Section 4-30-130 - Quality assurance review (QAR) requirements for licensed CPA firms(1)Peer review. Generally, all firms licensed in Washington state offering and/or performing attest services, as defined by WAC 4-30-010, or other professional services for which a report expressing assurance is prescribed by professional standards, are required to participate in a board-approved peer review program as a condition of renewing each CPA firm license under RCW 18.04.215 and WAC 4-30-114.(2)Approved programs. Board-approved peer review programs include: (a) The inspection processes of the Public Company Accounting Oversight Board (PCAOB);(b) Peer review programs administered by the American Institute of CPAs (AICPA) and/or their assigned administering entities (AE); and(c) Other programs recognized and approved by the board.(3)Enrollment in peer review: A licensed firm must enroll in a board-approved peer review program before issuing a report for each of the following types of service:(a) Review of historical financial statements;(b) Audit of financial statements, performance audits, or examination of internal controls for nonpublic enterprises;(c) Other professional services subject to Statements on Standards for Attestation Engagements. The schedule for the firm's peer review shall be established according to the peer review program's standards. The board does not require any licensee to become a member of any organization administering a peer review program.
(4)Participation in peer review. Every firm that is required to participate in a peer review program shall have a peer review in accordance with the peer review program standards.(a) It is the responsibility of the firm to anticipate its needs for review services in sufficient time to enable the reviewer to complete the review by the assigned review date.(b) Any firm that is dropped or terminated by a peer review program for any reason shall have 21 days to provide written notice to the board of such termination or drop and to request authorization from the board to enroll in another board-approved peer review program.(c) In the event a firm is merged, otherwise combined, dissolved or separated, the peer review program shall determine which firm is considered the succeeding firm. The succeeding firm shall retain its peer review status and the review due date.(d) A firm choosing to change to another peer review program may do so only if there is not an open active peer review and if the peer review is performed in accordance with the minimum standards for performing and reporting on peer reviews.(5)Reporting requirements. Every firm must provide the following information, along with the appropriate fees, with every application for renewal of a firm license by April 30th of the renewal year:(a) Certify whether the firm does or does not perform attest services, or compilation services, as defined by WAC 4-30-010, or other professional services for which a report expressing assurance is prescribed by professional standards in Washington state;(b) If the firm is subject to the peer review requirements, provide the name of the approved peer review program in which the firm is enrolled, and the period covered by the firm's most recent peer review;(c) Certify the result of the firm's most recent peer review. Failure to timely submit complete information and the related fee by the April 30th due date can result in the assessment of late fees. The board may waive late fees based on individual hardship including, but not limited to, financial hardship, critical illness, or active military deployment.(6)Documents required. Any firm required to undergo peer review per subsection (1) of this section is required to provide unlimited access to all peer review documents to the board, including mandatory participation in the AICPA Facilitated State Board Access (FSBA). (7)Document retention.RCW 18.04.390(4) requires a firm to retain audit and review records and documentation for a period of seven years after the firm concludes an audit or review of a client's financial statements.(8)Extensions. The board may grant an extension of time for submission of the peer review report to the board. Extensions will be determined by the board on a case-by-case basis.(9)Verification. The board may verify the certifications of peer review reports that firms provide.(10)Compilations. Compilations are excluded from board-approved peer review requirements. (a) A firm may be required to include compilations in any peer review program to satisfy membership requirements for the AICPA or any other professional organization; to satisfy licensing requirements in other jurisdictions; or for any other reason whatsoever.(b) A firm license is still required even if a firm only performs compilation services that are otherwise excluded from board-approved peer review.(11)Exemption from peer review.(a) Out-of-state firms that do not have a physical location in this state, but perform attest in this state, and are otherwise qualified for practice privileges under RCW 18.04.195 (1)(a)(ii)(A) through (D) or (b) are not required to participate in the board's program if the out-of-state firm participates in a board-approved peer review program or similar program approved or sponsored by another state's board of accountancy.(b) Firms that do not perform attest services, as defined by WAC 4-30-010, or other professional services for which a report expressing assurance is prescribed by professional standards are not required to participate in a peer review program, and shall request exemption on each firm license renewal application.(12)Quality assurance oversight.(a) The board will: (i) Annually appoint a peer review oversight committee, and such other committees as the board, in its discretion deems necessary, to provide oversight of the administration of approved peer review programs in order to provide reasonable assurance that peer reviews are being conducted and reported on in accordance with the minimum standards for performing and reporting on peer reviews;(ii) Consider reports from the peer review oversight committee;(iii) Direct the evaluation of peer review reports and related documents submitted by firms;(iv) Determine the appropriate action for firms that have unresolved matters relating to the peer review process or that have not complied with, or acted in disregard of the peer review requirements;(v) Determine appropriate action for firms when issues with a peer review report may warrant further action; and(vi) Take appropriate actions the board, in its discretion, deems appropriate to carry out the functions of the quality assurance review program and achieve the purpose of the peer review requirement.(b) The peer review oversight committee shall conduct oversight of approved peer review programs at least semiannually to provide reasonable assurance that such programs are in compliance with the minimum standards for performing and reporting on peer reviews.(13)Remedies. The board will take appropriate action to protect the public's interest if the board determines through the peer review process or otherwise that a firm's performance and/or reporting practices are not or may not be in accordance with applicable professional standards, the firm does not comply with peer review program requirements, or the firm does not comply with all or some of the reporting, remedial action, and/or fee payment requirements of subsection (5) of this section. The board's actions may include, but are not limited to: (a) Require the firm to develop quality control procedures to provide reasonable assurance that similar occurrences will not occur in the future;(b) Require any individual licensee who had responsibility for, or who substantially participated in the engagement(s), to successfully complete specific courses or types of continuing education as specified by the board;(c) Require that the reviewed firm responsible for engagement(s) submit all or specified categories of its compilation or attest working papers and reports to a preissuance evaluation performed by a board-approved licensee in a manner and for a duration prescribed by the board. Prior to the firm issuing the reports on the engagements reviewed, the board-approved licensee shall submit to the board for board acceptance a report of the findings, including the nature and frequency of recommended actions to the firm. The cost of the board-approved preissuance evaluation will be at the firm's expense;(d) Require the reviewed firm to engage a board-approved licensee to conduct a board-prescribed on-site field review of the firm's work product and practices or perform other investigative procedures to assess the degree or pervasiveness of nonconforming work product. The board-approved licensee engaged by the firm shall submit a report of the findings to the board within thirty days of the completion of the services. The cost of the board-prescribed on-site review or other board-prescribed procedures will be at the firm's expense; or(e) Initiate an investigation pursuant to RCW 18.04.295, 18.04.305, and/or 18.04.320.(f) Absent an investigation, the specific rating of a single peer review report is not a sufficient basis to warrant disciplinary action.(14) The board may solicit and review licensee reports and/or other information covered by the reports from clients, public agencies, banks, and other users of such information.Wash. Admin. Code § 4-30-130
Amended by WSR 14-16-102, Filed 8/5/2014, effective 9/5/2014Amended by WSR 16-17-036, Filed 8/9/2016, effective 9/9/2016Amended by WSR 19-22-005, Filed 10/24/2019, effective 1/1/2020Amended by WSR 24-21-116, Filed 10/21/2024, effective 11/21/2024Statutory Authority: RCW 18.04.055(9). 12-17-054, § 4-30-130, filed 8/10/12, effective 9/10/12. 10-24-009, amended and recodified as § 4-30-130, filed 11/18/10, effective 12/19/10; 08-18-016, § 4-25-820, filed 8/25/08, effective 9/25/08; 07-14-036, § 4-25-820, filed 6/26/07, effective 7/27/07; 05-01-135, § 4-25-820, filed 12/16/04, effective 1/31/05; 02-04-064, § 4-25-820, filed 1/31/02, effective 3/15/02. Statutory Authority: RCW 18.04.055. 94-02-071, § 4-25-820, filed 1/4/94, effective 2/4/94.