New Delhi, Jan. 5: The Naresh Chandra committee has given short shrift to the Institute of Chartered Accountants of India (ICAI) on the formation of a peer review board while formulating broad recommendations for tightening auditing regulations.
For starters, the committee has changed the name to a Qualitative Review Board (QRB) instead of the peer review board, as envisaged by the ICAI Council. The committee, which submitted its report last week, suggested that the QRB chairman should be chosen through a joint consultative process with the department of company affairs (DCA) and ICAI. However, the ICAI had suggested in a statement issued last March that the chairman should be chosen by its council.
Moreover, “the committee clearly mentioned that the chairman of the board has to be someone outside the ICAI Council though he can be a chartered accountant.” However, this will require an amendment in the Chartered Accountants Act itself, ICAI president Ashok Chandak said.
The ICAI statement on peer review stipulates that five of the 11-member board should be chosen from outside agencies by the council.
However, the Naresh Chandra Committee feels that the department of company affairs is best suited to do the job.
While ICAI wanted the council to have six members, the committee would like the council to confine itself to five members.
Why this undermining of the Institute which governs the professional standards of accounting and auditing services in the formation of the peer review board' ICAI president Ashok Chandak says the emphasis on involving the DCA is to broad base the concept of a peer review and stay in tune with the public perception of having a regulatory authority more involved with the auditing.
ICAI will start implementation of the first phase of its peer review board from April this year. “If the recommendation becomes an Act, we will go for the convergence of the two approaches to the peer review board and even then it will be called the QRB,” said Chandak.
“The basic purpose of the peer review board is to guide professionals on how to conduct an audit,” he said.