In accordance with the plans to mandate the peer review process in a phased manner, the ICAI has mandated Phase I (beginning on April 1, 2022) and Phase II (beginning on April 1, 2023) for obtaining a peer review certificate by the relevant practise units.
Peer Review Phase I: Implemented from 01/04/2022
On April 1, 2022, the first phase of the peer review process has been implemented, which requires practice Units to obtain a Peer Review Certificate before conducting Statutory Audits of enterprises whose equity or debt securities are listed in India or abroad, as defined by the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Practice Units covered by Phase I must submit a declaration form, which can be found at https://forms.office.com/r/AA5Zpgdsrr.
Peer Review Phase II: To be implemented from 01/04/2023
The second phase of the peer review process will begin on April 1, 2023, with Practice Units required to obtain a Peer Review Certificate before undertaking Statutory Audit of unlisted public companies with paid-up capital of not less than Rs. 500 crores, annual turnover of not less than Rs. 1000 crores, or outstanding loans, debentures, and deposits of not less than Rs. 500 crores as of March 31, 2023. Additionally, Practice Units that provide attestation services and have 5 or more partners must obtain a Peer Review Certificate before conducting any Statutory Audit.
Peer Review Phase III: Proposed Implementation date 01/04/2024
On April 1, 2024, Phase III of the peer review process is proposed to begin, requiring practise units to obtain a peer review certificate before undertaking statutory audits of entities that have raised funds from the public or banks or financial institutions in excess of fifty crores rupees during the period under review or of any body corporate, including trusts, that are covered under public interest entities. In addition, practise units that provide attestation services and have four or more partners must obtain a peer review certificate before conducting any statutory audit.
Peer Review Phase IV: Proposed Implementation date 01/04/2025
Phase IV of the peer review process is scheduled to begin on April 1, 2025, and will require practise units to obtain a peer review certificate before auditing public sector bank branches. In addition, practise units that provide attestation services and have three or more partners must have a peer review certificate before conducting any statutory audit.
ICAI mandates Peer Review Phase II to be implemented from 01/04/2023
The ICAI has mandated Phase II of the peer review process, which will be effective on April 1, 2023. The practise units have been advised to take note and submit to peer review.
ICAI Announcement dt. 09/11/2022: Peer Review Mandate Phase II Roll Out
ICAI Clarification on Peer Review Certificates without Expiry Date
Practising units (PUs) that received peer review certificates from the Peer Review Board before April 16, 2015, may have noticed that the certificate’s issuance date was listed but not its validity period. Due to the Peer Review Certificate’s lack of an expiration date, the Practice Units are confused and believe they still have a valid Board certificate.
At its 413th meeting in August 2022, the Council decided that peer review certificates issued up until April 16, 2015 without a stated end date would expire on December 31, 2022, but they would remain valid until then.
For practise units with certificates without an expiration date, the firm peer review must be completed by December 31, 2022. Thus, the peer review certificate remains valid.
ICAI Announcement dt. 10/11/2022: Certificates issued by Peer Review Board to Practice Units without end date
ICAI Clarifies Requirement of Peer Review Phase I implemented from 01/04/2022
In light of the revision to the Peer Review Mandate made to cover more audit firms under the Process in a phased manner, the ICAI clarifies the requirement of a Peer Review Certificate, a pre-requisite, for conducting audits of all entities, starting from April 1, 2022.
Clarification was required for some elements, such as the deadline for mandate compliance, the qualifications of the reviewer of listed entity auditors, etc. The Council addressed the issue at its 410th Meeting, which took place on March 24 and 25, 2022. It was made clear that having a current peer review certificate should be a requirement for conducting audits of all entities falling under phases I, II, III, and IV of the mandate by Practice Units (referred to as “firms” in the announcement dated 12/02/2022).
ICAI Announcement dt. 05/04/2022: Revision in Peer Review Mandate
ICAI rolls out plans to mandate Peer Review process
The Council at its 407th Meeting of the Council held from 7th to 9th January 2022 decided to mandate the Peer Review process for coverage of more firms under Peer Review process. The roll out shall be made in four stages:
ICAI Announcement dt. 12/02/2022: Peer Review Mandate-Roll Out
It is important to note that “peer review” is a process in which every audit firm will be required to go through a quality check by another firm. The purpose of this process is to ensure that the quality of work done by firms is up to the mark and in compliance with the standards set by ICAI. This activity will not only assist in preserving the quality of audit work, but it will also serve as a dissuasive measure for businesses that do not adhere to the auditing and other standards. The second phase of peer review is thus a welcome move by ICAI and will go a long way toward ensuring that the quality of work done by firms is up to mark. This move is a welcome move by ICAI and will go a long way toward ensuring that the work is up to mark.