AE Needs Board Approval

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Gaining the approval of a State Board of Accountancy for the acceptance of an administering entity of a Peer Review Program “is critical,” according to Todd Shapiro, chief executive officer of the Illinois Society of CPAs, which administers the program for six states (Illinois, Iowa, Kentucky, South Carolina, West Virginia and Wisconsin). Addressing the Executive Directors’ conference, he explained that the Board needs to work out a timeline with the Society and the AICPA. Whatever the state’s law is, that is with what the AE must comply, Mr. Shapiro explained and pointed out that in some cases the AE might not take on a state’s peer reviews because they would not want to comply with that state’s law.

Beth Thoresen, AICPA Director – Peer Review Operations, assured the Executive Directors that while the AICPA listened to their feedback on the AICPA’s proposal for changing the Peer Review Program’s administration, having a CPA on staff was one of the more controversial areas. It was determined that the skill set of a CPA was needed and it was important for a CPA to be a leader of the program. To overcome the familiarity threat that the AICPA determined exists, the administrators are being called on to submit a plan for mitigating familiarity. During 2018, the administering entities will be self-monitoring, with the administering entity benchmarks becoming effective May 1, 2018. PRIMA (Peer Review Integrated Management Application) is the AICPA’s web-based tool being used by administering entities, reviewers and firms to manage the peer review process, and it will be monitoring the benchmarks, Ms. Thoresen said. There will be consequences for not meeting benchmarks which will vary by severity of the failure, she explained.