Practice Review

Scenario:  Section V of the Board's QAR Policy states:  "Effective with peer reviews commencing after January 1, 2003, the Board will not accept a peer review unless the peer review scope includes a review of the firm's Washington practice . . ."  We are not clear on this requirement.

Does this requirement mean that the external peer review team must physically visit and perform procedures at the office(s) located in Washington?

No. The Board does not believe the peer reviewer or review team must necessarily physically visit and perform procedures at the firm's Washington office(s) in order to meet this requirement. This requirement can be met by:  (1) The peer reviewer or review team undertaking procedures to confirm that the firm's accounting and auditing practice , system of quality control, etc., are effectively implemented in Washington state, and (2) Clearly stating in either the peer review report or a supplement to the peer review report that the scope of the peer review includes either (a) the firm's Washington practice or (b) each of the firm's offices located within each state in the US.

The Washington Board wants assurance that the peer reviewer considered the firm's Washington practice in determining the peer review scope and activities, and that the assertions relayed in the peer review report are applicable to the firm's Washington office(s).

Would it be acceptable if an "internal team" (of the firm undergoing review) performed such procedures at the Washington location and reported its results directly to the external peer review team (this is how it is currently done under the AICPA SEC review system)?

Yes, provided the external peer reviewer includes the firm's Washington office(s) in the peer review scope and report (or supplemental report). The Washington Board wants assurance that the reviewer considered the firm's Washington practice in determining the peer review scope and activities, and that the assertions relayed in the peer review report are applicable to the firm's Washington office(s).

Currently, for national-level firms, the external peer review team looks at the firm's national audit approach and the firm's administrative and internal control structure as a whole. Would that suffice for meeting this requirement?

Yes, provided the external peer reviewer includes the firm's Washington office(s) in the peer review scope and report (or supplemental report). The Washington Board wants assurance that the reviewer considered the firm's Washington practice in determining the peer review scope and activities, and that the assertions relayed in the peer review report are applicable to the firm's Washington office(s).

Would a "limited review" (i.e., something similar to the 2001 pilot program administered by the AICPA Practice Review Committee, in which a limited scope audit of agreed upon procedures report is issued) of the policies and procedures of one of the Washington offices suffice?

Yes, provided the external peer reviewer includes the firm's Washington office(s) in the peer review scope and report (or supplemental report). The Washington Board wants assurance that the reviewer considered the firm's Washington practice in determining the peer review scope and activities, and that the assertions relayed in the peer review report are applicable to the firm's Washington office(s).

Scenario:  Section V of the Board's QAR Policy states: ". . . or the report includes a detailed description of the peer review activities performed on the Washington practice."

Is the present peer review report issued under the SEC Practice Review Section peer review procedures, along with the accompanying explanation of peer review procedures as put forth by the SEC Practice Section Peer Review Committee adequate to meet this requirement?

Yes, provided the external peer reviewer includes the firm's Washington office(s) in the peer review scope and report (or supplemental report). The Washington Board wants assurance that the reviewer considered the firm's Washington practice in determining the peer review scope and activities, and that the assertions relayed in the peer review report are applicable to the firm's Washington office(s).

My firm is scheduled to participate in the Board's Quality Assurance Review (QAR) program this year.  My CPA firm is registered in Washington and Oregon, but I do not maintain an office in Washington State.  Will the AICPA peer review report performed by the Oregon Society of CPAs be acceptable to the Board?

Yes. Firms may request an exemption from the Board's QAR program for unqualified AICPA system or engagement peer review reports. If you do not have a qualifying peer review report, you must submit reports to the Board's QAR Committee for review.

My CPA firm is registered in Washington and Oregon, but I do not maintain an office in Washington state.  My firm is scheduled to participate in the Board's Quality Assurance Review (QAR) program this year.  Board Policy states the Board will not accept a peer review unless the peer review scope includes a review of the firm's Washington practice, or the report includes a detailed description of the peer review activities performed on the Washington practice. Since there is no Washington location, will the Board accept my peer review given that only the Oregon location will be included in the review?

Yes, provided the peer review meets the Board's requirements (i.e., the peer review report is an unqualified AICPA system or engagement peer review report.)

Board Policy #2000-3, Section V, states that effective January 1, 2003, the Board will not accept a peer review unless the peer review scope includes a review of the firm's Washington practice, or the report includes a detailed description of the peer review activities performed on the Washington practice.  Does the January 1, 2003 date refer to the peer review report issue date?

Yes.

Board Policy #2000-3 states: "Individuals participating as volunteer reviewers on the WSCPA  Peer Review Acceptance Committee may qualify for up to 32 hours each calendar year of technical CPE credit for actual time spent performing peer review reports."  Does this apply to any CPA conducting a peer review?

No.  It applies to CPAs who volunteer their time to participate on a society of CPAs peer review committee that discusses and approves peer review reports.  For example: volunteer service on one of the WSCPA's two Peer Review Report Acceptance Bodies qualifies for technical CPE credit.

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