This Rule is promulgated pursuant to sections
12-20-204,
12-100-105(1)(b),
12-100-107(4),
and 12-100-114(7),
C.R.S.
A.
INTRODUCTION
In the interest of public protection, the Board requires all
certificate holders and registrants issuing attest and/or compilation reports
to be enrolled in and undergo peer review at least once every three
years.
Upon renewal of an active certificate or registration, all
certificate holders and registrants, except those exempt from peer review as
described in Rule 1.11, must attest to having undergone a peer review as
provided in Rule 1.11 within the previous three years.
B.
EXEMPTION FROM PEER REVIEW
1. A registrant that does not issue attest or
compilation reports is exempt from the peer review requirements of this Rule
1.11.
2. A certificate holder who
does not issue attest or compilation reports is exempt from the peer review
requirements of this Rule 1.11.
3.
A certificate holder who performs public accounting within a partnership,
professional corporation, or limited liability company is exempt from the peer
review requirements of this Rule 1.11 because the partnership, professional
corporation, or limited liability company within which he performs public
accounting is subject to the peer review requirements of this Rule 1.11 if it
issues attest or compilation reports.
C.
APPROVED PEER REVIEW SPONSORING
ORGANIZATIONS, PROGRAMS, AND PEER REVIEW STANDARDS
1. The Board shall approve peer review
Sponsoring Organizations, programs, and standards and may establish a Peer
Review Oversight Committee (PROC) to make recommendations to the Board for its
approval of such organizations, programs, and peer review standards. The Board
adopts the following:
a. American Institute of
Certified Public Accountants
b.
Council of the Inspectors General on Integrity and Efficiency
c. Association of Local Government
Auditors
d. International
Organization of Supreme Audit Institutions
e.National State Auditors Association
The Board may approve other Peer Review Sponsoring
Organizations and programs.
2. Any Board approved peer review program and
any peer reviewer performing a peer review under this Rule 1.11 must utilize
the standards for performing and reporting on peer reviews of the American
Institute of Certified Public Accountants as provided in sections
12-100-107(4)
and 12-100-114(7),
C.R.S., or equivalent standards promulgated by a recognized national
accountancy organization whose standards are generally accepted by other
regulatory authorities in the United States and are acceptable to the
Board.
3. The Board may terminate
its approval of a sponsoring organization for cause following notice and
opportunity for hearing. For purposes of this paragraph, "cause" includes, but
is not limited to, failure to comply with the requirements of this Rule 1.11.
The Board may approve the peer review program and standards of a peer review
program organization not specifically identified in these regulations as
Board-approved if the organization submits evidence satisfactory to the Board
that the overall program and standards are at least equivalent to those of the
AICPA Peer Review Program. At a minimum, the evidence must include the
standards, procedures, guidelines, oversight process, training materials, and
related documents used by those administering reviews, performing reviews,
having reviews, and those considering reviews for acceptance. The Board may
request any other documents/information from a peer review program organization
that it determines appropriate in deciding whether to grant approval.
4. No certificate holder or registrant is
required to become a member of any peer review sponsoring
organization.
D.
PEER REVIEWER QUALIFICATIONS AND DUTIES
1. A peer reviewer must hold an active
certificate, license, or active/valid registration to practice public
accounting, in good standing, issued by any state.
2. A peer reviewer must meet the peer
reviewer requirements established in the Board-approved peer review
standards.
3. A peer reviewer is
subject to all provisions of the Act and the Rules when providing peer review
services.
4. A peer reviewer must
comply with all applicable provisions of the peer review standards when
performing a peer review.
E.
RETENTION OF DOCUMENTS RELATING TO
PEER REVIEWS
1. Certificate holders
and registrants subject to peer review must maintain all documentation
necessary to establish that all peer reviews conformed to peer review
standards. The documentation maintained by the certificate holder or registrant
must include the following:
a. Documentation
of the peer reviewer/reviewing firm qualifications;
b. Copies of all the peer review documents
described in Rule 111(F);
c. All
correspondence that indicates the certificate holder's or registrant's
concurrence or non-concurrence with the results of the peer review;
and
d. All proposed remedial actions
and all information relevant to those remedial actions, including the
implementation of the remedial actions.
2. The documents described in Rule 1.11 must
be retained by the certificate holder or registrant until the completion of the
two most recent subsequent peer reviews or for a period of five years from the
date the peer review is accepted by the sponsoring organization, whichever is
longer. If the certificate holder or registrant ceases to practice or merges
with another certificate holder or registrant, the original certificate holder
or responsible party for the original registrant must retain all peer review
documents described in Rule 1.11 for a period of five years from the date the
peer review is accepted by the sponsoring organization.
F.
SUBMISSION OF PEER REVIEW
DOCUMENTS
1. Submission of peer review
Documents by certificate holders and registrants.
Certificate holders and registrants that have participated in
a peer review must submit upon request within thirty days all documents listed
in Rule 1.11 and the following documents to the Board:
a. Peer Review Report (accepted by the
Sponsoring Organization);
b. The
certificate holder's or registrant's letter of response (accepted by the
sponsoring organization);
c. The
acceptance letter from the sponsoring organization;
d. Letter(s) signed by the certificate holder
or registrant accepting the documents with the understanding that the
certificate holder or registrant agrees to take any actions required by the
sponsoring organization; and
e.
Letter signed by the sponsoring organization notifying the certificate holder
or registrant that all required actions have been appropriately
completed.
2. Submission
of Peer Review Documents by Sponsoring Organizations.
a. The peer review documents required in
Rules 1.11 through 1.11 shall be made available by the sponsoring organization
to the Board via a secure website within thirty days of the date of the
sponsoring organization's acceptance.
b. The peer review letter required in Rule
1.11 shall be made available by the sponsoring organization to the Board via a
secure website within thirty days of the date that the certificate holder or
registrant signs such letter.
c.
The peer review letter required in Rule 1.11 shall be made available by the
sponsoring organization to the Board via a secure website within thirty days of
the date of the letter from the sponsoring organization notifying the
certificate holder or registrant that the required actions have been
appropriately completed.
G.
EXTENSIONS FOR COMPLETING PEER
REVIEWS
The Board will accept an extension for completing peer
reviews granted by a sponsoring organization that does not affect a renewal
period if the Board is notified by the certificate holder or registrant within
fourteen days following the date of the letter from the sponsoring organization
granting the extension. Extensions may be granted for the following
reasons:
1. Health;
2. Military service; or
3. Other good cause clearly outside the
control of the reviewed certificate holder or registrant.
H.
BOARD ACTIONS
1. The Board may require sponsoring
organizations to provide a list of certificate holders or registrants that are
enrolled with the sponsoring organization and a list of those whose enrollment
in the peer review program has been dropped or terminated.
2. Based upon the peer review outcome, the
Board may require remedial actions, including specified CPE courses that the
certificate holder or Board-designated members, partners, shareholders, or
other CPAs within the registered firm must complete as a condition of
renewal.
3. Information in peer
review reports and other documents listed in Rules 1.11 and 1.11 are deemed
reasonable grounds to initiate a complaint and/or investigation under section
12-100-124, C.R.S.
I.
CHANGE OF REGISTRATION
STATUS- PEER REVIEW STATUS
In the event a certificate holder's or registrant's practice
is sold, dissolved, or merged with the practice of another certificate holder
or firm, determination of the successor or predecessor's peer review
year-end(s) and other peer review due date(s), if any, will be made in
accordance with the sponsoring organization's guidance.
J.
CONFIDENTIALITY OF PEER REVIEW
INFORMATION
Peer reviewers shall not disclose or use for their own
benefit any confidential information that comes to their attention from
certificate holders or firms in carrying out their responsibilities, except
that they may furnish such information in response to a legally enforceable
subpoena.
K.
PEER
REVIEW PROGRAM OVERSIGHT COMMITTEE (PROC)
1. The Board may establish a committee to
oversee sponsoring organizations' administration of their peer review programs.
The committee may consist of not more than five members appointed by the Board.
2. Members are appointed for terms
of three years, except that the terms of those first appointed shall be
arranged so that, to the extent possible, an equal number of members will
rotate off annually. There is no limit to the number of consecutive terms a
member may serve.
3. The committee
may fill vacancies occurring during a term for the unexpired term with members
approved by the Board.
4. Each
member must hold an active Colorado CPA certificate or an Active CPA
certificate from a substantially equivalent jurisdiction.
5. Each member must have undergone and
received a peer review report with a rating of pass on the most recent peer
review for himself or his Firm.
6.
No committee member may be a member of any state board of accountancy or one of
its committees or perform any enforcement-related work for a state
board.
7. Committee
responsibilities may include but are not limited to:
a. Recommending to the Board the approval of
sponsoring organizations, peer review programs, and peer review
standards;
b. Monitoring and
assessing the effectiveness of the sponsoring organizations, peer review
programs, and peer review standards; and
c. Reporting to the Board whether sponsoring
organizations are administering and facilitating peer review programs in
conformity with Board-approved peer review standards.
8. No member of the committee may disclose
information to the Board that would identify any specific certificate holder,
registrant, or peer reviewer/reviewing firm except as required in this Rule
1.11.
9. Committee members shall
not disclose or use for their own benefit any confidential information that
comes to their attention in the course of performing their duties as members of
the committee except as required under the Act, these Rules, or in response to
a legally enforceable subpoena.
L.
PUBLIC COMPANY ACCOUNTING OVERSIGHT
BOARD (PCAOB)
For certificate holders or registrants registered with and
inspected by the PCAOB, the Board approves the PCAOB's inspection process for
reviewing practices subject to its authority to the extent that such practices
are not included in the scope of peer review programs. Certificate holders or
registrants receiving inspections under the PCAOB must also undergo a peer
review under a Board-approved peer review program that covers the portion of
the certificate holder's or registrant's practice not subject to the PCAOB
inspection process, should it have such a practice.
M.
PEER REVIEW REQUIREMENT
1. Pursuant to sections
12-100-107(4)
and
12-100-114(7),
C.R.S., any certificate holder or registrant subject to peer review that is
licensed, registered, or issues attest or compilation reports:
a. Must enroll in an approved peer review
program the earlier of within thirty days of licensure, registration, or
immediately upon issuing the first attest or compilation report;
b. If the date of licensure, registration, or
issuing the first attest or compilation report is less than eighteen months
prior to the renewal of the certificate holder or registrant, the certificate
holder or registrant must submit evidence of enrollment in an approved peer
review program with the renewal application;
c. Must complete the peer review. "Complete"
the peer review means the peer review documents have been submitted to the
sponsoring organization's report acceptance body as defined in the
Board-approved peer review standards within eighteen months following the
report date of the initial engagement performed. Failure to timely complete a
peer review as required in this paragraph is grounds for discipline including
revocation; and,
d. Must undergo
subsequent peer reviews in accordance with Board-approved peer review
standards.
2. A
certificate holder or registrant that satisfies the requirements of Rule 1.11
is deemed to have undergone a peer review for the purposes of
renewal.
N.
RENEWAL ATTESTATION
As a condition of renewal, certificate holders and
registrants must attest that they either:
(1) have undergone a peer review as defined
in Rule 1.11(M); or
(2) that they
are exempt from the peer review requirement pursuant to Rule 1.11(B).
