Background
ICAI has widen ‘peer review’ process for auditors. ICAI has initiated this very important step to make sure that the audits of unlisted companies should be carried out with the same rigour as that for listed entities.
The ICAI Council at its 407th Meeting of the Council held from 7th to 9th January decided to mandate the peer review process for coverage of more firms under the Peer Review process i.e., the Peer Review Mandate.
Also, it was clarified that holding a valid Peer Review certificate by Practice Units should be a prerequisite for undertaking audit of all entities falling under Phase I, II, III and IV of the mandate from respective dates of mandate becoming operative.
It is mandatory to get the peer review done for Practice Units falling under the below category:
| Phase | Category of Firms | Date of Implementation |
| I | Firms which have taken statutory auditors of enterprises whose equity or debt securities are listed in India or abroad as defined under SEBI (LODR) Regulations, 2015 | 1st April 2022 |
| II | Firms which have undertaken Statutory audit of unlisted public companies having: Paid up share capital not less than Rs. 500 crore orHaving annual turnover of not less than Rs.1000 crore orHaving an aggregate, outstanding loan, debentures and deposit of not less than Rs 500 crores as on 31st March of immediately preceding financial year OR Firms having 5 or more partners anytime during the immediately preceding financial year. | 1st April 2023 |
| III | Firms which have taken statutory audit of: Entities which have raised funds from public or banks or financial institution of over Rs. 50 crores during the period under review orAnybody corporate including trusts which are covered under public interest entities OR Firms having 4 or more partners may be covered in the Phase 3 of the rollout. | 1st April 2024 |
| IV | Firms conducting audit of branches of public sector banks OR Firms having 3 or more partners and rendering assurance services. | 1st April 2025 |
The Peer Review Board has now deferred applicability of the second phase of the Peer Review Mandate by three months to be made effective from July 1, 2023 as a one-time measure.
| SW Point of View:The ‘peer review’ mechanism is made mandatory by ICAI to further bolster the quality of auditing. This move of ICAI is well received and will be applauded by all who are a part and parcel of the ecosystem of unlisted corporates |
