Peer review of auditors of large unlisted firms must from April

economictimes.indiatimes.com:

ICAI) will make the peer review mechanism mandatory for even large unlisted firms from April 2024, as it has decided to merge the second and third phases of the implementations, its president Aniket Sunil Talati told ET. The earlier deadlines to implement the second and third phases of the peer review mechanism, aimed at bolstering auditing standards, were July 1, 2023 and April 1, 2024, respectively.

In a peer review, an independent auditor verifies the audit process, procedures and documentation followed by a firm and issues a report. The move to defer the implementation of the second phase, which is expected to cover over 3,400 firms, is aimed at giving both the firms and the peer reviewers more time to prepare themselves, Talati said in an interview.«Based on the representations received from a lot of firms, we have decided to merge the phase 2 and phase 3 of the implementation (deadlines),» he said.

In the first phase of implementation, the peer review was made mandatory for listed firms from April 2022. In the second phase, it would be applicable to large unlisted firms with paid-up capital of not less than ₹500 crore, annual turnover of not less than ₹1,000 crore, or outstanding loans, debentures and deposits of not less than ₹500 crore.

In the third phase, auditors would be required to get a peer review certificate before undertaking statutory audits of entities that have raised funds of more than ₹50 crore from the public or banks or financial institutions, among others.Forensic audit Talati said from July 1, ICAI has made adoption of new Forensic Accounting and Investigation Standards mandatory for auditors. The move assumes significance as FAIS stipulates the minimum standards for undertaking forensic