As you are aware, this is a license renewal year and a peer review is required for certain practitioners and firms as a condition of license renewal. MCL 339.729(2) states, in part, that a CPA licensee shall submit to the Department at the time of renewal, proof of a peer review obtained within the three years immediately preceding the renewal application. The details regarding which licensees are required to have a peer review and procedures to report it to us are included below.

1. When did the new peer review statutory requirement take effect?
The legislation containing the mandatory peer review provisions was enacted on March 1, 2007 but did not begin effecting licensees until March 1, 2008. Participation in a peer review program is mandatory beginning sometime after March 1, 2008 based on the timeline described in FAQ #2.

2. Who is required to have and provide proof of a peer review as a condition of renewing a license?
Licensed CPA firms and sole practitioners that perform attestation services (including audits, reviews, and compilations that are relied upon by third parties) are required to provide proof of participation in a peer review program as a condition of re-licensure or license renewal. The peer review must have taken place in the three years immediately preceding the application for re-licensure or license renewal and, depending on the specific services provided; the timeline for the requirement is different for each type of service:

1. If you have performed at least one attestation service that includes an audit anytime since March 1, 2008, you are required to provide proof of a peer review completed between December 31, 2006 and December 31, 2009.
2. If you have performed at least one attestation service that includes compilation with disclosures relied upon by third parties, or review, or both compilation with disclosures and review, but not audits, anytime since March 1, 2009, you are required to provide proof of a peer review completed between December 31, 2006 and December 31, 2009.
3. If you have performed at least one attestation service that includes compilation without disclosures relied upon by third parties, but not audits, reviews or compilations with disclosures anytime after March 1, 2010, you are required to provide proof of a peer review completed between December 31, 2008 and December 31, 2011.

3. What if I perform one of these services for the first time or am applying for original licensure?
Proof of participation in a peer review is not required for license renewal until the second renewal following initial licensure or the first performance of one of the services described above.

4. Are 2009 and 2011 the only renewal years that a peer review will be required?
No. Completion of a peer review is a permanent renewal requirement that was enacted into law by Public Act 278 of 2005. Any renewal cycle in which a licensee has performed even one attestation service (for even one client), licensee must provide proof of having a peer review completed within the immediately preceding three years.

5. Is there an additional cost associated with this, beyond the normal license renewal fees?
Yes, there is an additional $100 fee due at the time of renewal for licensees required to have a peer review. Licenses required to have a peer review will not be renewed until proof of the completed peer review and payment of the additional $100 fee are received.

6. How will I prove my level of service and therefore show compliance with the new peer review requirements during the renewal of my license(s)?
During renewal, each licensee will be required to certify, under penalty of law, whether they do or do not perform the attestation services requiring a peer review.

7. Can I renew my license in 2009 if my peer review is scheduled but not completed?
If a CPA firm or sole practitioner performs the types of services requiring a peer review, their license cannot be renewed until the peer review is complete and reported to the Department. If the peer review has not been completed, your application for renewal will be incomplete and the Department will not renew your license.

8. How and when do I report my peer review results to the Department?
The timing for reporting your peer review to the Department depends on the result that you receive. If the result of your review is “pass,” the results are required to be reported at the time of renewal. However, you may also allow posting to the secure website called the Facilitated State Board Access (FSBA) as described below. If the result of the peer review is a second consecutive “pass with deficiencies” or “fail,” the results must be reported directly to the Department within 30 days of the peer review’s completion.

You are encouraged to report the results of your peer review seamlessly through the peer review sponsoring organization (such as the MACPA or AICPA). The sponsoring organization will ask if you voluntarily wish to have the completion disclosed to the FSBA. A licensee who has its results posted to the FSBA secure website is automatically considered compliant by the Department.

If you “opt out” from allowing the sponsoring organization to post your completion of the peer review results through the FSBA, then you are responsible to report your results directly to the Department at the time of renewal or within 30 days of peer review completion depending on the review outcome as described above. Your notification should be addressed to: The Department of Energy, Labor & Economic Growth, Bureau of Commercial Services, Licensing Division, Attention: Board of Accountancy, Post Office Box 30018, Lansing, MI 48909.

9. What do I do if I need an extension to complete the peer review?
The statute allows the Department to grant an extension to have the peer review completed only if the requirement would present an undue hardship on the licensee; however, there are also other circumstances under which a review might not be closed by the end of the license renewal period. To apply for an extension, you must provide a written request to the attention of Stacie Bayes, Assistant Licensing Administrator, outlining the reasons for your request. You may contact Ms. Bayes by email at bayess@michigan.gov or submit the written request to our office at Department of Energy, Labor & Economic Growth, Bureau of Commercial Services, Licensing Division, Board of Accountancy, PO Box 30018, Lansing, MI 48909.

10. What happens if my CPA firm or practice receives a “fail” or “pass with deficiencies” peer review report?
The licensee is required to notify the Department within 30 days after receipt of a peer review report with a result of a second consecutive “pass with deficiencies” or “fail.” Receiving one of these two results will be considered as not meeting one or more professional standards and the licensee will be contacted by the Department to provide more information.

11. Where can I obtain a copy of the peer review statute and rules?
The statute and administrative rules are available on the Michigan Board of Accountancy’s website. Look for “Quick Links” on the right hand side of your screen and click on “Article 7” or “Administrative Rules.” Specifically, you may wish to review Section 729 of Article 7 (MCL 339.729) and the Board’s administrative rules 501 and 503.



Top