State Board Report

September 2007

Looks like the revisions to the AICPA’s peer review standards will be in agreement with the changes NASBA recently made to the Uniform Accountancy Act Model Rule 7-3, Thomas J. Sadler, chair of NASBA’s Compliance Assurance Committee concluded after attending the August 28 meeting of the AICPA’s Peer Review Board. Peer Reviews will be categorized as either “pass,” “pass with deficiencies” or “fail,” as stated in revised Model Rule 7-3 (see www.nasba.org for the July 2007 Model Rule changes). Some boards of accountancy and the General Accountability Office had recommended in their exposure draft responses to the AICPA that the Peer Review reports retain the “letter of comment,” to give readers more information about the quality of a firm, beyond “pass.”

The Peer Review Oversight Board’s Task Force has drafted the “AICPA Peer Review Board 2007 Annual Report on Oversight,” on which attendees at the August 28 meeting were asked to comment. Mr. Sadler noted that the last annual oversight report from the Peer Review Board (PRB) was distributed in 2003.

While Mr. Sadler thought the 2007 Annual Report “is very close to what we have envisioned for the Compliance Assurance Review Board’s reporting model,” he also pointed out that the PRB was “not independent and should say so — or restrict the report to internal use only.” He explained, “The report looks a lot like an engagement for agreed upon procedures under the attestation standards, but those standards require independence and the use of the report is restricted.” Susan S. Coffey, AICPA vice president of audit quality and professional ethics, and Mr. Sadler will present a session on developments in peer review and compliance assurance at NASBA’s 100th Annual Meeting.

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