- 1. PEER REVIEW- AN OVERVIEW
2. PEER REVIEW:GENERAL MEANING
- The term Peer means aperson of similar standing . The term review means a general survey or assessment of a subject or thing. The term Peer Review would mean review of work done by a professional, by another professional of similar standing .
3. Definition of Peer Review (Para 3.4)
- Peer Review deals with examination and review of systems and procedures to determinewhether the systems and procedures are in:
- Operating continuously during the period under review
- Put in place by the practice Unit ( PU ).
4. NEED FOR PEER REVIEW
- Expectation of service Receiverto receivequality service
- Gap between minimum quality of service and actual service rendered.
- Reassuringthe stake holders and the society at large that the profession is conscious of its responsibilities and strives its bestto ensure that the highest standards are observed by all practising members rendering audit andattestation services to the society .The Peer Review process is an endevourto enhance the quality of services rendered by members of ICAI in public practice.
5. Global Scenarioin Peer Review
- Independent Regulator in certain countries
- In some countries disciplinary action if deficiency in services of Auditor is found.
- In the US, public accountancy firms are required to enrol in an approved Practice Monitoring Programme in order to be admitted to or retain membership in the AICPA (the professional body in the US).Furthermore, under Sec 104 of theSarbanes-Oxley Act, 2002they are additionally liable to be inspected by thePCAOB(Public Companies Accounting Oversight Board), to assess the degree to which each firm and its associated persons comply with the Act, the PCAOB and SEC rules, the professional and reporting standards, etc.
- Existence in Most of the developed Countries-50
6. U.K. Position
- The Audit Inspection Unit (AIU), part of the Professional Oversight Board, is responsible for the monitoring of the audits of all listed and other major public interest entities. The AIU was set up following the Governments post-Enron review of the regulation of the UK accountancy profession which reported in January 2003. The review teams report recommended enhancing the monitoring of the audits of listed and other major public interest entities through a new independent inspection unit (the AIU) reporting to a professional oversight board (the POB) within an integrated independent regulator (the FRC).The professional accountancy bodies continue to register firms to conduct audit work with their regulatory activities being overseen by the POB. The audit registration committees of the accountancy bodies receive formal reports from the AIU on our monitoring work, with the POB overseeing the action taken by them in response to our recommendations. The Companies (Audit, Investigations and Community Enterprises) Act 2004 implemented the statutory changes necessary to give effect to these arrangements.
7. Present Peer Review System In India
- Supervisor Within Institute of Chartered Accountants of India
- Chinese Wall between Peer Review process and Disciplinary Mechanism ( No disciplinary action even if there is deficiency in service of Auditor)
- Audit of accounts after 1st April 2002onlycovered
- Peer Reviewers are Individual Members of the Institute(possessing 15 years or more experience of audit)
8. Present Peer Review System In India
- Three Stages of Peer Review In India
- Stage I-Mandatory Peer Review once in three years
- Stage II-No Time limit, Proposed Once in 5 years
- Stage III- No Time Limit, Proposed Once in 7 years
- (Only Attestation services Covered)
9. The Regulatory Framework to bring the light of the day
- The Chartered Accountants (Amendment)Act, 2005
- Bill Introduces new Chapter VIIA in Chartered Accountants Act 1949.
- Chapter VII A consists of Sections 28A to 28D.
- Central Government will constituteQuality review board (QRB) consisting of 11 persons.
10. The Regulatory Framework to bring the light of the day contd.
- Council of ICAI will nominate 5 members on QRB
- Chairman and other 5 members will be appointed by Central Government
- All services provided by members(Both attestation and non attestation will be subject to Quality Review)
- Disciplinary actionif there is a deficiency in service.
11. Composition of Peer Review Board at Institute of Chartered Accountants of India
- The Board consists of 10 members appointed by the Council
- Of whom atleast six are from amongst the members of the Council.
- Representatives from the Department of Company Affairs, Comptroller and Auditor General of India and Industry (FICCI/ CII) as members
- In addition, persons of eminence from legal, banking and education sectors (a retired High Court Judge, CMD, Bank of Maharashtra, CE, Indian Banks Association, Chairman, UGC) and a former President of the Institute assist the Board in its deliberations as Special Invitees.
12. Salient Features of the Statement on Peer Review 13. Some features of the Statement.
- Statement on peer review was passed by Council in March 2002
- First meeting of Peer Review board took place in July 2002
- Statement on Peer Review serves as a mechanism as is intended to further enhance the quality of professional work of practising chartered accountants over a period of time.Therebyensuring that the profession of chartered accountants continue to serve the society in the manner envisaged.
- Statement issued under Section 15 of the Institute of Chartered Accountants Act 1949 which provides that the duties of carrying out the provisions of the Act shall be vested in the Council.The section enumerates various duties of the Council.With a view to regulate the profession and in terms of powers vested, this statement has been issued.
14. Statement on Peer review
- (Attestation Services Member, PU, Peer Review, Peer Review Board, Review of Technical Standards)
- Authority of the statement on Peer review
- 9. Compliance with this statement of Peer review
- 10. Qualifications of the reviewer
- 11. Members/ Firms subject to review
15. Statement on Peer review contd.
- 12. Obligation of the practice Unit
- 13. Periodicity of Peer Review
- 15. Training and Development
- 17. Referral of Disputes and Appeals
- (Reference to Peer Review Board over the powers of the Reviewer or to conclusions reached by Reviewer or any other matter related to Review)
- (No liability of PU under Code of Ethics)
- 20. Procedural departures
16. Objective of Peer Review (Para 2.1 )
- Assessingthe maintenance of Quality of Attestation Service Engagements performed by Practice Units through:
- -Compliancewith Technical Standards ; and
- -Existence of proper system (including documentation systems)
- Not to find out deficiencies but toimprove the quality of services renderedby the members
- Not to identify isolated cases of engagement failure, but toidentify weaknesses that are pervasive and chronic in nature
17. Scope of Peer Review (Para 7.0)
- Attestation Engagement Records forimmediately preceding three completed financial years(Records prior to accounting year beginning 1.04.2002 shall not be subjected to review)
- Technical Standards compliance
- Office Systems and Procedures ( attestation services only)
- Staff training Programmes ( attestation services only)
18. Attestation Services(Para 3.1)
- A uditing or verification of financial transactions/ books/ accounts/ records
- Verification/ certification of financial accounting & related statements defined under Section 2(2)(ii) of the Chartered Accountants Act, 1949
- Internal Audit/Concurrent Audit
- Management Consulting Engagements