How a Chartered Accountant can become a Peer Reviewer ?

What does it mean by peer review?

Peer review is a mechanism that has been developed by the Institute of Chartered Accountants of India ( ICAI ) for the purpose of maintaining and guarding the reputation and accountability of the learned profession of chartered accountancy. The Institute has implemented a peer review system to ensure compliance with worldwide best practices.

In India, it is regulated by The Chartered Accountants Act, 1949, as amended by the Chartered Accountants, The Cost and Works Accountants, and The Company Secretaries (Amendment) Act, 2022. It is also supervised by the Peer Review Guidelines, 2022 (PRG, 2022). The guidelines which are (PRG, 2022) is prescribed by the Council in the exercise of the powers conferred by Section 15(2) (fa) of the Chartered Accountants (Amendment) Act, 2022.

In simple terms, peer review refers to the process of examining and reviewing the work done by a professional by another professional of similar standing or position. Peer review evaluates the Practice Unit’s PU processes and methods for quality assurance, including tendering services, by assessing the effectiveness of the technical, ethical, and professional standards of the course.

What are the essentials required for a Chartered Accountant to be a Peer Reviewer? 

Now we will be looking into who can apply to be a peer reviewer or who has the necessary qualifications for performing the duty of a reviewer. They are as follows:

1. The reviewer must be a member of the ICAI and should possess a minimum of ten years of practical experience
2. is practicing  according to the Chartered Accountants Act of 1949
3. Should have completed the necessary training as directed by the board (once every five years).
4. A declaration of confidentiality regarding the connected matters should be signed before taking the position. It is vital to note that once the post is assumed, the reviewer is bound by the confidentiality agreement made with the review board.
5. A declaration should be furnished according to the directions of the Board when the peer review appointment is accepted.
6. The person should have spent at least seven years doing audits of Level 1 entities.

Please note that a block of less than two years of experience in calculating cumulative experience will not be taken into account. Ten years of audit experience do not have to be continuous, they can be cumulative.

Who is not eligible for the post of Peer Reviewer?

1. If a disciplinary action has been taken or is pending against the person. According to Clause 10.2(i) of the Peer Review Statement, a member cannot serve as a reviewer if they are facing disciplinary action or procedures.
2. Has been found guilty at any point by the Committee, Disciplinary Board, or Council.
3. been found guilty or been punished by a competent court, whether located in India or not, of a crime involving moral turpitude that carries a jail or transportation sentence.

The members of the ICAI who satisfy the above conditions may empanel by applying the prescribed format given by the ICAI. The members who wish to apply may be downloaded from the Institute’s website: www.icai.org. If necessary, the reviewer has the liberty to take the help of only one qualified assistant for carrying out the review process but it is important to note that only the reviewer, under his or her individual capacity, should sign and submit the Report along with the Annexure, and thus the qualified assistant cannot sign of the behalf of the reviewer.

Peer Review Process

It is generally conducted in 3 stages. The stages are as follows:

• Stage I – Planning
• Firms can apply for voluntary peer review by completing a Declaration/Application form.
•  Once the application is accepted, the PU can select one reviewer from the panel of 3 reviewers provided to them, and a letter of appointment is sent to the selected reviewer for his acceptance of the review.
• If the reviewer accepts the review, then the PU is required to send a duly filled questionnaire directly to the reviewer, to enable the reviewer to select a sample from the questionnaire for review. The process of review is usually for a period of 3 months, or 90 days.

• Stage 2 – Execution Stage

• It is usually conducted on the site with mutual understanding between the parties, which should not extend beyond 7 working days.
• An initial meeting is conducted to understand the accuracy of the questionnaire.
• A compliance review is carried out, which focuses on five “general controls”: independence, professional skills and standards, outside consultation, staff supervision, and development and office administration.
• The initial sample is refined based on a meeting and assessment of compliance with the five general controls.
• The records are reviewed. Either by compliance approach, or substantive approach (paragraph 4.19 of the Peer Review Manual), or a combination of both.

• Stage 3 – Reporting Stage

• If the reviewer is satisfied with the reports and documents, then a clean final report could be sent to the Board. If there are major irregularities, then the reviewer can issue a qualified report.
• The reviewer must discuss the findings of the review with the PU before submitting the report to the board, taking into account their representation.
• A preliminary report should be sent within 10 days.
• If the board is satisfied with the final report, then it issues a review Certificate.
• If the board is not satisfied with the report, it may make recommendations to the PU and request additional review.
• Once the review is finished, the reviewer has to submit, the necessary documents along with the reasons for the delay in submission.

In our country, the mechanism of peer review aims to educate and improve the quality of assurance services provided by members of the Institute in public practice.

The peer reviewer intends to identify the chronic and hidden weaknesses through the review of records and give guidance to his peers to improve their quality of work and make sure that they follow the necessary technical specifications.

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