August 2014

Previous posts in this five-part series mentioned that there are a few hundred peer review reports that are in the process of being withdrawn by various state administering entities. The reason is the review did not look at a pension plan audit when the firm performed one or more of them.

As I mentioned before, I’m writing these posts without explaining a lot of the technicalities that exist in the peer review program. I’m leaving out some of the terminology, skipping some details, and simplifying things. I’m doing this to help CPAs who don’t live in the peer review world.

More background

Before jumping in to the consequences, a bit more background:

Charles Hall has an overview of the recall issue at CPA-Scribo:  Peer Review Reports Being Recalled.

Scuttlebutt he has heard suggests 1,100 reports are in process of being recalled. I heard it may be in the range of a couple hundred.  If that makes you think this is a developing story, you are correct.

Here are a couple of things you can look at:

Peer Review Board Open Session Materials – May 28, 2014 – News flash from that document is that DOL sent the AICPA a list of about 5,000 firms who reported on an ERISA audit for year ending December 31, 2011. AICPA staff researched those firm names with the publicly available peer review report. They found exceptions, with amount not mentioned in the materials.  Resolution of the exceptions by state administering entities and the involved peer reviewer wasn’t what the PRB wanted to see. Thus, in April 2014, the PRB voted to require automatic recall of acceptance letters and require peer reviewers (shall) to withdraw their reports.

That describes how this started and why there seems to be a lot of activity now.

June 2014 Peer Review Update – Contains guidance for the replacement review.

I plan some more updates beyond the 5 already drafted. Now we ponder the consequences.

So what?

Consider the cascading consequences from your peer review report being withdrawn. That means the report on your firm doesn’t exist. You didn’t have a peer review when required.

Consider  the following –

Cost – think of the dollar cost and the amount of time it takes to go through a peer review. Depending on the timing, the replacement review may happen in the same year as the review would have otherwise happened anyway. Less lucky firms will have the review a year or two early.  Unlucky firms will get to have a replacement review covering the same time as the previous review – this means the cost will be doubled. …

Cascading consequences of your peer review report going away – peer review update part 3Read More »

Previous post explained that hundreds of peer review reports are in the process of being withdrawn because the firms did not tell their reviewer that the firm performs pension audits. As a result, the review did not cover any of those engagements.

Make sure you tell your peer reviewer about all the audits you perform. Things can get real bad real fast if you don’t.

What are the next steps?

The administering entities will confirm information provided by the Department of Labor with the peer reviewer and the reviewed firm. Assuming information is verified, the administering entity will withdraw the acceptance letter. The reviewer may withdraw his or her report.

It is my understanding that some reports have already been withdrawn. Firms are now going through the process of getting the replacement reviews.

They may or may not be able to use their current reviewer.

Impact on the replacement review

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Make sure you tell your peer reviewer about all the audits you do or things could get ugly – peer review update part 2Read More »

There are apparently several hundred peer review reports in the process of being withdrawn. This means those firms did not actually have a peer review.

This is the first in a series of 5 posts talking about this issue, two of which will consider the cascading consequence of not having a peer review.

By the way, I will try to write this series of posts without using all the technicalities that exist in the peer review program. I’ll leave out some of the terminology, skip some details, and simplify some stuff. Goal is to help CPAs who don’t live in the peer review world. For those who do understand the nuances, please keep in mind I’m simplifying.

How did this get started?

Apparently the Department of Labor pulled a sample of hundreds (maybe thousands) of pension audits from their files. They looked at the peer review reports for the auditors of those plans.

They found hundreds of situations where the firm auditing a pension plan did not have a peer review report which said a pension plan audit was included in the scope of the review.

Why is this an issue? Must-selects must be reviewed

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Make sure you tell your peer reviewer about all the audits you do or things could get ugly – peer review update part 1Read More »