Compliance with the new peer review requirements is raising many questions as practitioners and firms approach license renewal. The Department is sending a notification letter to all licensees regarding a new online CPE reporting program and the reporting of a designated individual with Administrative Responsibility for Firm renewal. The letter will clarify details, but general guidelines appear below.

The Department’s notification is expected in early July 2009; the ability to report online, rather than with a paper form, is expected to be available at the same time.

The Department encourages all licensees to utilize the new online reporting option!

Individual CPAs will be able to enter the number of CPE hours earned for the reporting period and indicate whether or not the licensee (working as a sole proprietor) is subject to the Peer Review requirements of MCL 339.729(3)(a) or MCL 339.729(3)(b).

Firms will be required to designate an individual with Administrative Responsibility and indicate whether or not the firm is subject to the Peer Review requirements of MCL 339.729(3)(a) or MCL 339.729(3)(b).

Peer review is required for certain practitioners and firms as a condition of license renewal. MCL 339.729(2) states, in part, that an applicant for renewal shall submit to the Department at the time of renewal, proof of peer review obtained within the 3 years immediately preceding the application. The following quick and easy “Question and Answer” may help clarify the statutory mandates and communicating with the licensing office regarding peer review.

When do the new peer review rules take effect?
The peer review requirements become effective as follows:

1. For licensed firms and sole practitioners whose attest services include audits; beginning March 1, 2008.
2. For licensed firms and sole practitioners whose attest services include compilation with disclosures relied upon by third parties, or review, or both compilation with disclosures and review, but not audits as listed in item one above; beginning March 1, 2009.
3. For licensed firms and sole practitioners whose attest services include compilation without disclosures relied upon by third parties (but not audits as listed in item number one above; or any compilation with disclosures relied upon by third parties, or review, or both compilation with disclosures and review as listed in item two above) beginning March 1, 2010.

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 the 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.

How can I determine if I am required to participate in the peer review program?
A CPA firm or sole practitioner is required to participate in the peer review program if the CPA firm or sole practitioner provides any of the following attest services:
audits, any compilation with disclosures relied upon by third parties, or review, or both compilation with disclosures and review; and, any compilation without disclosures relied upon by third parties.

How will I show compliance with the new peer review requirements during the renewal of my license(s) for this renewal period?
You will receive a notice from the Department at the beginning of July 2009 informing the licensee of our on-line reporting program. Each licensee will be required to certify whether or not the licensee is subject to the requirements of MCL 339.729(3)(a) or MCL 339.729(3)(b). If the answer is yes, the licensee will be required to certify on their renewal that the peer review was conducted and completed.

What happens if my CPA firm receives a pass with deficiencies or fail (adverse or second modified) peer review report?
It is the Licensee’s responsibility to notify the Department within 30 days after receipt of a pass with deficiencies or fail (adverse or second modified) peer review report.

The AICPA has implemented a Peer Review Facilitated State Board Access (FSBA) program. The MACPA will facilitate the voluntary disclosure of peer review results to the Department via a secure Board of Accountancy access-only website. You may choose to “opt-in” to this process and your documents will be made available to the Department. By utilizing the FSBA program and making your documents available to the Department, you will automatically be compliant with the 30-day notification requirement.

If you choose not to “opt-in” to the FSBA program, you may submit your notification directly to the Department. 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. Verbal testimony and documents are subject to disclosure to the Department in the case of an adverse or second modified opinion.

For more information and FAQs on Peer Review, visit the State Board of Accountancy website at www.michigan.gov/accountancy.



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