The Institute of Chartered Accountants of India (ICAI) has always been striving to drive several initiatives to improve the quality of assurance services rendered by its members. Peer Review has been one such step in that direction, over the years, this has been a self-regulatory mechanism to assure society and stakeholders at large, that the profession is aware of its responsibilities and strives its best to ensure that all the practicing members rendering service to the public adhere to the highest standards.
The Council of ICAI has been working diligently to improve the quality of assurance services provided by its members. Empanelment of the reviewers through an assessment test was an initiative in that direction.
While sharing the decision taken during recently concluded Council Meeting, CA. Nihar N Jambusaria, President, ICAI mentioned “This is a historic decision to mandate the Peer Review mechanism for certain categories of firms rendering assurance services to specific class of entities and will go a long way in enhancing the audit quality .” Realising the extent of wide range of the Practice units, some of which have multiple branches located in different parts of the country while others may be operating only at sole proprietor level, the roadmap has classified Practice Units into four categories and prescribed the implementation of peer review process over a four year time period.
The implementation will begin, in a phased manner, from April 1, 2022 and will first apply to practice units (Firms) that have undertaken Statutory Audit of enterprises and whose equity or debt securities are listed in India. CA. Dayaniwas Sharma, Chairman, Peer Review Board of ICAI said “Over the next three years, the roll out would steadily cover firms providing assurance services to companies other than those listed on stock exchanges. The second phase is for the firms which have undertaken Statutory Audit of unlisted public companies having paid-up capital of not less than Rs.500 crore or having annual turnover of not less than Rs.1000 crore or having, in aggregate, outstanding loans, debentures and deposits of not less than Rs.500 crore as on the March 31st of immediately preceding financial year.”
The third phase covers firms which have undertaken the Statutory Audit of entities and have raised funds from public or banks or financial institutions of over Rs. 50 crore during the period under review or of any body corporate including trusts which are covered under public interest entities. The last leg of the mandate covers firms conducting audits of branches of Public Sector banks.