii) compliance with the qualifications required by the AICPA to qualify as a peer reviewer.
(b) Peer reviewers shall be licensed or hold a permit to practice as a CPA in Utah or another state or jurisdiction of the United States.
(c) The administering organization shall approve reviewers for reviews not administered by the AICPA.
(d) Regulatory bodies shall determine the qualifications of inspectors.
(5) Conduct of the Peer Review or inspection. Peer reviews shall be conducted as follows:
(a) Peer reviews shall be conducted according to the 'Standards for Performing and Reporting on Peer Reviews" promulgated by the AICPA, effective April 2019, which are hereby incorporated by reference and adopted as the minimum standards for peer reviews of all firms. This section shall not require any firm or licensee to become a member of the AICPA or any administering organization.
(b) The Board may review the standards used by the regulatory body to determine if those standards are sufficient to satisfy all or part of the peer review requirements, or what additional review may be required to meet the peer review requirements under this rule.
(6) If an administering organization finds that a peer review was not performed in accordance with this rule or the peer review results in a pass with deficiencies or fail report, the Peer Review Committee may require remedial action to assure that the review or performance of the CPA or CPA firm being reviewed meets the objectives of the peer review program.
(7) Review of Multi-State Firms.
(a) With respect to a multi-state firm, the Division may accept a peer review based solely upon work conducted outside of this state as satisfying the requirement to undergo peer review under this rule, if:
(i) the peer review is conducted during the year scheduled or rescheduled under R156-26a-303a(2);
(ii) the peer review is performed in accordance with requirements equivalent to those of this state;
(iii) the peer review:
(A) studies, evaluates, and reports on the quality control system of the firm as a whole in the case of system reviews; or
(B) results in an evaluation and report on selected engagements in the case of engagement reviews;
(iv) the firm's internal inspection procedures require that the firm's personnel from another office outside the state perform the inspection of the office located in this state not less than once in each three year period; and
(v) at the conclusion of the peer review, the peer reviewer issues a report equivalent to that required by R156-26a-303a(5) or in the case of an approved regulatory body, a report is issued under their standards.
(b) A multi-state firm seeking approval under R156-26a-303a(7)(a) shall submit an application to the administering organization by February 1 of the year of review establishing that the peer review it proposes to undergo meets all of the requirements of R156-26a-303a(5).
(8) A firm which does not perform services encompassed in the scope of minimum standards as set out in R156-26a-303a(5) (a) or (b) is exempt from peer review and shall notify the Division of the exemption at the time of renewal of its registration. A firm which begins providing these services must commence a peer review within 18 months of the date of the issuance of its initial report as defined in Subsection 58-26a-102(16).
(9) Mergers, Combinations, Dissolutions or Separations.
(a) Mergers or combinations: If two or more firms are merged or sold and combined, the surviving firm shall retain the year of review of the largest firm.
(b) Dissolutions or separations: If a firm is divided, the new firms shall retain the year of review of the former firm. If this period is less than 12 months, a new year shall be assigned so that the review occurs after 12 months of operation.
(c) Upon application to the administering organization and a showing of hardship caused solely by compliance with R156-26a-303a(10), the Division may authorize a change in a firm's year of review.
(10) If a firm can demonstrate that the time established for the conduct of a peer review will create an unreasonable hardship upon the firm, the Division may approve an extension not to exceed 180 days from the date the peer review was originally scheduled, as follows:
(a) A request for extension shall be addressed in writing by the firm to the Division with a copy to the administering organization responsible for administration of that firm's peer review.
(b) The written request for extension shall be received by both the Division and the administering organization at least 30 days prior to the date of scheduled review or the request will not be considered.
(c) The Division shall inform the administering organization of the approval of any extension.
(11) Retention of Documents Relating to Peer Reviews.
(a) All documentation necessary to establish that each peer review was performed in conformity with peer review standards adopted by the Board, including the peer review working papers, the peer review report, comment letters and related correspondence indicating the firm's concurrence or nonconcurrence, and any proposed remedial actions and related implementation, shall be retained for the relevant administering organization's designated retention period or 120 days, whichever is longer.
(12) Costs and Fees for Peer Review.
(a) All costs associated with firm-on-firm reviews will be negotiated between the firm and the reviewer and paid directly to the reviewer. All costs associated with committee assigned review team (CART) reviews will be set by the administering organization. The administering organization will collect the fees associated with CART reviews and pay the reviewer.
(b) All costs associated with the administration of the review process shall be paid from fees charged to the firms. The fees shall be collected by the administering organization. The schedule of fees shall be included in the administering organization's proposal. The fee schedule shall specify how much is to be paid each year and shall be based on the firm size.
(13) All financial statements, working papers, or other documents reviewed are confidential. Access to those documents shall be limited to being made available, upon request, to the Peer Review Committee or the technical reviewer for purposes of assuring that peer reviews are performed according to professional standards.

Utah Admin. Code R156-26a-303a

Amended by Utah State Bulletin Number 2017-23, effective 11/7/2017
Amended by Utah State Bulletin Number 2019-23, effective 11/7/2019