3 Colo. Code Regs. § 705-1.11

Current through Register Vol. 47, No. 22, November 25, 2024

Section 3 CCR 705-1.11 - PEER REVIEW REQUIREMENT

This Rule is promulgated pursuant to sections 12-20-204, 12-100-105(1)(b), 12-100-107(4), and 12-100-114(7), C.R.S.

A.INTRODUCTION

In the interest of public protection, the Board requires all certificate holders and registrants issuing attest and/or compilation reports to be enrolled in and undergo peer review at least once every three years.

Upon renewal of an active certificate or registration, all certificate holders and registrants, except those exempt from peer review as described in Rule 1.11, must attest to having undergone a peer review as provided in Rule 1.11 within the previous three years.

B.EXEMPTION FROM PEER REVIEW

1. A registrant that does not issue attest or compilation reports is exempt from the peer review requirements of this Rule 1.11.

2. A certificate holder who does not issue attest or compilation reports is exempt from the peer review requirements of this Rule 1.11.

3. A certificate holder who performs public accounting within a partnership, professional corporation, or limited liability company is exempt from the peer review requirements of this Rule 1.11 because the partnership, professional corporation, or limited liability company within which he performs public accounting is subject to the peer review requirements of this Rule 1.11 if it issues attest or compilation reports.

C.APPROVED PEER REVIEW SPONSORING ORGANIZATIONS, PROGRAMS, AND PEER REVIEW STANDARDS

1. The Board shall approve peer review Sponsoring Organizations, programs, and standards and may establish a Peer Review Oversight Committee (PROC) to make recommendations to the Board for its approval of such organizations, programs, and peer review standards. The Board adopts the following:

a. American Institute of Certified Public Accountants

b. Council of the Inspectors General on Integrity and Efficiency

c. Association of Local Government Auditors

d. International Organization of Supreme Audit Institutions

e. National State Auditors Association

The Board may approve other Peer Review Sponsoring Organizations and programs.

2. Any Board approved peer review program and any peer reviewer performing a peer review under this Rule 1.11 must utilize the standards for performing and reporting on peer reviews of the American Institute of Certified Public Accountants as provided in sections 12-100-107(4) and 12-100-114(7), C.R.S., or equivalent standards promulgated by a recognized national accountancy organization whose standards are generally accepted by other regulatory authorities in the United States and are acceptable to the Board.

3. The Board may terminate its approval of a sponsoring organization for cause following notice and opportunity for hearing. For purposes of this paragraph, "cause" includes, but is not limited to, failure to comply with the requirements of this Rule 1.11. The Board may approve the peer review program and standards of a peer review program organization not specifically identified in these regulations as Board-approved if the organization submits evidence satisfactory to the Board that the overall program and standards are at least equivalent to those of the AICPA Peer Review Program. At a minimum, the evidence must include the standards, procedures, guidelines, oversight process, training materials, and related documents used by those administering reviews, performing reviews, having reviews, and those considering reviews for acceptance. The Board may request any other documents/information from a peer review program organization that it determines appropriate in deciding whether to grant approval.

4. No certificate holder or registrant is required to become a member of any peer review sponsoring organization.

D.PEER REVIEWER QUALIFICATIONS AND DUTIES

1. A peer reviewer must hold an active certificate, license, or active/valid registration to practice public accounting, in good standing, issued by any state.

2. A peer reviewer must meet the peer reviewer requirements established in the Board-approved peer review standards.

3. A peer reviewer is subject to all provisions of the Act and the Rules when providing peer review services.

4. A peer reviewer must comply with all applicable provisions of the peer review standards when performing a peer review.

E.RETENTION OF DOCUMENTS RELATING TO PEER REVIEWS

1. Certificate holders and registrants subject to peer review must maintain all documentation necessary to establish that all peer reviews conformed to peer review standards. The documentation maintained by the certificate holder or registrant must include the following:

a. Documentation of the peer reviewer/reviewing firm qualifications;

b. Copies of all the peer review documents described in Rule 111(F);

c. All correspondence that indicates the certificate holder's or registrant's concurrence or non-concurrence with the results of the peer review; and

d. All proposed remedial actions and all information relevant to those remedial actions, including the implementation of the remedial actions.

2. The documents described in Rule 1.11 must be retained by the certificate holder or registrant until the completion of the two most recent subsequent peer reviews or for a period of five years from the date the peer review is accepted by the sponsoring organization, whichever is longer. If the certificate holder or registrant ceases to practice or merges with another certificate holder or registrant, the original certificate holder or responsible party for the original registrant must retain all peer review documents described in Rule 1.11 for a period of five years from the date the peer review is accepted by the sponsoring organization.

F.SUBMISSION OF PEER REVIEW DOCUMENTS

1. Submission of peer review Documents by certificate holders and registrants.

Certificate holders and registrants that have participated in a peer review must submit upon request within thirty days all documents listed in Rule 1.11 and the following documents to the Board:

a. Peer Review Report (accepted by the Sponsoring Organization);

b. The certificate holder's or registrant's letter of response (accepted by the sponsoring organization);

c. The acceptance letter from the sponsoring organization;

d. Letter(s) signed by the certificate holder or registrant accepting the documents with the understanding that the certificate holder or registrant agrees to take any actions required by the sponsoring organization; and

e. Letter signed by the sponsoring organization notifying the certificate holder or registrant that all required actions have been appropriately completed.

2. Submission of Peer Review Documents by Sponsoring Organizations.

a. The peer review documents required in Rules 1.11 through 1.11 shall be made available by the sponsoring organization to the Board via a secure website within thirty days of the date of the sponsoring organization's acceptance.

b. The peer review letter required in Rule 1.11 shall be made available by the sponsoring organization to the Board via a secure website within thirty days of the date that the certificate holder or registrant signs such letter.

c. The peer review letter required in Rule 1.11 shall be made available by the sponsoring organization to the Board via a secure website within thirty days of the date of the letter from the sponsoring organization notifying the certificate holder or registrant that the required actions have been appropriately completed.

G.EXTENSIONS FOR COMPLETING PEER REVIEWS

The Board will accept an extension for completing peer reviews granted by a sponsoring organization that does not affect a renewal period if the Board is notified by the certificate holder or registrant within fourteen days following the date of the letter from the sponsoring organization granting the extension. Extensions may be granted for the following reasons:

1. Health;

2. Military service; or

3. Other good cause clearly outside the control of the reviewed certificate holder or registrant.

H.BOARD ACTIONS

1. The Board may require sponsoring organizations to provide a list of certificate holders or registrants that are enrolled with the sponsoring organization and a list of those whose enrollment in the peer review program has been dropped or terminated.

2. Based upon the peer review outcome, the Board may require remedial actions, including specified CPE courses that the certificate holder or Board-designated members, partners, shareholders, or other CPAs within the registered firm must complete as a condition of renewal.

3. Information in peer review reports and other documents listed in Rules 1.11 and 1.11 are deemed reasonable grounds to initiate a complaint and/or investigation under section 12-100-124, C.R.S.

I.CHANGE OF REGISTRATION STATUS- PEER REVIEW STATUS

In the event a certificate holder's or registrant's practice is sold, dissolved, or merged with the practice of another certificate holder or firm, determination of the successor or predecessor's peer review year-end(s) and other peer review due date(s), if any, will be made in accordance with the sponsoring organization's guidance.

J.CONFIDENTIALITY OF PEER REVIEW INFORMATION

Peer reviewers shall not disclose or use for their own benefit any confidential information that comes to their attention from certificate holders or firms in carrying out their responsibilities, except that they may furnish such information in response to a legally enforceable subpoena.

K.PEER REVIEW PROGRAM OVERSIGHT COMMITTEE (PROC)

1. The Board may establish a committee to oversee sponsoring organizations' administration of their peer review programs. The committee may consist of not more than five members appointed by the Board.

2. Members are appointed for terms of three years, except that the terms of those first appointed shall be arranged so that, to the extent possible, an equal number of members will rotate off annually. There is no limit to the number of consecutive terms a member may serve.

3. The committee may fill vacancies occurring during a term for the unexpired term with members approved by the Board.

4. Each member must hold an active Colorado CPA certificate or an Active CPA certificate from a substantially equivalent jurisdiction.

5. Each member must have undergone and received a peer review report with a rating of pass on the most recent peer review for himself or his Firm.

6. No committee member may be a member of any state board of accountancy or one of its committees or perform any enforcement-related work for a state board.

7. Committee responsibilities may include but are not limited to:

a. Recommending to the Board the approval of sponsoring organizations, peer review programs, and peer review standards;

b. Monitoring and assessing the effectiveness of the sponsoring organizations, peer review programs, and peer review standards; and

c. Reporting to the Board whether sponsoring organizations are administering and facilitating peer review programs in conformity with Board-approved peer review standards.

8. No member of the committee may disclose information to the Board that would identify any specific certificate holder, registrant, or peer reviewer/reviewing firm except as required in this Rule 1.11.

9. Committee members shall not disclose or use for their own benefit any confidential information that comes to their attention in the course of performing their duties as members of the committee except as required under the Act, these Rules, or in response to a legally enforceable subpoena.

L.PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD (PCAOB)

For certificate holders or registrants registered with and inspected by the PCAOB, the Board approves the PCAOB's inspection process for reviewing practices subject to its authority to the extent that such practices are not included in the scope of peer review programs. Certificate holders or registrants receiving inspections under the PCAOB must also undergo a peer review under a Board-approved peer review program that covers the portion of the certificate holder's or registrant's practice not subject to the PCAOB inspection process, should it have such a practice.

M.PEER REVIEW REQUIREMENT

1. Pursuant to sections 12-100-107(4) and 12-100-114(7), C.R.S., any certificate holder or registrant subject to peer review that is licensed, registered, or issues attest or compilation reports:

a. Must enroll in an approved peer review program the earlier of within thirty days of licensure, registration, or immediately upon issuing the first attest or compilation report;

b. If the date of licensure, registration, or issuing the first attest or compilation report is less than eighteen months prior to the renewal of the certificate holder or registrant, the certificate holder or registrant must submit evidence of enrollment in an approved peer review program with the renewal application;

c. Must complete the peer review. "Complete" the peer review means the peer review documents have been submitted to the sponsoring organization's report acceptance body as defined in the Board-approved peer review standards within eighteen months following the report date of the initial engagement performed. Failure to timely complete a peer review as required in this paragraph is grounds for discipline including revocation; and,

d. Must undergo subsequent peer reviews in accordance with Board-approved peer review standards.

2. A certificate holder or registrant that satisfies the requirements of Rule 1.11 is deemed to have undergone a peer review for the purposes of renewal.

N.RENEWAL ATTESTATION

As a condition of renewal, certificate holders and registrants must attest that they either:

(1) have undergone a peer review as defined in Rule 1.11(M); or

(2) that they are exempt from the peer review requirement pursuant to Rule 1.11(B).

3 CCR 705-1.11

44 CR 03, February 10, 2021, effective 3/2/2021

44 CR 20, October 25, 2021, effective 11/14/2021

45 CR 11, June 10, 2022, effective 6/30/2022

45 CR 17, September 10, 2022, effective 9/30/2022

45 CR 20, October 25, 2022, effective 11/14/2022