La. Admin. Code tit. 46 § XIX-1503

Current through Register Vol. 50, No. 11, November 20, 2024

Section XIX-1503 - Peer Review and Practice Monitoring Programs

A. The board hereby requires firms that provide attest services, excluding engagements subject to a permanent inspection program of the Public Company Accounting Oversight Board, to participate in an approved peer review program enumerated in R.S. 37:77(G)(2)(a)(i), (ii), and (iii), and comply with the applicable requirements of that program. The purpose of this requirement is to improve the quality of financial reporting and to assure that the public can rely on the fairness of presentation of financial information on which CPA firms issue reports.

1. Each licensee or CPA firm, which performs attest services in Louisiana, shall at its own expense undergo and complete a peer review that has been accepted by the administering entity at least once each three years, and have its initial peer review in accordance with standards not less stringent than the American Institute of Certified Public Accountants (AICPA) Standards for Performing and Reporting on Peer Reviews.

2. Peer reviews shall be administered by the Society of Louisiana Certified Public Accountants (LCPA) or by another board approved administering entity or sponsoring organization, such as, a state society of CPAs, the National Peer Review Committee, or state board of accountancy program with standards substantially equivalent to the AICPA's standards.

3. Peer review programs must be approved by the board and conducted pursuant to standards not less stringent than standards applied by the AICPA and may be subject to the following:

a. evaluations by the board or its designee that assess the effectiveness of the peer review program under its charge;

b. notifying the board of the participation of firms enrolled in the peer review program and dates of the firm's most recently accepted peer reviews;

c. notifying the board of a firm's failure to cooperate or otherwise fulfilling the requirements of the peer review program, or of a firm's withdrawal, removal, or other termination from enrollment in the program.

4. Peer review reports shall be made available to the board after a reviews acceptance date by the administering entity or its peer review committee. "Acceptance" shall be as described in the AICPA peer review standards and its interpretations. Timely completion of peer reviews and submission of, or making available reports, in the manner and periods required under this Section, are conditions of holding a valid permit.

a. For reviews commencing on or after January 1, 2009 and administered by the Society of Louisiana CPAs, peer review reports shall be made available or submitted to the board by the administering entity by making them available on a secure website or other secure means. Such reports must be made available within 45 days of the acceptance date.

b. For reviews administered by another board approved administering entity or sponsoring organization, such as, a state society of CPAs, National Peer Review Committee, or state board of accountancy program with standards substantially equivalent to the AICPA's standards, peer review reports shall be submitted to the board by the firm directly or made available or submitted to the board by the sponsoring organization or administering entity by making them available on a secure website or other secure means. Such reports must be submitted or made available within 45 days of the acceptance date.

5. The reviewed firm must retain any or all of the documents related to the peer review in accordance with AICPA peer review standards. Upon request of the board, the reviewed firm shall timely submit such documentation to the board.

6. The objective of this reporting rule is primarily to reinforce the boards efforts to ensure that only appropriately qualified CPA firms are engaged in the offering and rendering of attest services subject to peer review.

7. For good cause shown, the board may grant or renew permits for a reasonable period of time pending the completion of a peer review or the submission of a report thereon.

B. Practice Monitoring Program

1. A reviewer(s) designated, employed, or engaged by the board will conduct a periodic review of peer review reports that are made available to the board. Such reviewer(s) will determine whether peer reviews are being properly submitted or made available to the board; will assess the significance of any reported or disclosed failures or deficiencies in complying with professional standards; will communicate with the reviewed firms as may be deemed necessary; will consider making referrals to the board of cases requiring further investigation by the board or its designees; and, will perform such other functions as the board may assign to its designees.

2. The reviewer or board designee may disclose, use, introduce, or testify with respect to information or records obtained or reviewed in connection with the practice monitoring program which are relevant in a proceeding before the board pursuant to R.S. 37:79, 80, 81 or 84.

3. Based upon the results of practice monitoring or additional investigations, the board may consider, by administrative hearing or by consent, corrective actions such as probation, suspension, practice limits or restrictions, additional continuing education, pre-issuance reviews, more frequent peer reviews, and other measures, including discipline against the reviewed firm and any individual licensees employed or contracted by the reviewed firm.

C. Confidentiality. Peer review reports and documents submitted to the board pursuant to this Section and comments of reviewers and of the board on such reports or attest documentation relating thereto shall be maintained in confidence, except that they may be communicated by the board, or its designees, to the licensees who issued the reports and as may be allowed under R.S. 37:77(H).

D. No CPA or CPA firm shall be required to become a member of any organization in order to comply with the provisions of §1503

E. Peer Review Oversight Committee (PROC)

1. The board shall appoint a Peer Review Oversight Committee (PROC) whose function shall be the oversight and monitoring of sponsoring organizations for compliance and implementation of the minimum standards for performing and reporting on peer reviews. The PROC shall consist of up to three members, none of whom are current members of the Board of Certified Public Accountants of Louisiana. These members shall be a licensee holding an active CPA certificate in good standing, and possess accounting and/or attest experience deemed sufficient by the board.

2. Responsibilities. At least one member of the PROC will attend all meetings of the Society of Louisiana Certified Public Accountants Peer Review Committee (PRC), or any successor thereof, and report periodically to the board on whether the PRC is meeting the requirements of these rules.

3. Compensation. Compensation of PROC members shall be set by the board.

4. Duties of the PROC:

a. observe the plenary sessions of the PRC which include the assignment of reviews to committee members and the summary meeting where the conclusions of the review committee members are discussed;

b. may periodically review files of the reviewers; and

c. may observe the deliberations of the PRC and report their observations to the board; and

d. make recommendations relative to the operation of the program; and

e. consider such other matters and perform such other duties regarding the peer review programs as may be necessary from time to time;

f. members of the Peer Review Oversight Committee must sign a confidentiality agreement with the administering entity annually.

La. Admin. Code tit. 46, § XIX-1503

Promulgated by the Department of Economic Development, Board of Certified Public Accountants, LR 17:1071 (November 1991), amended LR 23:1125 (September 1997), LR 26:1981 (September 2000), LR 35:236 (February 2009), Amended LR 431907 (10/1/2017).

AUTHORITY NOTE: Promulgated in accordance with R.S. 37:71 et seq.