Consultancy services including taxation,advisory,transactions and assurance being provided by auditing firms may also have to go through peer reviews. Besides that,companies may be asked to develop an independent Information Systems Audit (ISA) for statutory auditors. The ministry of corporate affairs,which is studying the recommendations made by a High-Powered Committee (HPC) of the ICAI,is planning to incorporate stringent regulations and rules in the CA Act and Companies Bill,2009,in an effort to insulate firms from becoming victims of corporate frauds,as happened in the Satyam debacle. In the HPC report,approved by its council,the Institute of Chartered Accountants (ICAI) has said that the peer review approach should be re-engineered and apart from frequently monitoring audit quality of the work done,peer reviews should be extended to non-audit services too. Most of the auditing firms provide non-audit services such as assurance and taxation,among others. Robust independent assurance services provide vital information to investors and other stakeholders,along with a clear perspective to audit committees and timely inputs to the management. Therefore,the ICAI is of the view that not just the auditing work conducted by auditors but other services provided by them should also be monitored because they also form an important basis for the auditing of any company. The ICAI has also proposed that hot and cold review procedures should be empowered. A hot review is one where while an audit assignment is on,another auditor reviews it. In cold reviews,the review is done after the audit work has been completed. The files are then reviewed by other auditors. Since the Satyam scam was also partly due to a systems failure and the auditors overlooked it,the ICAI has said that there should be an independent team,which may also be an IT consultancy firm,to check the systems installed in a company to see if they are adequate enough to raise the alarm in case of any irregularity.
