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in this five-part series mentioned that there are a few hundred peer review reports that are in the process of being withdrawn by various state administering entities.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.
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.
Consider the cascading consequences from your peer review report being withdrawn.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 »