PEER REVIEW (AN OVERVIEW) - PowerPoint Presentation

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PEER REVIEW(AN OVERVIEW)

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2Definition of Peer Review

The dictionary meaning of the term “peer” is, a person of the same legal status or a person who is equal to another in abilities, qualifications, age, background, etc.

“Review” means to look back upon (a period of time, sequence of events, etc.)

“Peer Review” is a self improvement process and is a method of evaluation of a person’s work or performance by a group of people in the same occupation, profession, or industry.

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3PEER REVIEW:

GUIDELINES

Guidelines for Peer Review of Attestation Services by Practicing Company Secretaries

Exposure Draft of the Guidelines released at the 12

th

National Conference of Practicing Company Secretaries in 2011

Approved by the Council in its Meeting held on August 25-26, 2011

ICSI Guideline No. 1 of 2011 – Guidelines for Peer Review of Attestation Services by Practicing Company Secretaries

notified in the official Gazette of India dated October 18, 2011

Guidelines

effective from October 1, 2011

Guidelines revised by the Council in its 229

th

Meeting held on March 19-20, 2015

Guidelines further revised by the Council in its

254

th

(Adj.) meeting held on 1

st

September, 2018.

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4Peer Review of Company Secretaries

Peer Review deals with examination and review of systems and procedures to determine whether the systems and procedures are :

Put in place by the practice Unit

Effective

Operating continuously during the period under review

.

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5Services covered under Peer Review

Signing / Certification of Annual Returns

Issuance of Certificate under Regulation 40 (9) of SEBI (LODR) Regulations, 2015

Issuance of Secretarial Audit Reports in terms of Section 204 of the Companies Act, 2013 / Regulation 24A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

Issuance of Annual Secretarial Compliance Reports

Internal Audits under Section 138 of the Companies Act, 2013

Audit Reports under Clause 76 of SEBI (Depositories & Participant Regulations) 2018 issued

Certificate issued under Regulation 56 of LODR Regulation 34(3) read with Schedule V, Para C, Clause (b) (i)

Compliance Certificates issued under Clause E, Schedule V of SEBI (LODR) Regulations, 2015

Internal Audit of Registrar and Share Transfer Agent (RTA) under SEBI Circular No. SEBI/HO/MIRSD/CIR/P/2018/73

Internal Audit of Credit Rating Agencies under SEBI Circular No. SEBI/MIRSD/CRA/Cir-01/2010

Internal Audit Certificate for operations of the Depository Participants

Issuance of half yearly bank due diligence certificates

Audit Reports under Clause 76 of SEBI (Depositories & Participant Regulations) 2018 issued

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6RATIONALE FOR PEER REVIEW

Expectation of the Regulators that the professionals are their extended arm in ensuring compliance in corporates.

Expectation of service Receiver to receive quality service

Gap between minimum quality of service and actual service rendered.

Reassuring the stake holders and the society at large that the profession is conscious of its responsibilities and strives its best to ensure that the highest standards are observed by all practising members rendering

attestation

services to the society.

The Peer Review process is an endeavour to enhance the quality of services rendered by members of ICSI in practice.

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7OBJECTIVES OF PEER REVIEW

To ensure that in carrying out their attestation services and professional assignments, the PCS is to –

Comply with the Technical Standards laid down by the Institute, and

Have in place proper systems (including documentation systems) for maintaining the quality of the attestation services work they perform.

Peer Review is directed towards –

maintenance as well as enhancement of quality of attestation services

providing guidance to members to improve their performance and adhere to various statutory and other regulatory requirements.

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8SCOPE OF PEER REVIEW

Peer Review is directed at the audit & attestation services provided by a practice unit –

Once a practice unit is selected for review, its audit / attestation engagement records pertaining to the immediately preceding financial year shall be subjected to review.

Review shall ascertain –

Compliance with Technical Standards (

i.e. Guidance Notes, Auditing Standards issued by ICSI)

Quality of Reporting

Office systems and procedures with regard to compliance of attestation services systems and procedures

Training programmes for staff concerned with attestation functions.

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9Guidelines issued by Council with respect to Peer Review

Limits for the issue of Secretarial Audit Reports:

10 Secretarial Audits per partner/ PCS, and

an additional limit of 5 secretarial audits per partner/PCS in case the unit is peer reviewed.

The limits will be applicable for the Secretarial Audit Reports to be issued for the financial year 2016-17 onwards.

Number of Annual Secretarial Compliance Reports to be issued by PCS is 5 (five) reports individually/ per partner in each financial year

w.e.f

. 1st April, 2020 and an additional limit of 5 (five) Annual Secretarial Compliance Reports individually / per partner in case the Unit has been Peer Reviewed.

Secretarial Audit / Annual Secretarial Compliance Report under SEBI (LODR) to be done by Peer Reviewed Units only for:

Top 100 companies as per market capitalisation

w.e.f

1st April, 2020

Top 500 companies as per market capitalisation

w.e.f

1st April, 2021

all listed companies

w.e.f

1st April, 2022

all companies

w.e.f

1st April, 2023

Issue of Diligence Report for Banks in case of Consortium Lending / Multiple Banking Arrangements to be undertaken only by Peer Reviewed Practice Units

w.e.f

1st April, 2020

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Date __________

Place __________

For XYZ & Associates

Company Secretaries

Name ____________

FCS ____________

CP ____________

PR

123/2018

10

Guidelines issued by Council with respect to Peer Review

Council has also decided that the PCS shall mention mandatorily the Peer Review Certificate Number in

Secretarial Audit Report / Secretarial Compliance Report / Diligence Report for Banks

in format

PR-123/2018

and opined the signature of the PCS in the following format:

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11Authority of the Guidelines on Peer Review

Guidelines shall apply to all or any of the following cases:

Whenever a peer review is mandated by the order of Government / Regulators

Whenever a peer review is requested by Practice Unit voluntarily or Client / Company to which the Practice Unit renders Attestation / Audit services.

Whenever peer review is done on the basis of random selection

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12The Reviewer’s eligibility criteria

A member of the Institute–

possesses at least 10 years of post membership experience

is currently holding Certificate of Practice as issued by the Institute.

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13The Reviewer’s approach?

Not as an inspector, auditor or investigator but as a pathologist.

Should be appreciative of good practices while suggesting areas of improvement

Collaborative with a friendly demeanour

Discussion mode as a peer to be adopted by the Reviewer

Should try and give value addition to PU and not merely a tick box approach

In determining issues which are subjective, the purpose is not to replace the PU’s opinion with the opinion of the Reviewer but to verify the process followed in exercise of judgment by the PU. Verification of the process will include verification of working papers maintained by the PU.

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14Qualities of Reviewer

Should be well acquainted with the technical aspects of the attestation services

Should have studied the provisions of the Code of Conduct of ICSI

Should get himself / herself acquainted with decisions of various courts on “deficiency in service”

Relevant provisions of CS Act, 1980 and CS Regulations, 1982

Should have knowledge of the Consumer Protection Act, Evidence Act, IPC, etc.

contd...

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15Qualities of Reviewer

…contd

.

Should have studied the technical standards like Auditing Standards, Guidance Notes, Notifications issued by the Council of ICSI

Should be good at drafting and written and spoken English.

Professional behaviour while on visit – dress code, punctuality, neatness, soft language.

Understand his limitations – what is outside the scope of Peer Review.

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16Empanelment

of ReviewersMembers fulfilling the eligibility requirement may make an application for empanelment in the format prescribed by the Board.

After scrutiny of the application the Board issues the empanelment letter.

Members against whom Disciplinary proceedings are pending or who have been found guilty of misconduct are not eligible to be empanelled as a Peer Reviewer

Office bearers of the Council / Regional Councils / Managing Committee of Chapter are not empanelled as a Peer Reviewer till the time they are in office

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17Methodology to be followed by Reviewer

Offsite ReviewStudy of information given by PU in the format and based on the same make own observations about possible areas where improvement is possible and note other aspects to be discussed in personal meeting with PU

Onsite Review

Verification of information given by PU. Test checks in respect of attestation assignments handled by PU

Interaction with the staff & trainees of PU should be part of PR

Calling for the records of the client maintained by PU to verify whether proper systems and procedures have been followed

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18Obligations of the Practice Unit

Practice Unit shall -

provide access to any record or document as may be asked for by the reviewer

afford and provide explanation or further particulars in respect of anything produced before the Peer Reviewer

provide all assistance in connection with peer review

allow the reviewer to inspect, examine or take any abstract of or extract from a record or document or copy there from which may be required by the reviewer.

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19Validity of Peer Review Certificate issued?

The validity of the Peer Review Certificate is five years from the date of its issue. However, in case the PU is being reviewed within two year of its incorporation, the validity shall be two years.

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20Cost of Peer Review

Cost of Peer Review for reviewer and his qualified assistant(s) as may be decided by the Board from time to time, shall be borne by the Practice Unit in the following situations:

Peer Review is mandated by the order of Government / Regulators;

Peer Review is requested by Practice Unit voluntarily;

Peer Review is done on the basis of random selection.

In case the Peer Review has been requested by client / company, the cost shall be bear by such client / company.

Same rate shall apply to second review also.

Each branch / office under review would be considered separately.

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21

Prescribed rates of Fee for Peer Review

As on date the prescribed fee is Rs. 10,000/- to be paid directly to the Peer Reviewer (inclusive of TA/DA and any out of pocket expenses).

The fee shall be paid by the Practice Unit within 30 days from the receipt of Invoice from the Peer Reviewer and submission of Report by the Reviewer.

The Peer Reviewer may charge a sum higher / lesser thane the prescribed fee as mutually decided between the Practice Unit and the Peer Reviewer.

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22Review Framework

Three stage process – Planning

Intimation

Asking of further information be Reviewer.

Execution

Sample of Attestation service engagements

Confirmation of Visit

Initial meeting

Compliance Review – General Controls

Selection of Attestation services engagements to be reviewed

Review of record

Reporting

Preliminary Report of Reviewer, in case the Reviewer finds some deficiency in the systems and procedures adopted by Practice Unit;

Final Report of Reviewer.

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23Dispute Resolution

Disagreement between Peer Reviewee and Peer Reviewer

Peer Reviewer was qualified but has not exercised the desired competence in undertaking the peer review.

Proper procedure was not followed in the Peer Review Process.

Additional information has not been considered by the Peer Reviewer.

Observations of the Peer Reviewer are at variance with the information presented.

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24Dispute Resolution

Procedure for resolving Disagreement between Peer Reviewee and Peer Reviewer

Written request to the Peer Review Board within 15 days of the Peer Review Report

Copy of the Request forwarded to the Peer Reviewer for his comments within 15 days of receipt of request

PRB shall examine the written request and the comments of the Peer Reviewer

Provide opportunity to both for personal appearance

Call additional clarifications

PRB shall pass final orders within 30 days

Reject the request with reasons

Appoint some other Peer Reviewer

Copy of Order forwarded to the Council

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25Dispute Resolution

Appeal against Order of the Peer Review Board

Appeal to the Council within 30 days from the date of receipt of order

Appeal in writing and clearly spelling out reasons for the appeal and the relief sought

Council may pass any of the following orders:

Dismiss the appeal stating reasons in writing

Admit the appeal and remand the case back to the PRB for reconsideration

Pass such orders as it may deem fit.

Order of the Council shall be within 60 days from the date of the Appeal

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QUESTIONS!QUERIES!SUGGESTIONS!

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THANK YOU!