The Council at its 407th Meeting held from 7th – 9th January 2022 decided to mandate the Peer Review process for coverage of more firms under Peer Review process. An Announcement dated 12.02.2022 in this regard was hosted on the website.
Certain aspects required revision to bring in more clarity e.g. the time limit for compliance of the mandate, qualifications of reviewer of listed entity auditors, etc. The same have been addressed by the Council at its 410th Meeting held on 24th – 25th March 2022. It was clarified that holding a valid Peer Review certificate by Practice Units (referred to as ‘firms’ in the Announcement dated 12.02.2022) should be a pre requisite for undertaking audit of all entities falling under phase I; II; III and IV of the mandate from respective dates of mandate becoming operative.
Accordingly, the Peer Review Mandate (Revised), operative from April 1, 2022 has been made in following four stages:
| Phase | Category of firms covered for Mandatory Peer Review | Date from which Peer Review is Mandatory |
| I(*) | Practice Units which propose to undertake Statutory Audit of enterprises whose equity or debt securities are listed in India or abroad as defined under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015: For these Practice Units, there is a pre-requisite of having Peer Review Certificate. | |
| II | Practice Units which propose to undertake Statutory Audit of unlisted public companies having paid-up capital of not less than rupees five hundred crores or having annual turnover of not less than rupees one thousand crores or having, in aggregate, outstanding loans, debentures and deposits of not less than rupees five hundred crores as on the 31st March of immediately preceding financial year: For these Practice Units, there is a pre-requisite of having Peer Review Certificate. OR Practice Units rendering attestation services and having 5 or more partners: For these Practice Units, there is a pre-requisite of having Peer Review Certificate before accepting any Statutory audit. |
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| III | Practice Units which propose to undertake the Statutory Audit of entities which have raised funds from public or banks or financial institutions of over Fifty Crores rupees during the period under review or of anybody corporate including trusts which are covered under public interest entities : For these Practice Units, there is a pre-requisite of having Peer Review Certificate OR Practice Units rendering attestation services and having 4 or more partners: For these Practice Units, there is a pre-requisite of having Peer Review Certificate before accepting any Statutory audit. |
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| IV | Practice Units which propose to undertake audits of branches of Public Sector banks : For these Practice Units, there is a pre-requisite of having Peer Review Certificate OR Practice Units rendering attestation services and having 3 or more partners: For these Practice Units, there is a pre-requisite of having Peer Review Certificate before accepting any Statutory audit. |
(*) for auditors from this category, Peer Review is already mandatory by SEBI, this mandate is further requirement stipulated by the ICAI
Thus, at each phase, before undertaking statutory audit the concerned Practice Unit should possess Peer Review Certificate.
For example: i) for the Practice Units, from April 1, 2023, there is a pre-requisite of having Peer Review Certificate for undertaking Statutory Audit of unlisted public companies having paid-up capital of not less than rupees five hundred crores or having annual turnover of not less than rupees one thousand crores or having, in aggregate, outstanding loans, debentures and deposits of not less than rupees five hundred crores as on the 31st March of immediately preceding financial year or ii) From April 1, 2024, Practice Units rendering attestation services and having 4 or more partners should have a Peer Review Certificate before undertaking any statutory audit.
On the date, Peer Review becoming mandatory for a Practice Unit, if it is in possession of Peer Review Certificate, there is no need of once again subjecting the Practice Unit to Peer Review, till conclusion of the validity period of the said Certificate. It is necessary for such a Practice Unit to possess a new Peer Review Certificate on conclusion of validity of Peer Review Certificate that was available at the time Peer Review becoming mandatory.
Any firm falling under phase I of the roll out is required to submit a declaration form hosted at https://forms.office.com/r/AA5Zpgdsrr.
In respect of Peer Reviewer of auditors/Practice Units auditing listed entities, a reviewer who has carried out audit of listed entity or also one who has undergone training and test for this purpose in addition to normal training and test, is also qualified to conduct peer review.
Guidelines for issuance of Peer Review Certificate to newly established firms (i.e. firms in existence for less than 12 months) will shortly be issued by the Peer Review Board.
To read notification by ICAI on peer review CLICK ME.
