ICAI Announces Peer Review Mandate Roll Out

At its 407th meeting, held on the 7th and 9th of January 2022, the Council resolved to mandate the Peer Review process in order to cover additional firms. On the website, there was an announcement dated 12.02.2022 in this regard.

Certain issues, such as the time limit for compliance with the mandate, the credentials of the reviewer of listed business auditors, and so on, needed to be revised to provide more clarity. The Council addressed the issue at its 410th Meeting, which took place on March 24th and 25th, 2022. Holding a valid Peer Review certificate by Practice Units (referred to as “firms” in the Announcement dated 12.02.2022) should be a pre-requisite for auditing all entities falling within phases I, II, III, and IV of the mandate from the relevant dates of mandate being active.

As a result, the Peer Review Mandate (Revised), which will take effect on April 1, 2022, has been developed in four stages:

As a result, at each phase, the concerned Practice Unit shall have a Peer Review Certificate before conducting a statutory audit.

For example, having a Peer Review Certificate for undertaking Statutory Audit of unlisted public companies with paid-up capital of not less than rupees five hundred crores or annual turnover of not less than rupees one thousand crores or having, in aggregate, outstanding loans, debentures, and deposits of not less than rupees five hundred crores as on the 31st March of the immediately preceding year is a pre-requisite for the Practice Units as of April 1, 2023.

If a Practice Unit is in possession of a Peer Review Certificate on the date when Peer Review becomes required, there is no need to subject the Practice Unit to Peer Review again until the validity period of the said Certificate expires. On the expiration of the validity of the Peer Review Certificate that was available at the time Peer Review became mandatory, such a Practice Unit must get a new Peer Review Certificate.

Any company that is part of phase I of the rollout must fill out a declaration form, which can be found at https://forms.office.com/r/AA5Zpgdsrr.

In the case of auditors/Practice Units auditing listed entities, a reviewer who has conducted an audit of the listed entity or who has undergone additional training and testing for this purpose, in addition to regular training and testing, is eligible to do peer review.

The Peer Review Board will soon announce guidelines for the granting of Peer Review Certificates to newly created firms (i.e. firms that have been in operation for less than 12 months).