Report on Audit Quality Review (2017-18) by Quality Review Board (QRB)
Quality Review Board (QRB) has issued a Report on Audit Quality Review for the period 2017-18, providing key findings and analysis of observations made by the Technical Reviewers in their review reports on auditing of of top listed and other public interest entities in India.
It may be noted that the Government of India has, in exercise of the powers conferred under Section 28A of the Chartered Accountants Act, 1949, constituted a Quality Review Board (the ‘Board’) to perform the following functions u/s 28B of the Chartered Accountants Act, 1949:-
a) to make recommendations to the Council with regard to the quality of services provided by the members of the Institute;
b) to review the quality of services provided by the members of the Institute including audit services; and
c) to guide the members of the Institute to improve the quality of services and adherence to the various statutory and other regulatory requirements.
Government of India has also issued ‘Chartered Accountants (Procedures of Meetings of Quality Review Board, and Terms and Conditions of Service and Allowances of the Chairperson and Members of the Board) Rules, 2006’. In terms of its Rule 6, in the discharge of its functions, the Board may, inter alia, evaluate and review the quality of work and services provided by the members of the Institute in such manner as it may decide and also lay down the procedure of evaluation criteria to evaluate various services being provided by the members of the Institute and to select, in such manner and form as it may decide, the individuals and firms rendering such services for review. Pursuant to the Rule 6, the Board has issued ‘Procedure for Quality Review of Audit Services of Audit Firms’ (the ‘Procedure’) providing for various matters, adopting best practices, in laying down the necessary system for conducting reviews of Audit firms in India.
In terms of the aforesaid Procedure, the Quality Review Board has initiated a system of independent review of statutory audit services of the audit firms auditing accounts of top listed and other public interest entities in India pursuant to a process comprising selection of the Audit firms for review and engagement of Technical Reviewers.
The Board has issued a Report on Audit Quality Review (2017-18) providing key findings and analysis of observations made by the Technical Reviewers in review reports during the period which is available at the website of the Quality Review Board (http://www.qrbca.in/wp-content/uploads/2018/07/qrb40447.pdf). It is hoped the concerned stakeholders will find it useful.
Report of the ‘Quality Review Board (QRB)’ on ‘Audit Quality’ for Review period 2015-16; Latest report is based on 102 cases reviewed by the QRB after its last report and upto August 2016
Since August 2012, the Board has selected a total of 454 review assignments for review of statutory audits of 349 companies/ entities, being public interest entities in India. These entities from various industries selected for review represent more than 75% market cap of the stocks listed on the National Stock Exchange (NSE, world’s 12th largest stock exchange with an overall market capitalization of US$1.65 trillion as of January, 2015) and Bombay Stock Exchange (BSE, world’s 11th largest stock exchange with an overall market capitalization of US $1.7 trillion as of January, 2015). Total of 249 Audit firms registered with the ICAI were selected for review of audit quality of these selected audit file/s. Since then, the Board has finalised a total of 257 review reports while reviewing audits of top listed and other public interest entities in India.
Based upon these 257 review reports, 28 cases have been recommended to the ICAI Council for consideration in terms of the requirements of Section 28B(a) of the Chartered Accountants Act, 1949 and in 136 cases appropriate advisories were issued by the Board to the concerned Audit firms for improvement in audit quality in terms of the requirements of Section 28B(c) of the Chartered Accountants Act, 1949. Out of the 28 cases recommended to the ICAI Council, it has decided to refer 6 cases to the Disciplinary Committee for initiating disciplinary proceedings; issue appropriate advisory to the concerned Audit firms in 18 cases; and close cases. One case is under consideration of the ICAI Council. Out of the total 257 review reports completed so far by the QRB, findings of 155 review reports were presented in the earlier Report of the QRB. Subsequently, 102 reviews have been completed till August, 2016. In this report, the QRB has included key findings, analysis and summary of observations made by the Reviewers in those 102 review reports.