Peer Review Manual

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peer review ICAI

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The Institute of Chartered Accountants of India All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form, or by any means, electronic, mechanical, photocopying, recording, or otherwise without prior permission, in writing, from the publisher. First Edition : Second Edition : Committee/ Department E-mail Website Price ISBN Published by : December, 2005 December, 2009 Peer Review Board

: : : : :

peerreviewboard@icai.org www.icai.org Rs. 75/978-81-88437-35-9 The Publication Department on behalf of the Institute of Chartered Accountants of India, ICAI Bhawan, Post Box No. 7100, Indraprastha Marg, New Delhi - 110 002. Sahitya Bhawan Publications, Hospital Road, Agra 282 003. December/2009/500 Copies

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FOREWORDThe Peer Review Board of the Institute established in year 2002, has been a successful endeavour which has so far been able to achieve its objectives for which it was set up. The Concept of Peer Review which was an unfamiliar subject at the time of its establishment and was received with some initial skepticism and suspicion amongst the Chartered Accountants fraternity has come a long way since then. Peer Review Board with a modest start has achieved some impressive statistics which shows that the concept of Peer Review has been well understood amongst the fraternity. Peer Review Process has become more significant, pursuant to the recommendation of the Institute to SEBI that from accounting periods commencing on or after April 1, 2009, all Listed Companies would be audited by only those Firms/Practice Units that have been issued Peer Review Certificate by the Peer Review Board of the Institute. Further, it is worth mentioning that Comptroller & Auditor General of India has recognised Peer Review Boards work; as it seeks additional details from the Chartered Accountants firms about their Peer Review Status in the application form for allotment of audit for Public Sector Undertakings. Furthermore from last few years the C&AG annually seeks details from the Institute of those firms which have been issued certificate by the Peer Review Board. Peer Review Board in its landmark history of seven years has organised nearly hundred ten training programmes imparting training to more than 4000 reviewers. Presently, the Board has covered around 12000 firms under the purview of Peer Review and issued Peer Review Certificates to nearly 4000 firms. Since the time, it was published, the Statement of Peer Review has been revised in the year 2007, in view of some important decisions taken by the Council & Board has necessitated an updation in the FAQs.

As always our endeavour to provide the latest and updated information to members, the Board has come out with an updated & improved version of the FAQs for the benefit of members. We hope our current effort will prove useful and informative for the Practice Units & Members and help them in smooth conduct of their Peer Review. I would like to place on record, on behalf of Council, my deep appreciation for the efforts put in by the Chairman of the Board, CA. K. Raghu, together with all members of the Board and his team in bringing out this informative booklet objectively.

New Delhi December,2009

CA. Uttam Prakash Agarwal President

PREFACEPeer Review Process has been gaining momentum since its inception. The mechanism is widely understood and well accepted. Peer Review Training Programme are being conducted regularly all across the country. The participants of the programme have immensely gained from these programs. During these programs various important questions with regard to the peer review mechanism and the recent updates/ changes are raised. The Faculty invited has mostly answered to the best of their ability to respond to the queries raised. However, there might still be several questions that can storm the minds of the Reviewers as well as the Practice Units. This concise collection of Frequently Asked Questions is an effort towards answering appropriate and satisfactory answers to various questions that bring doubts on the Process. It may be seen that the latest edition has many new decisions taken by the Council and the Peer Review Board, which have been incorporated in this revised edition. I wish to place on record my gratitude to CA. Shashi Gupta Senior member of the profession who has revised this edition and to all the Members of the Board for providing their whole-hearted cooperation. The Board would welcome suggestions and improvements in the contents of the booklet. I sincerely hope that this booklet will prove to be very useful to the Reviewers/ Practice Units/ Practicing members to provide quality professional services in accordance with the professional and ethical norms, and practices so as to make the accounting profession respectable and reliable. December,2009 Bangalore

CA. K. Raghu Chairman Peer Review Board

FOREWORD TO FIRST EDITIONThe Peer Review Board since its inception has published the Peer Review Manual followed by the Training Modules to clarify the process of peer review and provide guidance to members, to achieve the objective of the peer review. The enthusiasm shown by the Reviewers, empanelled by the Peer Review Board, at the Training Pogrammes, as per the feedback received so far, is an encouraging sign that the peer review mechanism introduced by the Institute is being received with smile. Accountancy profession is the first and the only profession in the country which has taken a proactive step to ensure that its members provide their services to the users, stakeholders, regulatory authorities, in the best possible manner and comparable to global practices, by ensuring compliance with various pronouncements issued by the Institute from time to time. While various questions raised at the Training Programmes, have been satisfactorily answered by the Trainers, there still might be some questions in the minds of the Reviewers and the Practice Units also might be thinking of the implications of the inability to come upto the expectations of the Reviewer or the Peer Review Board. With this objective in view, the Peer Review Board has endeavoured to develop this booklet or Frequently Asked Questions (FAQs) on peer review process, obligations of Pus, role of the Reviewer, Powers of the Board, insulation from disciplinary jurisdiction etc. I am confident that both the Reviewers and the Practice Units will find this compilation useful and handy, as also the answers they might be looking for, for numerous questions. I would like to place on record Councils appreciation for the efforts put in by Shri Shantilal Daga, Chairman, Peer Review Board and his team in bringing out this informative booklet. New Delhi, May 27, 2004 Sunil Goyal President

PREFACE TO FIRST EDITIONThis Peer Review Board established since July, 2002 has been striving hard to ensure that the peer review process is conducted in the most efficient manner. Towards this end, it published Peer Review Manual and Training Modules for the benefit of both the Reviewers and the Practice Units. The Boards started imparting Training to empanelled Reviewers in October 2003 and 15 such Programmes have been held so far. In the process, almost one-third of the Peer Reviewers empanelled with the Board have been imparted adequate and necessary training before embarking on peer review assignments. The participation at the Training Programmes has evoked several important questions with regard to the peer review mechanism introduced by the accountancy profession a leader in this behalf in the country. While the Trainers have tried to the best of their ability to respond to the queries raised, the Peer Review Board felt that there may still be several questions agitating the minds of the Reviewers, on the one hand and the Practice Units, on the other. In this booklet, efforts have been made to formulate questions likely to be posed and provide appropriate and satisfactory answers therefore. The posers in the compilation relate to the Powers of the Peer Review Board, Reviewers role, Practice Units responsibilities etc. We have also tried to clear the doubts that the Practice Units might be having as to what would happen if the systems and procedures obtaining in the Unit are found deficient in any respect. I wish to place on record my deep sense of gratitude for Shri Sunil Bhargava, my predecessor, for having conceived the idea of documenting the questions asked at various Training Programmes which is now in your hands in this booklet form. I also with to record my appreciation for the efforts put in by the officers and staff of the Peer Review Board who have made this endeavour possible and bought it to fruition. It is

likely that some aspects may have remained to be covered and the Board would welcome suggestions for addition of questions and improvements in the contents of the booklet. I am also indebted to the members of the Board for providing their whole-hearted cooperation.

Hyderabad, May 24, 2004

Shantilal Daga Chairman Peer Review Board

CONTENTForeword ....................................................................................................................................(iii) Preface .......................................................................................................................................(vii) Introduction ...............................................................................................................................01 Reviewer......................................................................................................................................08 Practice Unit ..............................................................................................................................11 Cost of Peer