It's the Law
For license renewals on or after July 1, 2012, all firms and sole practitioners who provide services (i.e., accountancy activities) requiring an Illinois license under Section 8.05(a)(1) of the Illinois Public Accounting Act (i.e., audits and/or reviews of historical financial statements and/or examinations of prospective financial statements) must undergo a peer review every three years.
Just the Facts
If your firm or sole proprietorship (hereinafter referred to as “firm”) performs one or more audit, review, or examination of prospective financial statement (i.e., forecast or projection) engagements, your firm must be enrolled with the Peer Review Alliance (department of the Illinois CPA Society), AICPA, or other approved peer review administrator and have satisfactorily completed a peer review during the three years immediately preceding its license renewal.
If you perform accountancy activities as a sole practitioner and issue the aforementioned reports under your own individual CPA license (e.g. John Jones, CPA), you must be enrolled in the program and have satisfactorily completed a peer review in the three years immediately preceding your individual Illinois CPA license renewal.
If you perform accountancy activities and issue the aforementioned reports under a business name other than the licensee's own name, including but not limited to a business name that contains such words as “and Company”, “and Associates”, or similar words indicating that others take part in the conduct of the business, your firm must be separately licensed, be enrolled in the program, and have satisfactorily completed a peer review in the three years immediately preceding its license renewal.
If your firm only performs full or non-disclosure compilation engagements AND you or any member of your firm is an AICPA member, your firm is subject to peer review under the AICPA individual membership requirements.
If your firm only performs full or non-disclosure compilation engagements AND neither you nor any member of your firm is an AICPA member, your firm is not subject to peer review under the state of Illinois’ licensing requirements.
If subsequent to your license renewal, you accept an audit, review or examination of prospective financial statement engagement, you must notify the Illinois Department of Financial and Professional Regulation (IDFPR) within 30 days of accepting the engagement and undergo a peer review within 18 months after the end of the period covered by the engagement.
If your firm only performs preparation service engagements under SSARS AND you or any member of your firm is an AICPA member, your firm is not required to enroll in the AICPA Peer Review Program. However, if your firm remains enrolled in the AICPA Peer Review Program, even though not required to do so, your firm must have an engagement peer review.
If your firm only performs preparation service engagements under SSARS AND neither you nor any member of your firm is an AICPA member, your firm is not subject to peer review.
Tax and consulting services are not subject to peer review under the state of Illinois’ licensing requirements or AICPA membership requirements.
The scope of the peer review will include all accounting and auditing engagements with client periods ending during a twelve-month period mutually agreed to by you and your peer reviewer (i.e., the peer review year). The peer review year generally ends six months prior to your peer review due date.
The rules for administration of the Illinois Public Accounting Act authorize the Peer Review Alliance (department of the Illinois CPA Society), AICPA, and other qualified peer review administrators to assign peer review due dates. The peer review administrator may consider the number and types of engagements to be encompassed in the review, the year-ends and report date of the engagements, and state licensing requirements in determining an appropriate due date. A firm’s subsequent peer review ordinarily will be due three years and six months from its prior peer review year-end.
Your direct peer review costs will have two components: (1) an annual fee paid to the peer review administrator to cover the costs of running the program and (2) the fee paid to the peer reviewer for the actual review.
1) Please see the Peer Review Alliance Administrative Fee Schedule for details on the annual administrative fee.
2) Fees paid to the peer reviewer can vary greatly depending on the nature of your practice. Your firm’s client demographics have a greater effect on the cost of your review than firm size. For instance, a sole practitioner whose practice is 70% accounting & auditing and 30% tax work, and who conducts several audits of governmental entities will have a more costly peer review than a firm with ten professionals performing mostly compilation and review engagements.
