Current through Register Vol. 28, No. 3, September 1, 2024
10.1
A CPA firm that does not maintain an office in Delaware and is practicing
certified public accountancy through an individual practicing pursuant to the
practice privilege afforded by 24 Del.C. §
109 and Section
8.0 is not required to have a CPA firm
permit to practice or otherwise notify the Board.
10.2 Each firm which intends to be or is
engaged in the practice of public accountancy in Delaware shall be required to
obtain and maintain a valid permit to practice. A sole proprietor is required
to hold both an individual permit to practice public accountancy and a firm
permit to practice public accountancy.
10.3 Each firm that is engaged in the
practice of certified public accountancy with an office in Delaware shall be
required to obtain and maintain a valid permit to practice certified public
accountancy. A sole proprietor is required to hold both an individual permit to
practice certified public accountancy and a firm permit to practice certified
public accountancy.
10.4 Each
applicant for issuance of an initial firm permit to practice certified public
accountancy must be enrolled in a peer review program pursuant to subsection
10.12.
10.5 Requirements
10.5.1 Each applicant for issuance or renewal
of a firm permit to practice public accountancy shall be required to show that:
10.5.1.1 Each principal who performs services
in Delaware, who performs services for a client located in Delaware, or who is
responsible for the accounting work in Delaware, holds a valid Delaware
individual permit to practice public accountancy or certified public
accountancy; and
10.5.1.2 Each
employee who performs services in Delaware or who performs services for a
client located in Delaware holds a valid individual permit to practice public
accountancy or certified public accountancy.
10.5.2 For purposes of 24 Del.C. §
110 and this Section, employees of
a firm with its principal offices outside of Delaware that work in excess of 80
hours in Delaware or who work for a client in Delaware must have a valid
Delaware individual permit to practice.
10.6 Each applicant for issuance of an
initial firm permit to practice public accountancy must be enrolled in a peer
review program pursuant to subsection 10.12.
10.7 An applicant for issuance or renewal of
a firm permit to practice certified public accountancy or public accountancy
shall be required to register each office of the firm within Delaware with the
Board, and to show that each such office is under the charge of a person
holding a valid Delaware permit to practice.
10.8 Notification of changes by firms.
10.8.1 A firm registered pursuant to 24
Del.C. §
111 shall file with the Board a
written notification of any of the following events concerning the practice of
certified public accountancy or public accountancy within Delaware within 30
days after its occurrence:
10.8.1.1 Formation
of a new firm;
10.8.1.2 Addition of
a partner, member, manager or shareholder;
10.8.1.3 Retirement, withdrawal or death of a
partner, member, manager or shareholder;
10.8.1.4 Any change in the name of the
firm;
10.8.1.5 Termination of the
firm;
10.8.1.6 Change in the
management of any branch office in Delaware;
10.8.1.7 Establishment of a new branch office
or the closing or change of address of a branch office in Delaware;
and
10.8.1.8 Issuance of the firm's
first issued financial statements and accountant's reports for each level of
service described in subsection 10.12; or
10.8.1.9 The occurrence of any event or
events which would cause such firm not to be in conformity with the provisions
of the Delaware Code or this regulation.
10.8.2 In the event of any change in legal
form of a firm, such new firm shall within 30 days of the change file an
application for an initial permit in accordance with this regulation and pay
the fee required by this regulation.
10.9 Certified public accounting and public
accounting firms practicing as corporations organized pursuant to Delaware law
must be organized in compliance with The Professional Service Corporation Act,
8 Del.C. §
601, et. seq.
10.10 All firms and accountants practicing in
firms shall be bound by professional responsibility standards no less stringent
than those stated in 8 Del.C. §
608. Each applicant for issuance or
renewal of a firm permit to practice certified public accountancy or public
accountancy shall be required to cause a duly authorized individual to verify
under oath that upon issuance by the Board of a firm permit to practice, the
firm will be bound by professional standards no less stringent than those
stated in 8 Del.C. §
608.
10.11 Certified public accounting and public
accounting firms may not practice using firms names that are misleading as to
organization, scope, or quality of services provided.
10.12 Peer Review
10.12.1 Definitions. The following words and
terms have the following definitions when used in Section
10.0:
"Enrollment in a peer review program" means a firm is
required to follow all requirements of the peer review process, cooperate with
those performing and administering the peer review, comply with the peer review
standards and inform sponsoring organizations when firm changes occur.
"Peer review programs" mean the sponsoring organization's
entire peer review process, including the standards for administering,
performing, and reporting on peer reviews, oversight procedures, training, and
related guidance materials. Peer review programs include any Board-approved
peer review program, which utilizes standards for performing and reporting on
peer reviews by a recognized national accountancy sponsoring organization whose
standards are generally accepted by other regulatory authorities in the United
States, including the AICPA Standards for Performing and Reporting on
Peer Reviews.
"Peer review standards" mean the Board-approved
professional standards for administering, performing and reporting on peer
reviews.
"Peer reviewer/reviewing firm" means a certified public
accounting firm responsible for conducting the peer review, holding a valid and
active license to practice public accounting in good standing by Delaware or
some other state, and meets the peer reviewer qualifications to perform peer
reviews established in the Board-approved peer review standards.
"Sponsoring organization" means a Board-approved
professional society, or other organization responsible for the facilitation
and administration of peer reviews through use of its peer review program and
peer review standards.
10.12.2 Enrollment in an approved peer review
program, including peer review programs or other comparable programs that have
been approved by the Board, as a condition for renewal of permit.
10.12.2.1 In furtherance of its duty to
protect the public regarding attest and compilation services, the Board
requires all firms offering or rendering such services to be enrolled in a
Board-approved peer review program and to comply with the applicable standards
and guidance of that program.
10.12.2.2 A firm is not required to enroll in
a Board-approved peer review program if its only level of service is performing
preparation of financial statements (with or without disclaimer reports) under
Statements on Standards for Accounting and Review Services. However, if the
firm elects to enroll in a Board-approved peer review program, it is required
to have a peer review which would include preparation of financial statements
within the scope of the review.
10.12.2.3 On and after July 1, 2017, each
applicant for renewal of a permit to practice under 24 Del.C. §
108 or 24 Del.C. §
110 in the case of a permit holder
who issues compilation reports to the public other than through a CPA or PA
firm, and each applicant for renewal of a firm permit to practice under 24
Del.C. §
111 shall furnish in connection
with their renewal, evidence of enrollment in a Board approved peer review
program. Such evidence shall be at the Board's discretion and may consist of a
check box on the renewal form. Further proof of enrollment shall be at the
Board's discretion.
10.12.2.4 A
firm enrolled in a Board-approved peer review program shall schedule, undergo
and complete its initial peer review in compliance with the sponsoring
organization's peer review standards and related guidance. Ordinarily, a firm's
initial peer review is due 18 months from the date it enrolled or should have
enrolled in a Board-approved peer review program.
10.12.2.5 A firm enrolled in a Board-approved
peer review program shall schedule, undergo and complete its subsequent peer
reviews in compliance with the sponsoring organizations peer review standards
and related guidance. Subsequent peer reviews shall be completed such that the
peer review has taken place and all peer review materials are submitted to the
sponsoring organization within 3 years and 6 months from the peer review year
end of the previous peer review.
10.12.2.6 The Board may accept extensions for
completing peer reviews granted by sponsoring organizations provided the Board
is notified by the firm within 14 days from the date of the letter from the
sponsoring organization granting the extension. Extensions may be granted for
the following reasons:
10.12.2.6.1
Health;
10.12.2.6.2 Military
service; or
10.12.2.6.3 Other good
cause clearly outside of the control of the firm. For good cause shown, the
Board may grant or renew applications for a reasonable period of time pending
completion of the firm's peer review.
10.12.3 Approved Peer Review Sponsoring
Organizations, Programs and Peer Review Standards
10.12.3.1 The Board shall approve peer review
sponsoring organizations, programs, and standards.
10.12.3.2 The Board adopts the AICPA as an
approved sponsoring organization and its peer review program and the
Pennsylvania Institute of CPAs or its successor and other peer review programs
administered by entities fully involved in the administration of the AICPA Peer
Review Program. These organizations are not required to submit an application
for approval to the Board.
10.12.3.3 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
failure to maintain an ongoing compliance with the requirements of this
chapter.
10.12.3.4 The Board may
approve other peer review sponsoring organizations and programs. For an
organization, not specifically identified in this regulation as Board-approved,
to receive Board approval for its peer review program and standards, the
organization must submit evidence to the satisfaction of the Board. At a
minimum, the evidence shall include the standards, procedures, guidelines,
oversight process, training materials and related documents used to administer,
perform and accept peer reviews. The Board has the authority to request any
other documents/information from an organization about its peer review program
in determining whether to grant approval.
10.12.3.5 For firms required to be registered
with and inspected by the Public Company Accounting Oversight Board ("PCAOB"),
the Board accepts the PCAOB's inspection process for reviewing practices
subject to its authority, which are not included in the scope of peer review
programs. Firms receiving inspections under the PCAOB are also required to meet
the peer review requirements under a Board-approved peer review program that
covers the portion of the firm's practice not subject to the PCAOB permanent
inspection.
10.12.4 Peer
Review Oversight Committee
10.12.4.1 A Peer
Review Oversight Committee ("PROC") may be appointed by the Board to monitor
the Board-approved peer review program, including sponsoring organizations, to
provide reasonable assurance that peer reviews are being conducted and reported
on in accordance with peer review standards. The PROC shall report to the Board
on the conclusions and recommendations reached as a result of its monitoring,
including the continued approval of sponsoring organizations.
10.12.4.2 PROC members shall:
10.12.4.2.1 Not include individuals who are
members of the Board or perform any enforcement related work for regulatory or
governmental bodies, professional organizations, including an AICPA ethics
committee, AICPA joint trial board for state professional ethics committee, or
similar groups or subgroups.
10.12.4.2.2 Be subject to removal or
replacement by the Board at its discretion.
10.12.4.2.3 Be required to sign a
confidentiality agreement indicating they will not divulge any information to
the Board that would identify any firm, licensee, or peer reviewer/reviewing
firm as a result of their monitoring of the peer review process.
10.12.4.2.4 Perform procedures which may
consist of but are not limited to the following activities:
10.12.4.2.4.1 Visiting the sponsoring
organizations of the approved peer review program;
10.12.4.2.4.2 Reviewing sponsoring
organization procedures for administering the program;
10.12.4.2.4.3 Meeting with a sponsoring
organization's report acceptance body during consideration of the peer review
documents;
10.12.4.2.4.4 Reviewing
the sponsoring organization's compliance with its program.
10.12.4.3 Conduct oversight of
approved peer review programs to provide reasonable assurance that such
programs comply with the minimum standards for performing and reporting on peer
reviews. The PROC shall make recommendations to the Board regarding continued
approval of peer review programs.
10.12.4.4 The Board shall establish
procedures and take all action necessary to ensure that the above materials
remain privileged as to any third parties.
10.12.5 Submission of peer review documents
10.12.5.1 A firm is required to submit a copy
of the results of its most recently accepted peer review to the Board, which
includes the following documents:
10.12.5.1.1
Peer review report which has been accepted by the sponsoring
organization.
10.12.5.1.2 The
firm's letter of response accepted by the sponsoring organization, if
applicable.
10.12.5.1.3 The
acceptance letter from the sponsoring organization
10.12.5.1.4 Any letters accepting the
documents signed by the firm with the understanding that the firm agrees to
take any actions required by the sponsoring organization, if applicable;
and
10.12.5.1.5 Letter signed by
the sponsoring organization notifying the firm that required actions have been
appropriately completed, if applicable.
10.12.5.2 Firms whose peer reviews are
scheduled on or after July 1, 2017 are required to submit a copy of the peer
review documents in subsections 10.12.5.1.1 through 10.12.5.1.3 to the Board
within 30 days of the sponsoring organization's acceptance. The firm shall
submit the documents in subsection 10.12.5.1.4 to the Board within 30 days from
the date the letter is signed by the firm. The firm shall submit the documents
in subsection 10.12.5.1.5 to the Board within 30 days of the date of the
letter.
Firms must satisfy this document submission requirement by
allowing the sponsoring organization to provide the Board access to the
documents via a secure website such as the AICPA Facilitated State Board
Access.
