Mandatory peer review of all CA firms from April 1

From April 1 onwards, all chartered accountant (CA) firms engaged with public listed companies will undergo mandatory peer review, Debashis Mitra, president of Institute of Chartered Accountants of India (ICAI), said. The peer review is a thorough inspection of one firm's professional competence by a fellow professional. ICAI has an empanelled list of expert members available for peer review.

Over the next three years, the roll out would steadily cover firms providing assurance services to companies other than those listed on stock exchanges also including the ones conducting audits of branches of PSBs, ICAI said. The peer review of all CA firms engaged with public listed entities is expected to be complete in four years time.

The practice of peer review has been in place for some time now though it was done on a voluntary basis. Mitra said 1,170 firms have undergone this review process voluntarily. "A detailed roadmap has been laid down which classifies Practice Units into four categories and prescribes the implementation of peer review process. 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 whose equity or debt securities are listed in India or abroad," ICAI said.

According to Mitra, ICAI has been continuously working towards improving the quality of assurance services rendered by its members. "Peer review is one such initiative, through which the ICAI has been working diligently to improve the quality of Assurance Perception Services provided by its member. Recently, the council of ICAI has mandated peer review mechanism for certain categories of firms rendering assurance services to specific class of entities, which will go a long way in enhancing the audit quality," he said.

ICAI also plans to develop and issue a single Comprehensive Framework for Social Audit Standards for audit of Impact Reporting of Social Enterprises listed on SSE and area specific Social Audit Standards with respect to sub – themes of social impact, for example, poverty, nutrition etc. The standards would cover all aspects of assurance of impact reporting like, scope, engagement acceptance, basic principles, audit procedures, assurance report, documentation, etc.