CA Firms to Undergo Mandatory Peer Review from April 1

From April 1, all chartered accountant (CA) firms working with publicly listed companies will be subject to mandatory peer review, according to Debashis Mitra, president of the Institute of Chartered Accountants of India (ICAI). A peer review is an in-depth examination of one firm’s professional competence by another professional. The ICAI maintains an empaneled list of expert members who are available for peer review.

Over the next three years, the ICAI said, the roll out would gradually cover firms providing assurance services to companies other than those listed on stock exchanges, as well as those conducting audits of PSB branches. The peer review of all CA firms working with publicly traded companies is expected to be completed in four years.

Peer review has been practiced for some time, though it was done on a voluntary basis. According to Mitra, 1,170 businesses voluntarily participated in the review process. “A detailed roadmap has been established that categorizes Practice Units into four groups and prescribes the implementation of the peer review process. The phased implementation will begin on April 1, 2022, and will initially apply to practice units (Firms) that have undertaken Statutory Audit of enterprises whose equity or debt securities are listed in India or abroad” ICAI stated.

According to Mitra, the ICAI has been working hard to improve the quality of assurance services provided by its members. “Peer review is one such initiative, and the ICAI has been working hard to improve the quality of Assurance Perception Services provided by its members through it. Recently, the ICAI council mandated a peer review mechanism for specific categories of firms providing assurance services to specific classes of entities, which will go a long way toward improving audit quality “He stated.

ICAI also intends to develop and publish a single Comprehensive Framework for Social Audit Standards for auditing Impact Reporting of Social Enterprises listed on SSE, as well as area specific Social Audit Standards with respect to sub-themes of social impact, such as poverty, nutrition, and so on. The standards would cover all aspects of impact reporting assurance, such as scope, engagement acceptance, basic principles, audit procedures, assurance report, documentation, and so on.