Peer review is a systematic review of a firm's accounting and auditing services performed by a peer reviewer who is unaffiliated with the firm being reviewed to ensure work performed conforms to professional standards.

Peer review is required for all California-licensed firms, including sole proprietorships, that perform accounting and auditing services using the following professional standards:

• Statements on Auditing Standards (SAS)
• Statements on Standards for Accounting and Review Services (SSARS)
• Statements on Standards on Attestation Engagements (SSAE)
• Government Auditing Standards (Yellow Book)
• Audits of non-Security Exchange Commission (SEC) issuers performed pursuant to the standards of the Public Company Accounting Oversight Board (PCAOB)

Yes. There is no exclusion from the peer review requirement based solely on the number of engagements performed.

There are two exclusions from the peer review requirement.

1. Any of a firm's engagements subject to inspection by the Public Company Accounting Oversight Board's inspection program.

2. A firm, which as their highest level of work, performs only compilations where no report is issued in accordance with the provisions of Statements on Standards for Accounting and Review Services (SSARS).

Yes. Section 5035.1 of the Business and Professions Code defines a firm to include a sole proprietorship.

Firms will be phased into the reporting requirement over a three-year period. The following schedule will be used for the phase-in period:

• Firms with a license number ending in 01-33 will need to submit peer review information no later than July 1, 2011.
• Firms with a license number ending in 34-66 will need to submit peer review information no later than July 1, 2012.
• Firms with a license number ending in 67-00 will need to submit peer review information no later than July 1, 2013.

Firms will be required to report peer review information every three years thereafter.

For licensees that operate as a sole proprietorship, the firm number will be the last two digits of the individual CPA license number.

A firm that receives a peer review rating of pass or pass with deficiencies is not required to submit the peer review report. The firm will only need to complete the Peer Review Reporting Form and submit it to the CBA.

A firm that receives a substandard peer review rating is required to submit the peer review report, along with any materials documenting prescription of remedial or corrective actions, within 45 days after the report is accepted by the Board-recognized peer review program provider.

A Board-recognized peer review program provider is an organization that is recognized to administer peer reviews in California. Board-recognized peer review program providers will work with firms to ensure peer reviews are completed timely, firms select peer reviewers with a currency of knowledge of the professional standards to the type of practice to be reviewed, and review and accept the peer review report.

Presently, only the American Institute of Certified Public Accountants (AICPA) is recognized by the CBA to perform peer reviews. The AICPA uses several administering entities nationally, usually state certified public accountant societies, to administer its peer review program.

A firm is required to enroll in a Board-recognized peer review provider's program. Once enrolled, the provider will assist in a firm's selection of a qualified peer reviewer to ensure that the peer reviewer has a currency of knowledge of the professional standards related to the type of practice to be reviewed.

Should an extension of time be needed to have a peer review report accepted by a Board-recognized peer review program, the firm shall submit the extension request to the Board-recognized peer review program provider with which the firm is enrolled. If the extension granted extends past the firm's reporting date, the firm shall notify the CBA of the extension and provide proof of the extension. The firm shall then report the results of the peer review to the CBA within 45 days of the peer review report being accepted by the Board-recognized peer review program.

Yes. Although not all Certified Public Accountants and Public Accountants are required to undergo peer review, ALL licensees must report. Since the CBA does not maintain a record of individual licensees who operate as sole proprietorships, you are required to respond even if only to report that you do not operate as a sole proprietorship.

Yes. Although not all firms are required to undergo peer review, ALL firms must report. Since the CBA does not maintain a record of services provided by firms, you are required to respond even if only to report that you are not performing any services that require you to undergo a peer review.

Yes. All firms and licensees will be required to report peer review information every three years even if they are not required to undergo a peer review.

Yes. As of January 1, 2010, all firms operating or maintaining an accounting and auditing practice must undergo peer review once every three years in order to renew its license. Should your firm begin performing accounting and auditing services after January 1, 2010, it must have a peer review report accepted by a Board-recognized peer review program within 18 months of the completion of the services.

No. Individual licensees must submit an Online Peer Review Reporting Form for their individual license number. As the reporting date for their individual license number approaches, they will receive a unique PIN code for logging into the Online Peer Review Reporting Form. Individuals working for a firm, or that are shareholders or partners of a firm, are not subject to peer review, but must still complete the Peer Review Reporting Form.

Yes. You must submit separate Online Peer Review Reporting Forms for your individual license and any corporation and/or partnership licenses you maintain. For your individual license, you will report that you are not operating as a firm. Your partnership will report it is operating as a firm.

Yes. Peer Review is a condition of license renewal in California regardless of where you practice.

Yes. As long as the peer review report is accepted by a California Board-recognized peer review program, it will meet the peer review requirement for California. Currently, the AICPA is the only Board-recognized peer review program in California.

No. The firm's peer review report must be accepted by a Board-recognized peer review program within 36 months prior to the reporting date. The firm will need to wait until its next peer review report is accepted to submit the Peer Review Reporting Form to the CBA.

You must submit a hard copy Peer Review Reporting Form to the CBA for correction. The form must be clearly marked "Corrected Copy." The hard copy form can be found at https://www.dca.ca.gov/cba/forms/prrfwinst.pdf.

No. Although online reporting is quick and easy, you can submit a hard copy reporting form which can be downloaded from the CBA website. If you do not have access to the internet, you can request that a Peer Review Reporting Form be mailed to you.

Failure to report your peer review status may result in nonrenewal of your license. Failure to report may also result in the CBA initiating enforcement action.

Please contact the Board-recognized peer review program provider for timeframes. If undergoing a peer review for the first time, please allow sufficient time for the peer review engagement and acceptance by the Board-recognized administering entity.

Please contact the Board-recognized peer review program provider for the cost to enroll in the peer review program. The fee for the peer review is negotiated between you and your peer reviewer.

If you receive a substandard peer review, you must notify the CBA within 45 days and submit a copy of the peer review report to the CBA at:

California Board of Accountancy

Attn: Peer Review Analyst

2000 Evergreen Street, Suite 250

Sacramento, CA 95815-3832

You must also notify the CBA within 30 days if you are expelled by a Board-recognized peer review program and provide the name of the Board-recognized peer review program and the reason(s) given by the peer review program for the expulsion.

Presently, CBA Regulation Section 45 does not specify a reporting date beyond the initial three-year phase-in period. However, the reporting dates in Section 45 are being amended. As amended, beginning January 1, 2014, the CBA will require all licensees to report their specific peer review information at the time of license renewal. The proposed text is available on the CBA website at http://www.dca.ca.gov/cba/laws_and_rules/pubpart.shtml.

No. Even though reporting will be done at the time of license renewal, peer reviews are still only required every three years. This means for some years you will report the same peer review results two renewal cycles in a row.

Effective January 1, 2013, only licensees renewing in an active status or converting to active status are required to have a peer review. If you renew in an inactive status, you do not need to have a peer review. However, you are required to report specific peer review information as required on Form PR-1 (1/10) to the CBA.

Peer review is a condition of license renewal. If you are renewing your license in an inactive status, you are not required to have a peer review. However, you are required to report specific peer review information as required on Form PR-1 (1/10) to the CBA by the July 1, 2013, reporting deadline.

No. Peer reviews are a condition of license renewal. A peer review would not be required if the corporation/partnership is dissolved, and the CBA is notified of the dissolution, prior to the renewal of the license.