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Updates from ICAI

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The Institute of Chartered Accountants of India (ICAI), vide an announcement dated 11 April 2022 had rolled out the peer review mandate for coverage of more practice units (firms) under the peer review process. The below mentioned peer review mandate was made effective from 1 April 2022:

Phase Category of firms covered for mandatory peer review Date from which peer review is mandatory
I Firms which propose to undertake statutory audit of enterprises whose equity or debt securities are listed in India or abroad 1 April 2022
II

Firms which propose to undertake statutory audit of unlisted public companies having:

  • Paid-up capital of not less than INR500 crore
  • Annual turnover of not less than INR1000 crore, or
  • Having, in aggregate, outstanding loans, debentures and deposits of not less than INR500 crore as on the 31 day of March of the immediately preceding financial year.

OR Firms rendering attestation services and having five or more partners

1 April 2023
III

Firms which propose to undertake statutory audit of entities which have:

  • Raised funds from public or banks or financial institutions of over INR50 crore during the period under review or
  • Anybody corporate, including trusts which are covered under the public interest entities.

OR Firms rendering attestation services and having four or more partners

1 April 2024
IV

Firms which propose to undertake audits of branches of public sector banks OR Firms rendering attestation services and having three or more partners

1 April 2025

Thus, at each phase specified above, the firm must possess appropriate peer review certificate36, before undertaking statutory audit of the concerned entities.

In this regard, ICAI, vide an announcement dated 9 November 2022 has reiterated the guidelines pertaining to phase II of the peer review mandate becoming applicable from 1 April 2023.

To access the text of the ICAI announcement dated 9 November 2022, please click here

To access the text of the ICAI announcement dated 11 April 2022, please click here

To access text of the ICAI announcement on validity of Peer Review Certificates, please click here

  1. If a firm is in possession of the peer review certificate, on the date peer review becomes mandatory for it, then it is not required to be subject to the peer review, till the conclusion of the validity period of the said certificate. In this regard, the ICAI has announced that in respect of Peer Review Certificates issued till 16 April 2015, which do not mention an end date, the end date shall be 31st December 2022 and till this date, the validity of such certificates would be considered effective..

Action Points for Auditors

  • Regulation 33 of the Securities and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations) states that a listed entity must ensure that the limited review or audit reports submitted to the stock exchange(s) are furnished only by an auditor, who has subjected himself/herself to the peer review process of the ICAI and holds a valid certificate in this regard. Thus, ICAI plans to cover a larger number of firms under the ambit of peer review exercise and thereby enhance transparency in the overall corporate governance framework.
  • Firms falling under the applicability criteria of phase II guidelines should proactively focus on building the necessary resource and knowledge infrastructure for rendering audit and other related services in an effective manner

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