CA Firms mandated to assess their current level of maturity model using Audit Quality Maturity Model

The Institute of Chartered Accountants of India (ICAI) has mandated the firms to undertake audit quality maturity evaluation through AQMM rev v1.0 w.e.f. 1st of April 2023.

The mandate covers the firms auditing (a) A listed entity; or (b) Bank other than co-operative bank (except multi-state co-operative bank); or (c) Insurance Company. However, those firms which are conducting only branch audits are excluded from this mandate.

This requirement was issued roughly a year after the AQMMv1.0 was introduced by the ICAI’s Centre for Audit Quality (CAQ) in July of 2021. Two improvements to the AQMM v 1.0 have been incorporated into the improved AQMM rev v1.0. As a result, in addition to the firm’s peer review, the scores and level reached by the firms must also be examined by a peer reviewer under the ICAI’s peer review mechanism.

Alternatively, the firm(s) may also choose to get their AQMM levels reviewed even before the peer review cycle gets due through an AQMM Reviewer. The level of the firm after being reviewed by the Peer reviewer/AQMM reviewer shall be hosted on the website of the ICAI alongside the details of the peer review certificate.

The ICAI Centre of Audit Quality was founded in 2020 with the goal of raising stakeholder confidence, dependability, and transparency by enhancing the audit quality of chartered accounting firms. Since its launch, the firms had been encouraged to carry out self-evaluation of the maturity of their audit quality to ascertain areas which needed to be strengthened. Currently, it is envisaged to include about 2000 chartered accounting companies in the scope of this requirement. Along with a thorough statement regarding its applicability, an implementation guide and FAQs have also been made available to assist the firms in undertaking the assessment.

A digital version of the AQMM rev v1.0 will also soon be released by the ICAI’s Centre for Audit Quality in order to assist the companies in completing the evaluation as well as the reviewers in doing the evaluations remotely.

AQMM offers the following benefits to the firms:

1. Assessing the current level of audit quality maturity.

2. Helps in identifying the areas needing improvisation.

3. Helps developing a roadmap for upgrading of the firms to the higher level of audit maturity.

4. Provides visibility to the firm by the Levels being hosted in the public domain.

While the model is still required for a specific group of businesses, it would be in the best interest of the other businesses to engage in self-evaluation using the AQMM to evaluate their performance and pinpoint their strengths and potential improvement areas.