The Institute of Chartered Accountants of India (ICAI) plays a vital role in maintaining and enhancing the quality of professional services offered by chartered accountants in India. One of its key quality assurance initiatives is the Peer Review mechanism—a structured process that ensures CA firms uphold professional and ethical standards, particularly in attestation services. If you’re a practicing chartered accountant or running a CA firm, understanding Peer Review by ICAI is essential for staying compliant and maintaining credibility. In this blog, we’ll break down everything you need to know—from its purpose to its process, applicability, and tips for smooth preparation.
What is Peer Review?, & Its Objective
Peer Review is a process through which another professional evaluates the work of a professional or professional entity to ensure compliance with technical, ethical, and professional standards. In the context of CAs, it is conducted by peers—qualified chartered accountants empanelled with ICAI.
The word Peer Review is defined in clause 2(14) of the Peer Review Guidelines 2022 as follows
Peer Review - means an examination and review of the systems and procedures to determine whether the same have been put in place by the Practice Unit for ensuring the quality of assurance services asenvisaged by the Technical, Professional and Ethical Standards as applicable including Audit Quality Maturity Model (AQMM) wherever applicable or any other regulatory requirements as may be prescribed by the Council or any Committee and whether the same were consistently applied during the period under review;
How is Peer Review being mandated?
ICAI established the Peer Review Board (PRB) in the year 2002, with an objective to enhance the quality of assurance services rendered by the members and to ensure adherence of various Technical, Professional and Ethical Standards by them.
Recently, ICAI has mandated Peer Review for certain firms rendering assurance services to specific classes of entities, which will go a long way in enhancing the audit quality. It is expected that more Practice Units will be Peer Reviewed, which will go a long way in enhancing the audit quality. The peer review is gaining relevance with time as more and more regulators are mandating it, for instance:
- SEBI has made it mandatory with effect from April 1, 2010, that the limited review/statutory audit reports submitted to the concerned stock exchanges by the listed entities shall be given only by those auditors who have subjected themselves to the peer review process and hold a valid certificate issued by the ‘Peer Review Board’ of the ICAI.
- CAG, in empaneling CA Firms, has decided to allocate substantial points to the Peer-Reviewed firms in the application form for allotment of audit for Public Sector Undertakings.
In line with the above, the ICAI has issued Peer Review Guidelines 2022, which is serving as a charter document for the Process of Peer Review. There are seven Chapters and ten Forms, which form part of the Guidelines.
List of Chapters and Forms prescribed by Peer Review Guidelines 2022
Chapter
- I. Preliminary
- II. Peer Review
- III. Peer Review Board
- IV. Administration
- V. Practice Units
- VI. Peer Reviewer
- VII. Miscellaneous
Forms
- Form 1- Application cum Questionnaire to be submitted by the Practice Unit
- Form 2- Acceptance cum Declaration of Confidentiality to be Submitted to the Practice Unit
- Form 3- Application cum Declaration for Empanelment as a Peer Reviewer
- Form 4– Declaration Form to be submitted by Board members and Secretariat
- Form 5- Notice by Peer Reviewer for visiting the office of the Practice Unit
- Form 6- Format for seeking additional information from the Practice Unit by the Reviewer
- Form 7- Joint application to be made by PU and RE for seeking additional time for completion of Peer Review process
- Form 8- Letter seeking extension to the validity of Peer Review Certificate
- Form 9- Letter for submission of report by the Peer Reviewer to the Peer Review Board
- Form 10- Notice to be given to the Practice Unit by the Board in case of revocation of Peer Review Certificate
What is a Practising Unit?
Practising Unit has been defined in clause 2(17) of the Peer Review Guidelines 2022 as follows:
Practice Unit - means a firm of Chartered Accountants or a member in Practice, practicing whether in an individual name or a trade name or such other entity as recognized by the Institute of Chartered Accountants of India from time to time;
What is the Peer Review Period?
Peer Review Period is the period of 3 financial years preceding the year in which the peer review is being done. This has been defined in clause 2(15) of the Peer Review Guidelines 2022 as follows:
Peer Review period – means three financial years preceding the year in which the Practice Unit is selected or such other period or any period as may be prescribed by the Peer Review Board for conducting a Peer Review in a specific case;
Example 1 – Standard 3-Year Period
- Suppose a CA firm is selected for Peer Review in FY 2024–25.
- The Peer Review Period would be:
- FY 2021–22
- FY 2022–23
- FY 2023–24
- These are the three financial years preceding the year of selection (2024–25).
Is it Mandatory for every CA Firm or Practising Unit to get a Peer Review Done?
Every Practising Unit or CA Firm doesn’t need to get the peer review done; rather, the same is governed by Regulation 5 of Guidelines 2022 as to who is required to get it done:
Mandatory Requirement
- For such Practice Units as may be decided by the Council.
- The Board may prescribe any other criteria for the selection of a Practice Unit for Peer Review as it may deem fit.
Voluntary Peer Review
- Any Practice Unit may, suo motu, apply to the Board for the conduct of its Peer Review voluntarily.
- A New Unit may also apply for Peer Review, whose
- Date of establishment is less than 12 months immediately preceding the date of receipt of the application for Peer Review, or
- In existence for a period exceeding 12 months but not rendering any assurance services,
Special Cases
- The Board, if in its opinion, requires a special Peer Review of the Practice Unit, may conduct a special Peer Review of the Practice Unit for such a period determined by the Board, based on specific information received from the
- Secretary, ICAI or
- the Disciplinary Directorate or
- any other Regulator
Process Flow of Peer Review
If all is not well, i.e., reviewer finds deficieny, then he can ask clarification from PU, to which PU shall response in 2 days and if compliance is done Reviewer issues unqualified report in form 9. If reviewer is not satisfied he can issue qualified report in form 9
FAQs
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