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State Board Report

April 2016

The State Boards’ executive directors were surprised to hear the AICPA is considering reducing the number of its peer review administering entities (AE) from 41 to 8-10 within the next few years. Stephanie Peters, chief executive officer of the Virginia Society of CPAs, told the March conference that the AICPA had a dozen state CPA societies work on developing a proposal on the evolution of peer review administration, which had been sent to state CPA societies for their input. "We believe there will still be a role for state societies recruiting volunteers to be engaged with the State Boards on how it [the peer review process] is working for them," Ms. Peters said. The goal is to more effectively administer the process, she explained: "The administering entities now have 41 different ways of working."

Among the criteria for remaining an administering entity is performing at least 1,000 reviews per year, Todd Shapiro, Peer Review Board Chair and Chief Executive Officer of the Illinois CPA Society added. This raised questions from the State Board Executive Directors about the concept of equating bigger AEs to better AEs and how the state society programs would be merged. "The Virginia Society is committed to working with the State Board to see that they get what they need. We will not transition out until we are sure their needs will be met," Ms. Peters responded.

Since January 2015, the AICPA’s peer review program has required that firms which either fail their peer reviews twice or pass with deficiencies twice have only one chance to remediate their problems or they are out of the AICPA peer review program, Ms. Peters said. Effective May 2016, the AICPA is instituting an expedited drop process, she pointed out, which will reduce the period until a firm is dropped to 94 days and to 36 days for the firm to have a hearing.

How the evolving peer review system might be monitored by the State Boards will be discussed at the June NASBA Regional Meetings.

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