R156-26a-303a. Renewal Requirements - Peer Review Program

(1)(a) Under Subsections 58-1-308(3)(b) and 58-26a-303(2)(b), a licensee shall meet the peer review program requirement as a condition for the renewal of a license issued under Title 58, Chapter 26a, Certified Public Accountant Licensing Act. (b) If an administering organization performing a peer review of a licensee who is unwilling or unable to comply with or intentionally disregards professional standards, the administering organization shall refer the matter to the Division to determine the appropriate action. (2) A firm engaged in the practice of public accounting shall undergo a peer review as defined in Subsection 58-26a-102(14) that is: (a) performed at the firm's own expense; (b) commensurate in scope with the firm's practice; (c) performed at least once every three years; and (d) administered by an accounting firm as the administering organization; and (3)(a) The administering organization providing the peer review shall: (i) assign the year of review for the licensee; and (ii) as part of the peer review program: (A) review the work product of the licensee; and (B) monitor the licensee's compliance with professional standards. (b) If the administering organization finds the licensee is non-compliant, then the administering organization shall: (ii) emphasize education; and (iii) may include other remedial actions. (4) This subsection describes the timing of the initial peer review process and role of regulatory bodies performing peer review. (a) Within 18 months after the administering organization issues its initial report as defined in Subsection 58-26a-102(20), the administering organization shall assign a deadline to start the initial peer review. (b) the role of regulatory bodies performing peer reviews shall be as follows: (i) A regulatory body may perform a portion of the peer review if the Board approves the regulatory body as an administering organization. (ii) The peer review performed by a regulatory authority under Subsection R156-26a-303(4)(b)(i) does not satisfy the peer review requirement unless the regulatory body fulfills the other standards in this rule. (5) This subsection describes the assignment of peer reviewers or inspectors. (a) A firm scheduled for peer review as defined in Subsection 58-26a-102(14) shall engage a reviewer qualified to conduct the peer review. (b) A regulatory body shall assign the inspector. (6) This subsection describes the qualifications of a peer reviewer. (a) A peer reviewer shall provide evidence to the administering organization that the peer reviewer: (i) has been accepted as a peer reviewer by the AICPA; or (ii) meets the qualifications required by the AICPA to qualify as a peer reviewer. (b) A peer reviewer shall be licensed or hold a permit to practice as a CPA in Utah or in another jurisdiction of the United States. (c) The administering organization shall approve each reviewer for a peer review that is not administered by the AICPA. (d) A regulatory body shall determine the qualifications of inspectors. (7) This subsection describes the minimum standards for peer reviews. (a)(i) A peer reviewer shall conduct each peer review according to the Standards for Performing and Reporting on Peer Reviews promulgated by the AICPA, effective June 1, 2023, which are incorporated by reference. (ii) The requirement under Subsection R156-26a-303a(7)(a) does not require a firm or licensee to become a member of the AICPA or another administering organization. (b) The Board may review the standards used by the regulatory body to determine if those standards are sufficient to satisfy all or part of the peer review requirements. (8) If an administering organization finds that a peer review was not performed in accordance with this rule or the peer review results in a pass with deficiencies or fail report, the Peer Review Committee may require remedial action to assure that the review or performance of the CPA or CPA firm being reviewed meets the objectives of the peer review program. (9) This subsection describes the peer review standards for multi-state CPA firms. (a) For a multi-state firm, the Division may accept a peer review based solely upon work conducted by a peer reviewer outside of Utah as satisfying the requirement to undergo peer review under this rule, if: (i) the peer review is conducted during the year scheduled or rescheduled under Subsection R156-26a-303a(12); (ii) the peer review is performed in accordance with requirements equivalent to those of Utah; (iii) the peer review: (A) studies, evaluates, and reports on the quality control system of the firm as a whole in the case of system reviews; or (B) results in an evaluation and report on selected engagements in the case of engagement reviews; (iv) the firm's internal inspection procedures require that the firm's personnel from another office outside the state perform the inspection of the office located in Utah not less than once in each three-year period; and (v) at the conclusion of the peer review, the peer reviewer issues a report equivalent to that required by Subsection R156-26a-303a(7) or in the case of an approved regulatory body, a report is issued under their standards. (b) A multi-state firm seeking approval under Subsection R156-26a-303a(9)(a) shall submit an application to the administering organization by February 1 of the year of review that establishes the peer review it proposes to undergo meets the requirements of Subsection R156-26a-303a(7). (10) This subsection describes the requirements for a firm to be exempt from peer review. (a) A firm that does not perform services encompassed in the scope of minimum standards as set out in Subsection R156-26a-303a(7)(a) or (b) is exempt from peer review and shall notify the Division of the exemption at the time of renewal of its registration. (b) A firm exempt under Subsection R156-26a-303a(10)(a) that begins providing these services shall begin a peer review within 18 months of the date of the issuance of its initial report as defined in Subsection 58-26a-102(16). (11) This subsection describes the peer review obligations of firms following consolidations, mergers, and divisions. (a) If two or more firms are merged or sold and combined, the new firm shall retain the year of review of the largest of the firms that are merged or sold and combined. (b) If a firm is divided, each new firm shall retain the year of review of the original firm, except if the year of review is less than 12 months after the original firm was divided, then a new year of review shall be assigned. (c) Upon application to the administering organization and a showing of hardship caused solely by compliance with Subsection R156-26a-303a(12), the Division may authorize a change in a firm's year of review. (12) This subsection describes the process for extending the time for a peer review. (a) If a firm can demonstrate that the time established for the conduct of a peer review will create an unreasonable hardship upon the firm, the Division may approve an extension of up to 180 days from the date the peer review was originally scheduled. (b) A firm's request for extension under Subsection R156-26a-303a(12)(a) shall: (i) be in writing: (ii) be submitted to the Division; and (ii) include a copy to the administering organization responsible for administering the firm's peer review; (c) The firm shall send the request under Subsection R156-26a-303a(12)(a) to the Division and to the administering organization at least 30 days before the date of scheduled review or the request will not be considered; and (d) If the Division approves an extension, the Division shall notify the administering organization of the extension. (13) This subsection describes the file retention requirements for the administering organization. (a) Peer review documentation necessary to establish that each peer review was performed in conformity with peer review standards adopted by the Board including: (i) the peer review working papers; (ii) the peer review report; (iii) comment letters and related correspondence indicating the firm's concurrence or nonconcurrence; and (iv) any proposed remedial actions and related implementation; and (b) Peer review documentation under Subsection (13)(a) for the longer of: (i) 120 days; or (ii) the administering organization's retention schedule. (14) This subsection describes the allocation of costs associated with peer reviews. (a) The costs associated with a firm-on-firm review shall be: (i) negotiated between the firm and the reviewer; and (ii) paid directly to the reviewer. (b) The administering organization shall: (i) set the costs associated with committee assigned review team (CART); (ii) collect the fees associated with committee assigned review team (CART) reviews; and (iii) pay the reviewer. (c) The costs associated with the administration of the review process shall be: (i) paid from fees charged to the firms; (ii) collected by the administering organization; and (ii) based on a fee schedule included in the administering organization's proposal which: (A) specifies how much shall be paid each year; and (B) is based on firm size. (15) If requested by the Peer Review Program Committee or the technical reviewer performing a peer review, a CPA or CPA firm shall allow access to confidential documents including financial statements, working papers, or other documents to verify that the peer review is performed according to professional standards.