Other information related to peer review

Firm license required

CPA firms are required to be licensed in the state of Maryland in addition to the individual CPA licenses. There is an exception for sole practitioners. Firms that do not have appropriate licenses to practice in this or other applicable states may receive a modified or adverse report on their firm’s peer review. Firm applications are available online in Maryland at http://www.dllr.state.md.us/.

Impact of privacy act on peer review

Gramm-Leach-Bliley allows financial institutions to disclose information to auditors without notifying clients or giving them an opportunity to opt out of disclosure. Similarly, in a peer review CPA firms can disclose, without a client opt-out, information on their personal financial service clients. Also, peer reviews are to be conducted in a way that protects CPA client confidences, so the public is protected. However, while Gramm-Leach-Bliley does not require such an agreement, if the client or the client’s attorney require the CPA to sign a non-disclosure agreement as part of the audit engagement, the CPA should require that the agreement allow disclosure to a peer reviewer to avoid breaching the agreement in fulfilling peer review requirements.

Reviewers performing pre-issuance reviews

The pre-issuance review individual would not be precluded from performing a peer review of the same firm as long as the pre-issuance review is not an integral part of the firm’s system of internal control and as long as the pre-issuance review is not on a financial statement that will be included in the peer review in the current year.

SSARS 8 non-report engagements

Firms that perform compilations under SSARS 8 where a report is not issued are not required to enroll in the peer review process if that is all they do. As a result those firms will not be subject to peer review. If the firm is enrolled in peer review, it should contact MACPA and request to be taken out of enrollment. A non-report SSARS 8 compilation would be included in the peer review of a firm that issues reports on other engagements. The reviewer would look at the engagement letter and the restriction on the face of the statements, but he or she would not review the financial statements since they may not follow professional standards.