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Introduction - Scope

The Statement on Peer Review lays down the scope of review to be conducted as under:

    "7.1 The peer review process is directed at the attestation services of a practice unit.

  1. Once a practice unit is selected for review, its attestation engagement records pertaining to the immediately preceding three completed financial years shall be subjected to review. Provided that the records of audit reports/attestation services relating to years prior to the accounting year beginning 1.04.2002 shall not be subjected to review.

  2. The review shall focus on:

    1. Compliance with Technical Standards.

    2. Quality of Reporting.

    3. Office systems and procedures with regard to compliance of attestation services systems and procedures.

    4. Training Programs for staff (including Articled and Audit Clerks) concerned with attestation functions, including appropriate infrastructure."

As is clear from the above, the first part of paragraph (7) of the Statement aims to confine the scope of review to preceding three years since this would establish the consistency or deviations, if any, in respect of procedures followed by the practice unit. The tenure of immediately three financial years, perhaps, has been envisaged since all practice units would not be subjected to mandatory annual review. However in the first year of its implementation, it provides clearly that records of attestation services relating to the accounting year beginning on or after April 1,2002 only shall be subjected to review.

The second part of paragraph (7) of the Statement indeed defines the scope of peer review which revolves around compliance with technical standards; quality of reporting; office systems and procedures with regard to compliance of attestation engagements; and, training programmes for staff including articled and audit clerks involved in attestation engagements.

The reviewers may note that the entire peer review process is directed at the attestation services which may be used interchangeably as audit services, attestation function or audit functions of a practice unit. The attestation services which shall be subjected to peer review include auditing or verification of financial transactions, books, accounts or records and verification or certification of financial accounting and related statements as defined under section 2(2)(ii) of the Chartered Accountants Act, 1949. Specifically, the services which have been excluded from the scope of attestation services are all management consulting engagements, representation services, taxation matters, compilation/preparation of financial statements, compilation of any other information, testifying as expert witness and providing expert opinion on points of principle. It may be noted that while reviewing office systems and procedures and training programmes for the staff, the reviewer shall focus on such areas with reference to attestation engagements only.

It is also quite important for a reviewer to understand the scope of review with reference to compliance with technical standards because the said term has been defined in an inclusive manner in the Statement on Peer Review. As per the Statement, the term "Technical Standards" include accounting standards; auditing standards; framework in respect of accounting and auditing; statements; guidance notes; self-regulatory measures; and, relevant legislation in the context of specific engagement. Therefore, the reviewer shall have to concentrate on compliance with all standards, statements, guidance notes, notifications and relevant legislative requirements in respect of services rendered by the practice unit while performing a particular attestation engagement.

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