This chapter holds paramount importance in today ‘s Corporate World .With the advent of Companies Act 2013, all companies are forced to follow good corporate governance practices, Corporate social responsibility, best ethical practices. The Role of Company Secretary,CFO(CFO as Chartered accountants) has grown substantially. The Statutory audit function for rotation based Companies has caused a paradigm shift.Like Prime minister of the country takes vital decisions for the nation the statutory auditor ‘s role is so significant is highly responsible and accountable.The function is so supreme and red flags are also raised merely on statutory Auditor .The role of statutory Auditor has somewhat drawn flak and is also criticized.Large corporate scams are taking place or operations of certain Corporates as against laws regulations are not complied which led to resignations of many auditors.But before I continue I don’t want the seriousness of the article to be lost in misguided jingoism as the Article reaches to readers on Occasion of CA day. After Companies Act 2013 for the last two years nearly 35 resignations of Companies (rotation based) auditors have taken place (substantially by global audit firm) .In this modern area where by compliances requirement has exponentially grown, Standing tall also considering the paucity of time given the statutory function of companies (rotation based),banks (NPA default) and public sector undertakings(due to CAG requirement) where by the statutory auditors undergo huge risk and somewhat fear even in signing .
Peer Review
Way back in 2001 when a massive corporate scam took place of Energy Company in US which led even to the dissolution of the biggest audit firm. This was one of the worst disrepute caused to Accounting profession. Immediately a concept called Peer review was introduced in 2002. The peer review board was formed in 2002 which releases Peer review manual frequently. The Peer review board consist of 12 members of which not less than 50 % are Chartered Accountants (Central council members from 32 ) and the balance are Government Nominees (from 8 ).From there on a condition was imposed where by to become auditor of Listed Company a valid Peer review certificate is required by the firm (individual/firm).To qualify as a Peer Reviewer the following conditions are laid down
- Should be a Member of Institute as per Chartered Accountant Act 1949.
- Should be a practicing member who has 10 years of experience in Auditing, Accounting
- Should have undergone requisite training as prescribed by Peer review board.
- Should have submitted the statement of confidentiality as prescribed by the board
- .Should have conducted the audit for level 1 Entities.
- .Should not have disciplinary proceedings /action, not convicted by court of offence whether in India or Abroad.
- .Should not accept any professional Assignment from Practice unit for a period of 2 years from the date of Appointment.
The objective of Peer review is
- To ensure compliance with Technical/Professional/ethical standards.
- To ensure that laws rules regulations are complied and free of defects/deficiencies.
Peer review largely focuses on attestation Engagements. They include Audit functions, Audit services, Attestation functions.
Attestation engagement does not include the following
- Management Consultancy Engagements
- Due Diligence Engagements
- Representation before various tax authorities.
- Engagement with respect to filing of Income tax return and giving advises on tax
- Engagement with respect to the compilation of financial statements.
- Engagement with respect to identification gathering collecting of data for Financial statement.
- Engagement with respect to giving advises on laws regulations, Accounting Standards.
- Testifying as witness for expert.
A panel of three reviewers is sent by Peer review Board to Practice Unit. The practice unit selects any one of them and board approves it. The reviewer then perform review, adopts a mix of compliance and substantive procedures and submit report to the board (along with a recommendation by Practicing unit)
Quality Review
Quality is doing right even when no is looking
The Purpose of doing quality review is
- Ensure That the audit Firm complies with SQC -1
- Ensure that Partners complies with Ethical Technical standards
- Ensure that Partners complies with applicable law and regulation.
Quality Review is applicable only for Statutory Audit services.It is not applicable for internal Audit, also it does not apply for services rendered by members in service.In order to become a quality /technical reviewer the following is criteria
- He should be a chartered Accountant as per CA act 1949.
- He should have 15 years experience in Auditing, Auditing
- He should have not undergo any disciplinary proceedings under CA act 1949 for preceding 3 Financial Years.
- He should not be a Regional Council /Central council/Branch managing committee/Coopted Member of ICAI
- He Should have handled the role as a signing partner/proprietor for 3 statutory Assignments for which one should be other than Private sector companies.(others should be public companies, banks, CAG audit)
- He should have qualifications, as prescribed under Companies, act 2013.No element of Disqualification should be there.
Quality reviewer should conduct review and submit to Quality Review Board his report along with recommendations made by practice Unit.
The Fees for Peer Review and Quality review scale is fixed by ICAI and such amount is paid by ICAI to Reviewer.
Conclusion
July is a month where by CA exams results are announced.But this year due to elections exams were postponed, consequently results will be announced later.
July is a crucial month which marks the highlights of certain events.To begin with July 1st is known as CA day.This year ICAI turns into 71 st Year of its Glorious existence.It is an interesting fact that ICAI was incorporated on 01/07/1949, 2 years after independence and 6 months before India became Republic.Branches, Regional councils have geared for the celebrations, also the Central Council members are going for event in the Glorious presence of Vice President of India at New Delhi.It is also called as Doctor’s Day. The Medical council of India Act was passed on 01/07/1956.
For Members of ICAI the 3rd Phrase of UDIN starts.This day was when GST came into force on 01/07/2017.For students of ICAI this was the day when Revised Scheme of Education and Training was launched on 01/07/2017 by Prime Minister of India.
This Year significant events are going to take place in July Month.July 1st week new Budget is going to released by the New Government (Women Finance Minister of Country) which expected to be a booster for Economy as a whole.July 14 th is Cricket World cup finals .The way India are playing they have bright Chances of securing Title.1st two weeks of July will also witness Wimbledon Tournament played at London which will be Interesting which has already begun on 4th week of June.20th July AGM of ICAI is going to be held where by Accounts are going to be adopted .Last but not the least July 31st happens to be the day where by Income tax filing of Individuals is to be completed.(assuming no extension)
I being a thought provoker want to describe about “three Extraordinary events “ which has changed my life.Way back in 2008 when I was doing 6 th standard we had a story about a boy who had done three extraordinary things where by a question which was asked in the exam where I suffered to write and I had no clue of story but I can write now about it in detail
Event No 1
Way back on 01/07/2017 the Revised scheme of education and Training based on IAES(International Accounting Education Standard) was launched which had a open book case study system of examination based on elective at Final level .6 diverse subjects are offered allowing the student to opt one paper for specialization in one niche area.The open book examination system is a unique pattern which test the student the ability to comprehend analyse and develop command over the subject
Event no 2
In order to strengthen the balance between theory and practical, on 12/6/2018 Practical training assessment test was introduced after 1st year,2nd year.On 25/6/2018 a significant decision was taken with regard to a concept of partially subjective, objective (70/30) was introduced for theory subjects of Final,Inter (new).Leaving behind no stones unturned ICAI decided to extend the pattern of the same for Inter,Final (old) on 26/6/2018.That implies that ICAI is largely committed in providing quality Education .This was before 4 days before 1/7/2018.
Event No 3
To add feather to its Cap on 24/6/2019 owning to vastness in New syllabus for Inter,Final ICAI had reduced the chapters which are not going to be useful from Practical point of view.This in turn will benefit the students to prepare extensively for exams .This will help the student to focus on existing chapters ease burden, Workload.This has been taken in spirit,interest of the students that Knowing everything(vast portion) under the sun is impossible.However Indirect tax extend to old /new course at Inter Final.This announcement was made one week before CA day.This is for sure a turning point.
These shows That Changes are Inevitable and that is the only thing which remains Constant .Change is the result which led to survival in the end.
As a Young aspiring member of this August Institute I from bottom of my heart want to make significant contribution to ICAI in terms of
.Board of studies .Play a crucial role for Open book examinations (6c also consulting for others ) also for 70/30 Assessment (direct tax).The dual system of education will for sure continue even in next system of education.(after 2025)
Contribute articles for ICAI Journals and professional journals.
.Act as Paper Presenter,speaker in programmes by CPE study circles.
I have huge passion for writing articles,Teaching, play role as speaker all in due professional interest .Hence I adopt a policy of ‘’Love my passion, Respect my profession”.
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