1-501.   Peer review; firm registration; boardoversight; waivers; privileged information; closed sessions of the board;immunity.(a) The board may require as a condition for renewal ofa firm registration that a firm that provides attest services undergo apeer review and submit evidence of such so that the board maydetermine the degree of the firm's compliance with generally acceptedaccounting principles, generally accepted auditing standards and othersimilarly recognized authoritative technical standards. The reviews shalloccur at least once every three years with the cost of such review to be borneby the firm.

      (b)   Upon the issuance of the first report subject to peer review, a firmshall immediately notify the board on a form provided by the board;register as a firm in compliance with K.S.A. 1-308, and amendments thereto; andprovide a peer review letter of completion to the board within 18 months afterthe date on which the report subject to peer review was issued.

      (c)   A firm's completion of a peer review programendorsed or supported by the AICPA or other substantially similarprograms shallsatisfy the requirements of this section. The board shall provide foroversight of these programs by adoption of rules and regulations.

      (d)   A firm mayrequest in writing uponforms provided by the board, a waiver from the review requirement. The boardmay grant a waiver ifthe firm does not perform or has not performed any attest services duringthe twelve-month period preceding the date of application or for good cause asdetermined by the board.

      A firm granted a waiver on thebasis that the firm does not perform or intend to perform attest servicesshall immediatelynotify the board if the firm engages insuchpractice and thus becomes subject to the review.

      (e)   Except as provided by K.S.A. 60-437, and amendmentsthereto, and subsections (f) and (h) of this section, anyreports, statements, memoranda, transcripts, findings, records, or workingpapers prepared and any opinions formulated, in connection with any peer reviewshall be privileged and shall not be subject todiscovery, subpoena or other means of legal compulsion for their release toany person or entity or be admissible in evidence in any judicial oradministrative proceeding, except that such privilege shall not exist whenthe material in question is involved in a dispute between a reviewer andthe person or firm being reviewed.

      (f)   Nothing in subsection (e) shall limit the authority ofthe board to require a person whose work is the subject of a peer review or afirm to provide a copy of an adverse or modified peer review report and anyresponses toreport deficiencies from the person or firm and anydocument identifying follow-uprequirements for thepurpose of determining the person's or firm's compliance with generallyaccepted accounting principles, generally accepted auditing standards and othersimilarly recognized authoritative technical standards, provided however, theboard may not request or require a person or firm subject to a peer review toprovide a peer review report or any other document contained in this sectionunless the peer review report has been accepted by a report acceptancecommittee under the peer review program after December 31, 2001.

      (g)   After considering AICPA standards on peer review, theboard may define, by rules and regulations, the terms "modified" and "adverse."

      (h)   In any proceeding before the board in which discussionor admission into evidence of peer review report documents identified insubsection (f) is proposed, the board or presiding officer shall conduct thatportion of the proceeding in closed session. In closing a portion of suchproceeding, the board or presiding officer may exclude any person from theproceeding except the person whose work is the subject of peer review, membersof the permit holder's firm, the attorneys representing the parties, theboard's attorneys,necessary witnesses and a court reporter. The board or presiding officer shallmake the portions of the agency record in which such documents are disclosedsubject to a protective order prohibiting further disclosure. Documents thatare privileged under subsection (e) and that are considered during a closedproceeding shall not be subject to discovery, subpoena or other means of legalcompulsion for their release to any person or entity. No person in attendanceat a closed portion of such proceeding shall at a subsequent civil, criminal oradministrative hearing, be required to testify regarding the existence orcontent of a document privileged under subsection (e) which was disclosed in aclosed portion of a proceeding, nor shall such testimony be admitted intoevidence in any subsequent civil, criminal or administrative hearing. All otherevidence shall be presented as part of the proceeding in an open meeting.Offering any testimony or records in the open portion of a proceeding shall notbe deemed a waiver of the peer review privilege created in subsection (e).

      (i)   No person who participates in the conduct of any peerreview within thescope of this section shall be liable in damages to any person for any actiontaken or recommendation made in connection with the peer review process.

      History:   L. 1987, ch. 2, § 1;L. 1990, ch. 2, § 1;L. 1993, ch. 103, § 3;L. 2001, ch. 120, § 6;L. 2007, ch. 97, § 11;L. 2009, ch. 38, § 14; Apr. 2.