Current through Register Vol. 35, No. 18, September 24, 2024
A.
Participation: A firm seeking to obtain or renew a firm permit to provide
accounting and auditing services in New Mexico must be enrolled in a peer
review program and undergo a peer review pursuant to Section 6.60.4.10 B of the
1999 Public Accountancy Act , Peer review program objectives are established
pursuant to Section 13L of the act to monitor compliance with applicable
accounting and auditing standards adopted by generally recognized
standard-setting bodies. Emphasis is on education, including appropriate
education programs or remedial procedures that may be recommended or required
where reporting does not comply with appropriate professional standards.
(1) Firms contracting to perform audits of
state agencies as defined in the audit act must also comply with peer review
standards applicable to those audits.
(2) Participation is required of each firm
registered with the board who provides accounting or auditing services pursuant
to Subsection 13L of the act.
B. Timing of peer reviews:
(1) Each holder of a board-issued firm permit
shall enroll in a board approved peer review program and arrange, schedule,
complete and allow time for the sponsoring organization to consider their peer
reviews for acceptance prior to the June 30 renewal period.
(a) Firms need to ensure that their peer
review year ends and corresponding due dates allow for compliance with
Subsection 13E of the act.
(b)
Firms may need to consider changing their current peer review year ends and the
timing of when their peer reviews are performed in order to comply.
(2) When a firm performs its first
engagement requiring its initial peer review, the firm shall be enrolled in a
board approved peer review program by the report date of the first engagement,
and the due date ordinarily will be 18 months from the report date of that
engagement.
(a) The initial peer review must
report on the firm's practice for a full year.
(b) The requirements of Subsection 13L of the
act regarding permit renewal are initially applicable to the firm the first
June 30 renewal period after the 18 month due date.
(c) The peer review year end means the year
end as determined by the firm and its reviewer and may be different than the
firm's tax reporting year end.
(3) A firm's subsequent peer review
ordinarily has a due date of three years and six months from the year-end of
the previous peer review.
(4) The
board may grant extensions up to 180 days from the original due date in order
for the firm to comply with the peer review requirements in Subsection 13E and
13L of the act. All requests for extensions shall be submitted to the board in
writing by the firm no later than 30 days prior to renewal date and should
include any extensions approved by the sponsoring organization. The board may
recognize extensions granted by the sponsoring organization. The board has the
authority at its sole discretion to grant any reasonable extensions that it
deems necessary and extensions are ordinarily granted for the following
reasons:
(a) health;
(b) military service; or
(c) other good cause clearly outside the
control of the firm.
C. Hardship Exceptions: The board may make
exceptions to the requirements set out in this section for hardships. All
hardship requests must be in writing, setting forth detailed reasons for the
request, and must be submitted no later than six months prior to expected
completion date of the peer review.
D. Exemptions: A firm which does not perform
accounting or auditing engagements, including but not limited to audits,
reviews, compilations, attestations, forecasts, or projections is exempt from
the peer review program and shall re-certify annually to the board as to this
exempt status as part of the firm permit renewal process. A previously exempt
firm which begins providing the above described services must initiate and
complete a review within 18 months of the date the services were first
provided.
E. Reporting to the
board: Firms are required to submit a copy of the following documents related
to its most recently accepted peer review to the board:
(1) peer review report which has been
accepted by the sponsoring organization;
(2) the firm's letter of response (accepted
by the sponsoring organization), if applicable;
(3) the acceptance letter from the sponsoring
organization;
(4) letter(s) signed
by the firm acknowledging that the firm agrees to take any actions required by
the sponsoring organization, if applicable;
(5) the completion letter signed by the
sponsoring organization notifying the firm that required actions have been
appropriately completed, if applicable.
(6) Upon request of the board, any
correspondence from the sponsoring organization regarding the scheduling or
completion of a peer review.
F. Submission of documents: the above
documents shall be submitted by the firm to the board via mail, or
electronically or digitally as follows:
(1)
The documents in Paragraph (1) through (3) of Subsection E of 16.60.4.10 NMAC
shall be submitted within 30 days of the sponsoring organization's
acceptance.
(2) The documents in
Paragraph (4) of Subsection E of 16.60.4.10 NMAC within 30 days from the date
the letter is signed by the firm, or with submission of firm renewal
application, whichever occurs first.
(3) The documents in Paragraph (5) of
Subsection E of 16.60.4.10 NMAC shall be submitted to the board within 30 days
of the date of the letter.
(4) The
documents in Paragraph (6) of Subsection E of 16.60.4.10 NMAC shall be
submitted to the board within 30 days of receiving the documents by the firm or
upon request by the board.
(5) If
the firm cannot submit the documents in Paragraphs (1) through (5) of
Subsection E of 16.60.4.10 NMAC within the stated timeframe or, at the maximum,
180 days after the scheduled due date of the peer review, the firm must submit
a letter to the board via mail, electronically or digitally explaining its
failure to comply. The board may take disciplinary action for failure to
comply.
(6) Firms may also satisfy
this document submission requirement by having the sponsoring organization make
the documents described in Paragraphs (1) through (5) of Subsection E of
16.60.4.10 NMAC available to the board within the stated time frames via the
AICPA facilitated state board access (FSBA) secure website process.
G. Additional information to be
provided by firms or the sponsoring organization, upon request by the board,
shall provide written permission for the sponsoring organization to provide
information to the board. Permission may be granted annually on the firm
renewal form. Such information may include the following (or similar) types of
objective information about a firm's review, if known:
(1) the date the review is or was scheduled
to take place;
(2) the name of the
reviewing firm, team captain or review captain;
(3) if the field work on the peer review has
commenced;
(4) the date the exit
conference was expected to or did occur;
(5) a copy of any extension approval
letters;
(6) whether the peer
review working papers have been received by the sponsoring
organization;
(7) whether a must
select engagement was included in the scope of engagements reviewed;
(8) if a technical review is in
progress;
(9) whether the review
has been presented to a report acceptance body (RAB);
(10) the date the review is expected to be
presented to the report acceptance body;
(11) if the firm is going through fair
procedures to determine whether it is cooperating with the peer review.
H. Approved peer review
sponsoring organizations, programs and peer review standards:
(1) The board shall approve sponsoring
organizations, peer review program(s) and standards.
(2) The board adopts the American institute
of certified public accountants (AICPA) as an approved sponsoring organization
and its peer review program and the New Mexico society of CPAs (NMSCPA) 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 a plan of administration to the board
for approval. The board may approve other sponsoring organizations and peer
review programs.
(3) Any board
approved peer review program and any peer reviewer performing a peer review
under this section shall utilize standards for performing and reporting on peer
reviews by a recognized national accountancy organization whose standards are
generally accepted by other regulatory authorities in the United States,
including but not limited to the AICPA standards for performing and
reporting on peer review.
(4) 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 maintain an ongoing compliance with the requirements.
(5) For an organization, not specifically
identified in these rules 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.
(6) For firms required to
be registered with an inspected by the public company accounting oversight
board (PCAOB), the board approves 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 PAOB 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
inspection process, should the firm have such a practice.
I. Authority and function of peer review
oversight committee:
(1) The board
may appoint up to five individuals licensed in this or another
state to a peer review oversight committee to monitor programs administered by
the sponsoring organization and report periodically to the board. Peer review
oversight committee members shall not be current members of the board or
perform any enforcement related work for regulator or governmental bodies,
professional organizations (including but not limited to an AICPA ethics
committee, AICPA joint trial board or state professional ethics committee) or
similar groups or subgroups, including consultants and other similar
arrangements for the board; and may be removed or replaced by the board at its
discretion.
(2) Each committee
member shall annually sign a confidentiality statement indicating they will not
divulge any information to the board or any other person or entity that would
identify any firm, licensee, or peer reviewer/reviewing firm.
(3) The peer review oversight committee may
conduct oversight of approved sponsoring organization to provide reasonable
assurance that the program it is administering is complying with the minimum
standards for performing and reporting on peer reviews. The committee shall
report to the board any modifications to the sponsoring organization and shall
make the recommendations regarding their continued approval.
(a) Oversight procedures to be performed by
the peer review oversight committee may consist of, but are not limited to, the
following activities:
(i) visit the
sponsoring organization for the approved peer review program;
(ii) review the sponsoring organization's
procedures for administering the program;
(iii) meet with the sponsoring organization's
RAB during consideration of peer review documents;
(iv) review the sponsoring organization's
compliance with their programs.
(b) The peer review oversight committee shall
verify that firms comply with peer review requirements as follows:
(i) verification may include review of the
peer review report, the firm's response to the matters discussed in the peer
review report, and the acceptance letter outlining any additional corrective or
monitoring procedures, and the letter(s) signed by the sponsoring organization
notifying the firm that required actions have been appropriately
completed;
(ii) any other actions
deemed necessary by the peer review oversight committee to assure compliance
with peer review standards.
J. Disciplinary action:
(1) The board shall take disciplinary action
against a firm for failure to comply with peer review requirements. Actions may
include, but are not limited to, remedial and corrective procedures, fines, and
denial of firm registration.
(2) In
the event a firm is unwilling or unable to comply with established standards,
or a firm's professional work is so egregious as to warrant disciplinary
action, the board shall take appropriate action to protect the public
interest.
(3) Peer review documents
must be submitted to the board office in accordance with Subsection F of
16.60.4.10 NMAC.
(a) For each day the firm is
delinquent in submitting the documents, the board may assess a fine of $10 per
day not to exceed $1,000.
(b) If
peer review documents are submitted more than 100 days late, a notice of
contemplated action may be issued against all licensees listed on the most
recent firm permit renewal application as owners of the firm.
(4) Requests for extensions must
be submitted no later than 30 days prior to renewal date as required by
Paragraph (4) of Subsection B of 16.60.4.10 NMAC.
K. Privileged information: A report,
statement, memorandum, transcript, funding record, or working paper prepared
for and an opinion formulated in connection with any positive enforcement or
peer review is privileged information held by the sponsoring organization and
may not be subject to discovery, subpoena, or other means of legal compulsion
for release to any person and is not admissible as evidence in any judicial or
administrative proceeding except for a board hearing.
L. In the event a firm is merged, otherwise
combined, dissolved, or separated, the sponsoring organization shall determine
which firm is considered to be the succeeding firm, if any. The succeeding firm
shall retain its peer review status and the review due date.
