1. Quality Control Review The Institute of Chartered Accountants of India

2. Presentation Agenda • International Scene • Indian Scene • Process of Quality Review • Concluding Observations

3. IFAC – Quality Assurance • Mandatory for member bodies –March 31, 2005 • Scope: Minimum - Listed Cos. • Adequate system of quality control • Compliance with the system • Adherence to professional, legal and regulatory requirements • Approach : Cycle Approach vs. Risk Based Approach

4. IFAC : Quality-Assurance • Reporting • Designing of system • Compliance • Reasons for negative conclusions, if any • Recommendation for areas of improvement • Corrective and Disciplinary Action • To make appropriate correction • Repeated failure demonstrate compliance - Appropriate disciplinary action

5. Special Features of Indian Quality Review* • An independent quality review board • Nomination of Reviewers at the discretion of the Board • No Disciplinary Action • An exercise of quality enhancement * In India, the nomenclature is “Peer Review”

6. Objectives • Assessing the maintenance of Quality of Attestation Service Engagements performed by Practice Units through: • Compliance with Technical Standards; and • Existence of proper system (including documentation systems) • Adherence to statutory & regulatory requirements • Enhance reliance placed by users of financial statements

7. Three Embedded Questions

8. Question 1 Does the PU have a system of quality control for attestation services? Task Assess based on completed questionnaire developed by the Institute and initial meeting with PU

9. Question 2 Is it designed to ensure compliance with Technical Standards and maintenance of quality attestation work? Tasks • Review of general controls: • Independence • Maintenance of skills • Outside consultation • Staff supervision and development • Office administration

10. Question 3 Task Review of records:Compliance approachSubstantive approach Was it effective during the review period? • Six Key Controls • Audit Record Administration • Review & Evaluation of System of Internal Controls • Substantive Tests • Financial Statement Presentation • Audit Conclusion and • Audit Report

11. Stages of Peer Review PricewaterhouseCoopers | 11

12. Process…. • Preliminary report • Reply to report • Interim report • Final report • Confirmation of visit • Initial meeting • Compliance review • Review of records • Empanelment of reviewer • Selection of PU • Intimation to PU • Communication • Selection of sample • engagements Reporting Actual review Selection

13. General Considerations Maintain strict confidentiality Ensure Independence Follow principles of Integrity and Objectivity Exercise Due Professional Care

14. What is not intended • The Quality Review is not intended to be: • A source of new auditing standards • An opportunity to “second guess” another auditor’s judgments • A source of competitive information • An opportunity to put down a fellow professional or indulge in a “witch hunt”

15. The Goal • Enhance Quality • Share Expertise • Instill Confidence • Build Image • Create Brand Value

16. Thanks