Therefore, it is creditable that the professional body much maligned for being too slow to reform has successfully completed the first phase of peer review involving 231 large practising units, with the help of 972 trained reviewers.
On some prodding, you'd learn that the ICAI's Peer Review Board has received reports from about half the units reviewed, and certificates have been issued to 85 practising units. Mum is the word about the rest of the firms that were reviewed and reported on, but not given the `peered' stamp, though a logical guess would be that repair work is in progress based on the `interim' reports.
However, that doesn't diminish the accolades that are due to the Board for at least getting the juggernaut moving up to the point it has now reached.
Peer review, as the ICAI understands, is for "enhancing quality of professional work, and transparency in technical standards used," if we cut away the ostentatious extra that shows in www.icai.org as "world class procedures and techniques resulting into more reliable and useful audit and reports." A rhetoric that was for reluctant bean counters; so, to get them enticed, the Institute assured them that peer review has relationship with any disciplinary or any other regulatory mechanism. Another carrot was that "records of audit reports or attestation services relating to years prior to the accounting year beginning April 1, 2002 shall not be subjected to review".
There is a Chinese wall, they say, between peer review and disciplinary departments. Thus, even if a peer were to find that the firm under review has bungled with an audit, the goof up will find its grave among sheaves of reports. To the Board, all CAs are good; for, the first assumption is that the professionals discharge their responsibilities properly. The aim of review is equally Utopian: "To enhance those attributes of professionalism that serve to keep the profession of chartered accountancy in India in the forefront of the accounting and auditing profession in the world."
With an apparently impossible goal of completing the review process for 65,000-plus practising CAs in the next three years, the Institute is raring to go on to further phases 268 firms in the second, 1,576 in the third, and the rest of `stage one' in the last phase. But I wish they didn't lose sight of the purpose of the whole exercise: Strengthening public confidence in financial reporting.
What trickles in from the ICAI, apart from statements and announcements about peer review, is only some statistics. Sources in the Institute say that a compilation of positives and negatives noticed in peer review may be brought out, without naming anybody other than the printer and publisher. Let me hope it does not end up as a thoroughly sanitised version, robbing it of all things shocking and spicy.
A question arises whether the ICAI should achieve greater transparency in its peer review work. Many accountants shuddering at the very thought of being laid bare about their flaws in their work, may grumble that it is not the profession's job to take the lead in enforcing greater transparency. "These members might argue that instead, it is the regulator's job to regulate, not the profession's responsibility to impose an ever-expanding number of requirements on its members," notes a recent `Position Paper' titled Peer Review in an Era of Transparency, from the American Institute of Certified Public Accountants (AICPA). To such an argument, here is a quick answer: "But great professions control their destiny and do not wait for the regulatory community to impose actions on them."
At the ICAI, the ongoing governing Council meeting agenda has meatier things such as the election of VP and so on; therefore, it is possible that transparency gets the boot, as with many of its other important activities. Wonder if this snatch from the AICPA's paper would din in some reasoning for those who care to hear:
"There is clearly a trend among the general public demanding more transparency in all businesses and business transactions. People and businesses want assurances that they can trust their professional advisors. One way to ensure that we continue to be among the most trusted professions is to let people know what independent assessments have to say about firms that have taken on the public interest responsibility of attest functions."
If that didn't help, here is another exhortation: "For one hundred years, transparency has been a goal of the accounting profession. We have always strived to make everything we do the financial statements we audit, the advice we dispense, the tax returns we prepare transparently communicate the facts clearly and truthfully to every one of our audiences - investors, regulators, management, and the public. Now the question on the table is how we can be equally transparent when it comes to our own internal rules and procedures, most particularly our peer review programme." I can already see some of our elected representatives shift in their chairs.
An easy goal of greater transparency would be to make the lingo of peer review easy to understand. And the tough one is to make peer review files accessible to the public. Not a new concept to the AICPA because at www.aicpa.org/centerprp anybody can catch up with `peer review documents' of about 6,400 firms that are "members of the Partnering for CPA Practice Success, the AICPA Alliance for CPA Firms (PCPS), the Center for Public Company Audit Firms (CPCAF), the Employee Benefit Plan Audit Quality Center (EBPAQC) or the Governmental Audit Quality Center (GAQC)".
But the American accounting body wants to move on to "a mandatory public file for all CPA firms". A job that may be outsourced to Indian accountants, I can foresee, though the crystal ball is too hazy to peer through on whether we may see peer reviews of our auditors on www.icai.org.