The Institute of Chartered Accountants of India (ICAI) has announced that the second phase of the Peer Review Mandate will now be mandatory from July 1, 2023. This decision was taken during the Central Council meeting held on March 23rd and 24th, 2023 and supersedes the earlier decision of implementing the Peer Review Phase II from April 1, 2023.
ICAI Announcement dated 10/05/2023: Deferment of second phase of Peer Review Mandate
What is Peer Review Mandate?
Peer Review Mandate is a process of evaluating the quality of services provided by practicing Chartered Accountants in India. It is mandatory for all practicing Chartered Accountants to undergo this review process, which is conducted by other members of the ICAI who are designated as Peer Reviewers. The review process evaluates the quality of services provided by the Chartered Accountants in areas such as accounting, auditing, taxation, and related fields, and helps identify areas of improvement.
What is the Second Phase of Peer Review Mandate?
First phase launched in 2022 which was applicable for auditors of listed companies. Second phase is designed to further strengthen the Peer Review process and improve the quality of services provided by practicing Chartered Accountants. The second phase includes additional criteria for obtaining a Peer Review Certificate, which is required before conducting a Statutory Audit of ‘unlisted public companies’.
What are the Criteria for Obtaining a Peer Review Certificate in Phase II?
Practice Units are 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 five or more partners must obtain a Peer Review Certificate before conducting any Statutory Audit.
The decision of the Central Council of the Institute of Chartered Accountants of India to make the second phase of Peer Review Mandate mandatory from July 1, 2023, is a step towards ensuring the quality of services provided by practicing Chartered Accountants. The enhanced Peer Review process will not only help maintain high professional standards but also bring transparency and accountability to the profession. It is important for practicing Chartered Accountants to adhere to the guidelines laid down by the ICAI and obtain a Peer Review Certificate before conducting a Statutory Audit of unlisted public companies or attestation services, as mandated under Phase II. By doing so, they will maintain the highest level of professional competence and ethical standards in their work, and contribute to the growth of the profession.