PEER REVIEW (AN OVERVIEW)

Transcription

1 PEER REVIEW (AN OVERVIEW) Presentation by: Nesar Ahmad Vice President & Chairman, Peer Review Board

2 PEER REVIEW: GENERAL MEANING The term Peer means a person of the same legal status or person who is equal to another in abilities, qualifications, age, background, etc. The term review means to look back upon (a period of time, sequence of events, etc.) Thus Peer Review is an evaluation of a peer s work or performance by a group of people in the same occupation, profession or industry. 2

3 Guidelines for Peer Review of Attestation Services by Practicing Company Secretaries PEER REVIEW: GUIDELINES Exposure Draft of the Guidelines released at the 12 th National Conference of Practicing Company Secretaries held at Ooty during July , 2011 Approved by the Council in its 202 nd 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,

4 Definition of Peer Review (Para 3.4) Peer Review deals with examination and review of systems and procedures to determine whether the systems and procedures are in: Existence Effective Operating continuously during the period under review Put in place by the practice Unit. 4

5 Definition of Attestation Services (Para 3.1) Means services involving the secretarial audit issuing of various certificates, but does not include: Management consulting engagements; Representing a client before the Authorities; Testifying as expert witness; and Providing expert opinion on points of principle, such as secretarial standards or the applicability of certain laws, or the basis of facts provided by the client 5

6 Attestation Services covered under Peer Review Signing of Annual Return pursuant to Section 161(1) of the Companies Act, 1956 Issue of Compliance Certificate pursuant to Section 383A(1) of the Companies Act, 1956 Issue of certificate of Securities Transfers in compliance with the Listing Agreement with Stock Exchanges Certificate of reconciliation of Capital as per SEBI Circular dated Dec. 31, 2002 Conduct of Internal Audit of Operations of Depository Participants Certification under Clause 49 of Listing Agreement 6

7 Expectation of service Receiver to receive quality service RATIONALE FOR PEER REVIEW 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. 7

8 OBJECTIVES OF PEER REVIEW To ensure that in carrying out their attestation services and professional assignments, the PCS is to (a) Comply with the Technical Standards laid down by the Institute, and (b) 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. 8

9 SCOPE OF PEER REVIEW Peer Review is directed at the attestation services of a practice unit (a) Once a practice unit is selected for review, its attestation engagement records pertaining to the immediately preceding financial year shall be subjected to review. (b) Records of attestation services relating to five years prior to the financial year shall not be subjected to review. (c) Review shall focus on - Compliance with Technical Standards - 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. 9

10 Authority of the Guidelines on Peer Review Guidelines shall apply to all or any of the following cases: (a) Whenever a peer review is mandated (b) Whenever a peer review is requested (c) Whenever peer review is conducted 10

11 A member of the Institute who Who would be the reviewer? (a) Should possess at least 10 years of post membership experience (b) Should be currently in practice as a Company Secretary 11

12 What should be the reviewer s approach? a) Not as an inspector, auditor or investigator but as a pathologist. b) Should be appreciative of good practices while suggesting areas of improvement c) Collaborative with a friendly demeanour d) Discussion mode as a peer to be adopted by the Reviewer e) Should try and give value addition to PU and not merely a tick box approach f) 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 judgement by the PU. Verification of the process will include verification of working papers maintained by the PU. 12

13 Expected Qualities of Reviewer a. Should be well acquainted with the technical aspects of the attestation services b. Should know the provisions of Code of Conduct of ICSI c. Should have studied the provisions of the Code of Conduct of ICSI d. Should get himself / herself acquainted with decisions of various courts on deficiency in service e. Relevant provisions of CS Act, 1980, Consumer Protections Act, Evidence Act, IPC, etc. contd. 13

14 Expected Qualities of Reviewer contd. f. Should have studied the technical standards like Secretarial Standards, Guidance Notes, Notifications issued by the Council of ICSI g. Should be good at drafting and written and spoken English. h. Professional behaviour while on visit dress code, punctuality, neatness, soft language. i. Understand his limitations what is outside the scope of Peer Review. 14

15 Para 10 of the Guidelines provide for qualifications of a Peer Reviewer. Empanelment of Reviewers Members fulfilling the requirements of para 10 may make an application for empanelment in the format prescribed by the Board. After scrutiny of the application the Board issues the empanelment letter. 15

16 Training & Development of Reviewers To attain the objectives of peer review in letter and spirit. Adequate training facilities shall be provided from time to time to the Reviewer(s). Reviewers shall be expected to be fully familiar with all procedures, prescriptions, guidelines and other decisions as may be issued by the Board from time to time. 16

17 Methodology to be followed by Reviewer Offsite Review Study 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 17

18 Compliance with Peer Review Guidelines Practice Units required to comply with the provisions of these guidelines. Practice Units failing in this regard will be required to undergo appropriate review of their quality controls by the Board in terms to specific directions as may be issued by the Council in this regard from time to time. 18

19 Selection of Members/ Firms subject to Review Peer Review (PR) on the basis of random selections or at the request of the practice unit If company or concern requests the Board for PR of its secretarial auditor : cost of PR shall be borne by such company or concern If Council / Government or any regulatory body requests the Board for PR of any Practice Unit : cost of PR shall be borne by the referred practice unit 19

20 Obligations 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. 20

21 Atleast once in a block of five years. Periodicity of Peer Review If the Board so decides or otherwise at the request of the practice unit, the peer reviews for a practice unit can be conducted at shorter intervals. 21

22 Cost 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. Same rate shall apply to second review also. Each branch / office under review would be considered separately. 22

23 Prescribed rates of Fee for Peer Review Rs. 10,000/- to be paid directly to the Peer Reviewer (inclusive of TA/DA and any out of pocket expenses) as may be prescribed by the Peer Review Board from time to time. 23

24 Review Framework Three stage process Planning Intimation Return of completed Questionnaire 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 Interim Report of Reviewer Final Report of Reviewer 24

25 Peer Review - Planning Intimation to PU about impending Peer Review along with Questionnaire and list of three suggested Peer Reviewers. Reply by PU within 15 days. Questionnaire to be returned within one month Sampling of Attestation Services Engagements 25

26 Confirmation of visit by Reviewer. Peer Review - Execution Initial Meeting. Compliance Review General Controls. Selection of attestation services engagements to be reviewed. Review of Records. 26

27 Peer Review - Reporting Preliminary Report of Reviewer at the end of on-site review before the report is made to the Board. Practice Unit may submit its representation within 21 days from the date of Preliminary Report. Interim Report based on representation made by the Practice Unit and follow up review. Final Report of Reviewer to the Board. 27

28 Dispute 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. 28

29 Dispute 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 29

30 Dispute 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 within 60 days from the date of the Appeal 30

31 QUESTIONS! QUERIES! SUGGESTIONS! 31

32 THANK YOU! 32