What's happening
This bill amends the education law to require all CPA firms, including sole proprietorships and small firms, to undergo mandatory peer review of attest services every three years.
Why it matters
Expanding peer review requirements to all CPA firms, including sole proprietors and small firms, increases oversight and accountability across the entire profession. Previously, small firms were exempt; this change ensures that all firms providing attest services uphold consistent quality standards.
Mandatory peer review every three years means ongoing external checks of firms’ attest services, which can help identify issues before they affect clients or the public. This could lead to improved financial reporting and greater public trust in the profession.
The law maintains confidentiality of peer review reports, but allows disclosure if reports become evidence in disciplinary hearings. This balances transparency in cases of misconduct with protection of sensitive firm information during routine reviews.
Firms performing attest work for government entities must comply with federal government auditing standards, aligning state requirements with national best practices. This may facilitate smoother contracting and higher quality assurance for public sector audits.
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Who cares
Headline styles
Require CPA Peer Reviews
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Substituted by A7895A
- Ordered to third reading cal.2171
- Reported and committed to rules
- Print number 6026a
- Amend (t) and recommit to higher education
- Referred to higher education
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Require CPA Peer Review
Signed by Governor · Sponsor Albert A. Stirpe
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
6026--A
2017-2018 Regular Sessions
IN SENATE
May 10, 2017
Introduced by Sen. HELMING -- read twice and ordered printed, and when printed to be committed to the Committee on Higher Education -committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee
AN ACT to amend the education law, in relation to mandatory peer review of certified public accountants
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subparagraph 5 of paragraph c of subdivision 3 of section 7408 of the education law, as amended by chapter 651 of the laws of 2008, is amended to read as follows:
(5) That the firm failed to undergo a [quality] peer review of its attest services pursuant to section seventy-four hundred ten of this article at least once every three years; or
§ 2. Section 7410 of the education law, as added by chapter 651 of the laws of 2008, is amended to read as follows:
§ 7410. Mandatory [quality] peer review. 1. The department shall require as a condition to renewal of registrations under section seventy-four hundred eight of this article, that unless otherwise exempted by the department, applicants for firm registrations, [with the exception of sole proprietorship firms or firms with two or fewer accounting professionals, including certified public accountants or public accountants, or any combination thereof,] undergo, no more frequently than once every three years, except pursuant to a disciplinary action brought under section seventy-four hundred eight of this article, [quality] peer reviews of the firm's attest services conducted in such manner as the commissioner shall specify in regulations, and such review shall include a verification that individuals in the firm who are responsible for supervising attest services sign or authorize someone to sign the accountant's report on the financial statements on behalf of the firm
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD11586-05-7
S. 6026--A 2
meet the competency requirements set out in the professional standards for such services, provided that any such regulations:
a. shall include reasonable provisions for compliance by an applicant for firm registration showing that it has, within the preceding three years, undergone a [quality] peer review in this state or a peer review in another state that is a satisfactory equivalent to [quality] peer review required pursuant to this section;
b. shall require, with respect to any organization administering [quality] peer review programs contemplated by paragraph a of this subdivision, that it be subject to evaluations by the department or its designee, to periodically assess the effectiveness of the [quality] peer review program under its charge;
c. shall require the [quality] peer review to be conducted by reviewers acceptable to the department in accordance with the commissioner's regulations[, from a roster of qualified reviewers established by the department]; and
d. may require with respect to [quality] peer reviews contemplated by paragraph a of this subdivision that firms undergoing [quality] peer reviews and organizations administering [quality] peer review programs timely remit such [quality] peer review reports to the state board for public accountancy and such reports shall be maintained by the board in a manner consistent with subdivision [three] two of this section.
2. [Except as provided for in subdivision four of this section, nothing in this section shall be construed to require sole proprietorship firms or firms with two or fewer accounting professionals, including certified public accountants or public accountants, or any combination thereof, to undergo quality review, however, such firms may choose to voluntarily undergo quality review in accordance with this section.
3.] Notwithstanding any provision of law to the contrary, the reports submitted in accordance with subdivision one of this section shall be confidential and shall not constitute a public record and shall not be subject to disclosure under articles six and six-A of the public officers law. However, when any such report is admitted into evidence in a hearing held by the department, it shall then be a public record subject to disclosure under articles six and six-A of the public officers law.
[4.] 3. Notwithstanding any provision of law or regulation to the contrary, a firm that performs attest services for any New York state or municipal department, board, bureau, division, commission, committee, public authority, public corporation, council, office, or other governmental entity performing a governmental or proprietary function for New York state or any one or more municipalities thereof, or performs attest services specifically required to be performed pursuant to New York state law, or performs attest services for any federal governmental entity pursuant to federal law, shall be [required to undergo an external peer review] in conformity with the requirements pursuant to the government auditing standards of the comptroller general of the United States.
§ 3. This act shall take effect immediately.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the education law, in relation to mandatory peer review of certified public accountants
Purpose
The purpose of the bill is to remove the exemption of mandatory peer review, based on regulations promulgated by the department as a condition of renewal of registration, for sole proprietorship firms and firms with two or fewer accounting professionals.
Summary of provisions
Section 1 amends paragraph 1 of Section 7410 of the Education Law to remove the exemption of mandatory peer review, based on regulations promulgated by the department as a condition of renewal of registration, for sole proprietorship firms and firms with two or fewer accounting professionals.
The first section also strikes paragraph 2 of Section 7410 of the Education Law to remove the exemption of mandatory peer review, based on regulations promulgated by the department as a condition of renewal of registration, for sole proprietorship firms and firms with two or fewer accounting professionals.
Section 2 sets an immediate effective date.
Justification
Currently, sole proprietorship firms and firms with two or fewer accounting professionals are not required to undergo mandatory peer review as a condition of renewal of registration. New York is the only state that provides this exemption for sole and smaller firms.
All firms, regardless of size, that perform audit and attest services, should be required to undergo mandatory peer review. Mandatory peer review ensures adequate quality-control. It ensures that CPA firms follow best practices. This would ensure that public interest is protected and would ensure the dependability of information used for guidance in financial transactions.
Legislative history
New bill.
Fiscal implications
None.
Effective date
Immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.