ICAI defers peer review of auditors of large unlisted companies till April 1, 2024

The Institute of Chartered Accountants of India (ICAI) has further deferred the mandatory peer review of large unlisted companies to April 1, 2024. This gives a breather to these audit firms who would otherwise not be able to undertake statutory audit work without a peer review certificate.

This is the second deferment of the mandatory peer review for large unlisted firms, which is also the second phase of the roll-out of the peer review mandate. It was initially expected to be implemented from April 1 this year, but was then deferred by three months to July 1.

“Requests were being received from the practice units that they were not aware of the peer review mandate and therefore requested for some additional time to get themselves peer reviewed. Considering the same, the Council … decided to further defer the applicability of the second phase of the peer review mandate,” said the ICAI, adding that the second phase of the mandate would now come into effect from April 1, 2024.

Audit firms which plan to undertake statutory audit of unlisted public companies with paid-up capital of not less than Rs 500 crore or annual turnover of not less than Rs 1,000 crore, or with aggregate outstanding loans, debentures and deposits of not less than Rs 500 crore as on March 31 of the immediately preceding year, require a peer review certificate. Similarly, audit firms providing attestation services and with five or more partners require a peer review certificate before they can accept any statutory audit.

“Practice Units which accept statutory audits on or before March 31, 2024 should ensure that they have a Peer Review Certificate at the time of signing,” the ICAI has said while warning that the deadline will not be deferred any further and all firms should ensure strict compliance of the norms.

Peer review is expected to help improve the quality of services by audit firms by ensuring that they comply with technical standards laid down by the ICAI and have in place proper systems for maintaining the quality of attestation services work they perform.

Peer review of firms undertaking statutory audit of listed firms is already compulsory. In the third phase, planned from April 1, 2024, firms auditing entities which have raised funds from public or banks or financial institutions of over Rs 50 crore, any corporate covered under public interest entities as well as audit firms with four or more partners will have to get mandatory peer review down. The fourth phase from April 1, 2025 would include firms conducting audits of branches of public sector banks and audit firms with three or more partners.