Peer review for chartered accountantsM. V. Kali Prasad Share ·
print · T+ The Institute of Chartered Accountants of India
(ICAI) has taken it upon itself to ensure the quality of the working
of its members through peer review. Peer review is review of the
professional competence of one chartered accountant by another. Such
an exercise ensures that the members of the institute comply with the
requirements of the profession and that the quality of services
rendered doesn't fall below the expected quality. The ICAI selects
from senior members with a standing of more than 10 years to function
as peer reviewers. The peer reviewers (PR) scrutinise the records of
the practising unit (PU) and send the report to the Institute.
STEPS INVOLVED
Peer review can be voluntary by the firms, or initiated by the ICAI.
PU is given a choice to select the reviewer from among three names
recommended by the ICAI. It is the ICAI which appoints the PR, as
preferred by the PU. The ICAI sends in letters of appointment to both
the PR and the PU. Either of them can contact the other person to
commence the PR. The ICAI sends a questionnaire to the PU regarding
various aspects to be covered by the PR. The completed questionnaire
is forwarded to the PR, which sets the procedure in motion.
Every PU maintains records of their own firm, such as attendance
registers, training modules, standardised formats of communications,
templates for audit programmes, etc., apart from the permanent file
and current file of the clients. PR reviews the files of the firm as
well as of the clients.
Depending upon the size of the firm, the PR selects a few clients and
carries out his review procedures on them. He also reviews the files
of the PU on their own functioning and administration. Based on his
findings, the PR releases a preliminary report, indicating the
shortfalls as noted by him, and suggesting improvements on the
administration of the firm, as well as the quality of the work carried
out by the firm.
The PU is given guidelines to set right the shortcomings and to
improve upon the documentation and procedures to be adopted. Once the
PU informs that the shortcomings are taken care of, the PR carries out
a second review and releases his final report to the ICAI. The
committee of the ICAI reviews all the procedures adopted by the PR and
the PU, and, if satisfied, issues a certificate to the PU on
completion of the peer review.
WORKING OF THE PU
Before the commencement of the audit: Whether the PU considered the
element of independence of the auditor before accepting an assignment,
self-regulatory measures, correspondence with the outgoing auditor,
issue of letter of acceptance and the letter of engagement, if the
assignment is within the limits specified for the number of audits,
disqualifications under the provisions of law, etc.
At the planning stage: Evaluation of internal controls, basis of
determining the audit risk, basis for the extent of check to be
carried out, whether to carry out the audit on a continuous basis or
year-end basis, ascertaining any changes in accounting policies,
changes in law, changes in the organisational structure, etc.
During the course of the audit: Selection of audit staff, planning for
the work, critical areas, planning for transactions of a non-routine
nature, such as issue of shares, redemption of debentures, preference
shares, opening of new branches or new lines of activity. Monitoring
the progress of work, basis for accepting or rejecting the audit
evidence, basis on which any matter is to be referred to an expert,
selection of the expert, audit communications, minutes of meetings
with the management of the Company, compliance procedures, such as
compliance with the Accounting standards, requirements of law such as
TDS, service tax, central excise, VAT, etc.
Upon completion of the audit: Whether or not the working papers were
independently reviewed by the partner signing the audit report,
clarifications sought, basis of forming the opinion, coverage of the
aspects referred to in the terms of reference, etc.
----------------------------------------------------------
Peer review ensures that chartered accountants comply with the
requirements of the profession and that quality is maintained.
----------------------------------------------------------
(This article was published in the Business Line print edition dated
January 2, 2012)
print · T+ The Institute of Chartered Accountants of India
(ICAI) has taken it upon itself to ensure the quality of the working
of its members through peer review. Peer review is review of the
professional competence of one chartered accountant by another. Such
an exercise ensures that the members of the institute comply with the
requirements of the profession and that the quality of services
rendered doesn't fall below the expected quality. The ICAI selects
from senior members with a standing of more than 10 years to function
as peer reviewers. The peer reviewers (PR) scrutinise the records of
the practising unit (PU) and send the report to the Institute.
STEPS INVOLVED
Peer review can be voluntary by the firms, or initiated by the ICAI.
PU is given a choice to select the reviewer from among three names
recommended by the ICAI. It is the ICAI which appoints the PR, as
preferred by the PU. The ICAI sends in letters of appointment to both
the PR and the PU. Either of them can contact the other person to
commence the PR. The ICAI sends a questionnaire to the PU regarding
various aspects to be covered by the PR. The completed questionnaire
is forwarded to the PR, which sets the procedure in motion.
Every PU maintains records of their own firm, such as attendance
registers, training modules, standardised formats of communications,
templates for audit programmes, etc., apart from the permanent file
and current file of the clients. PR reviews the files of the firm as
well as of the clients.
Depending upon the size of the firm, the PR selects a few clients and
carries out his review procedures on them. He also reviews the files
of the PU on their own functioning and administration. Based on his
findings, the PR releases a preliminary report, indicating the
shortfalls as noted by him, and suggesting improvements on the
administration of the firm, as well as the quality of the work carried
out by the firm.
The PU is given guidelines to set right the shortcomings and to
improve upon the documentation and procedures to be adopted. Once the
PU informs that the shortcomings are taken care of, the PR carries out
a second review and releases his final report to the ICAI. The
committee of the ICAI reviews all the procedures adopted by the PR and
the PU, and, if satisfied, issues a certificate to the PU on
completion of the peer review.
WORKING OF THE PU
Before the commencement of the audit: Whether the PU considered the
element of independence of the auditor before accepting an assignment,
self-regulatory measures, correspondence with the outgoing auditor,
issue of letter of acceptance and the letter of engagement, if the
assignment is within the limits specified for the number of audits,
disqualifications under the provisions of law, etc.
At the planning stage: Evaluation of internal controls, basis of
determining the audit risk, basis for the extent of check to be
carried out, whether to carry out the audit on a continuous basis or
year-end basis, ascertaining any changes in accounting policies,
changes in law, changes in the organisational structure, etc.
During the course of the audit: Selection of audit staff, planning for
the work, critical areas, planning for transactions of a non-routine
nature, such as issue of shares, redemption of debentures, preference
shares, opening of new branches or new lines of activity. Monitoring
the progress of work, basis for accepting or rejecting the audit
evidence, basis on which any matter is to be referred to an expert,
selection of the expert, audit communications, minutes of meetings
with the management of the Company, compliance procedures, such as
compliance with the Accounting standards, requirements of law such as
TDS, service tax, central excise, VAT, etc.
Upon completion of the audit: Whether or not the working papers were
independently reviewed by the partner signing the audit report,
clarifications sought, basis of forming the opinion, coverage of the
aspects referred to in the terms of reference, etc.
----------------------------------------------------------
Peer review ensures that chartered accountants comply with the
requirements of the profession and that quality is maintained.
----------------------------------------------------------
(This article was published in the Business Line print edition dated
January 2, 2012)
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