PRESENTED BY:
CS R.Sridharan
R Sridharan & Associates
Company Secretaries,
New No. 5, Sivasailam Street,
T. Nagar, Chennai - 600017
1
THEME
INTEGRATING
GROWTH ,
GOVERNANCE
AND
CHALLENGES
BEYOND
ENHANCING
QUALITY OF
SERVICE OF A
PRACTISING
COMPANY
SECRETARY
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PEER REVIEW –
A TOOL FOR
IMPROVING THE
QUALITY OF
SERVICE BY A
PRACTISING
COMPANY
SECRETARY
2
PEER REVIEW- MEANING
PEER = Person of same standing or a person who is
equal to another in abilities.
REVIEW = A report or evaluation of past events
PEER + REVIEW = Evaluation of an similar standing
person’s work i.e.., evaluation of performance in same
profession.
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…… CONTD
Peer Review means an examination and review of the
systems, procedures and practices to determine whether
they have been put in place by the practice unit for
ensuring the quality of attestation services as envisaged
and implied/ mandated by the Technical Standards and
whether these were effective or not during the period
under review.
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PEER REVIEW - DEFINITION
Peer Review has been defined as
“ The examination and review of systems and procedures
to determine whether the systems and procedures are
in:

Subsistence

Efficiency

Constant working during the period under review

Established by the practice Unit”.
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HISTORY
• The first recorded editorial prepublication peer-review
process was at “ The Royal Society” in 1665 by Henry
Olderburg.
• In the 20th century, peer review became common for
science funding allocations,
• A professional peer-review process is found in the Ethics
of the Physician written by Ishaq bin Ali al-Rahwi
(854–931).
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….CONTD
• Peer review has been a touchstone of modern scientific
method only since the middle of the 20th century, the only
exception being medicine. Before then, its application was
slack in other scientific fields.
• The ICAI Peer Review Board was setup in the year
2003.
• ICSI Peer Review Guidelines came into effect from the
year 2011.
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WHY PEER REVIEW?




Evaluation of attestation services provided by PCS
Maintenance and enhancement of the quality of
attestation services
Assurance of compliance with the Technical standards
issued by ICSI from time to time and other regulatory
and statutory requirements
Assisting members in identifying the areas of
improvement and receiving guidance from their peer
members
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….CONTD




Upholding the standards of the profession and building
greater faith and confidence in the eyes of the
stakeholders
Sharing of good practices, experience and mutual
learning among peer members of ICSI
Recognition of quality performance by PCS in the
form of issue of peer review certificate
Improving global presence of the members of ICSI in
practice
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GENESIS OF PEER REVIEW PROCESS IN
ICSI



Need was felt to introduce a Peer Review of Practising
Company Secretaries in 2003 on the basis of the
recommendations issued by Naresh Chandra Committee
in November 2002
Establishment of Peer Review Board
Guidelines for Peer Review of Attestation Services by
Practicing Company Secretaries
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….CONTD
Exposure Draft of the Guidelines released at the 12th
National Conference of Practicing Company
Secretaries held at Ooty during July 13-14-15, 2011
 Approved by the Council in its 202nd 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

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ATTESTATION SERVICES
Attestation Services means services involving the
secretarial audit issuing of various certificates, but
does not include:
 Management consultation
 Representing a client before the Authorities;
 Testifying as expert witness; and
 Providing expert opinion on points of principle,
 The phrase ‘Attestation Services’ is used in the
guidelines interchangeably with secretarial or
compliance audit Services, Attestation Functions
and secretarial audit functions.
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ATTESTATION SERVICES COVERED
UNDER PEER REVIEW
 One of the main Objective of Peer Review is aimed at review of the
following attestation services rendered by a Practice Unit:






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
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OBJECTIVES OF PEER REVIEW
To ensure that in carrying out their attestation services
and professional assignments, the Practicing Company
Secretary (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.
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…..CONTD
Peer Review does not seek to redefine the scope and
authority of the Technical Standards specified by the
Council but seeks to enforce them within the parameters
prescribed by the Technical Standards.
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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SCOPE OF PEER REVIEW
The peer review process is directed at the attestation
services of a practice unit.
(1) Once a practice unit is selected for review, its
attestation engagement records pertaining to the
immediately preceding financial year shall be subjected
to review.
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…. CONTD
(2) The 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 Programs for staff (including apprentices)
concerned with attestation functions, including
appropriate infrastructure.
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TECHNICAL STANDARDS - MEANING
Technical Standards means and includes –
• Secretarial Standards issued by ICSI,
• Guidance Notes on Secretarial Standards issued by ICSI,
• Compliance of Guidance Notes on other subjects issued
by ICSI,
• Notifications / Directions issued by the Council of ICSI,
• Compliance of the provisions of the various relevant
Statutes and/or Regulations, applicable in the context of
engagements being reviewed.
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BENEFITS OF PEER REVIEW




Adherence to statutory, documentary and regulatory
requirements by the Practice Unit,
The Practicing Unit will have an opportunity to correct
the deficiencies and thereby enhance his professional
competence,
If a peer review certificate is issued in favor of the
practicing unit , it enhances his credibility in the eyes of
the general public,
Clients of the practicing unit will benefit from knowing
that their Practicing unit is periodically reviewed by
ICSI.
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OFFICE SYSTEMS
•
•
•
•
•
•
•
Simple, Spacious and cluster free space,
Document management system to prove efficiency,
Time management for timely compliances,
Office library for references,
Office equipments and other tangible assets and
Updated circulars for easy access.
Making a Ready – Referencer about the clients
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.… CONTD
5S : Sorting
 Setting in order
 Sweep
 Standardize
 Sustain
Office administration in a PU is a crucial area of
importance for carrying out the Peer Review Process.
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OFFICE SYSTEMS - DOCUMENTATION

Every professional work needs to be backed up by adequate
documents.

Broadly documents can be classified into two files :

Permanent (must contain the letter of engagement,
correspondences, constitution of the entity, nature and history
of business, location and work details) &

Current (must contain appointment letter, acceptance letter,
work assignment, queries raised and explanations received,
checklists, other expert’s opinion, applicable secretarial
standards and their appliance details, detailed working papers)
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ICSI
CREDITORS
SHAREHOLDERS
EXPECTATIONS
FROM
PCS
REGULATORS
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CORPORATE
GOVERNMENT
STAKEHOLDERS
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Professional
assistance to
company
liquidator
(CLAUSE 291)
Introduction of
Secretarial
Audit
(CLAUSE
204)
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Inclusion in
the definition
of key
management
Personnel
(CLAUSE
203)
POSITION OF
A COMPANY
SECRETARY
UNDER NEW
COMPANIES
BILL 2012
Increase in
Penalty on
appointment of
CS
Removal of
defense
regarding CS
(SECTION
383A)
Increased role
in annual
return
(CLAUSE 92)
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SECRETARIAL AUDIT
(LAWS TO BE COVERED)
UNDER COMPANIES ACT , 1956:
 Companies (Central Government’s) General Rules and Forms, 1956;
 Companies (Disqualification of Directors under Section 274(1)(g) of
the Companies Act, 1956) Rules, 2003.
 Companies (Issue of Share Certificates) Rules, 1960.
 Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988.
 Companies (Director Identification Number) Rules, 2006.
 Companies (Electronic Filing and Authentication of Documents)
Rules, 2006.
 Companies (Transfer of Profits to Reserves) Rules, 1975.
 Companies Unpaid dividend (Transfer to General Revenue Account
of the Central Government) Rules, 1978.
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….CONTD
UNDER SEBI :





Securities and Exchange Board of India (Substantial Acquisition
of Shares and Takeovers) Regulations, 2011.
Securities and Exchange Board of India (Prohibition of Insider
Trading) Regulations, 1992.
Securities Exchange Board of India (Employee Stock Option
Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.
Securities Exchange Board of India (Issue and Listing of Debt
Securities) Regulations, 2008
Securities Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations, 2009
Securities Exchange Board of India (Delisting of Equity Shares)
Regulations, 2009.
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….CONTD
OTHER LAWS:







Investor Education and Protection Fund (Awareness and Protection of
Investors), Rules 2001
The Depositories Act, 1996, Regulations and Bye-laws made under the Act.
Non Banking Financial Companies Auditors Report (Reserve Bank) Directions,
1998
Non-Banking Financial Companies (Non-Deposit Accepting or Holding)
Companies Prudential Norms (Reserve Bank) Directions, 2007
The Equity Listing Agreement with National Stock Exchange Ltd., and Bombay
Stock Exchange Ltd.
RBI Directions, Norms, Notifications, Guidelines as applicable to Non-Banking
Financial Companies.
Secretarial Standards issued by the Institute of Company Secretaries of India.
Corporate Governance Voluntary Guidelines, 2009 issued by the Ministry of
Corporate Affairs, Government of India.
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OTHER SIGNIFICANT FEATURES

STATEMENT OF CONFIDENTIALITY :
High Level of Integrity is commanded in the
conduct of peer review process and all the persons
involved in the Peer Review Process. Before accepting to
undertake a Peer Review , the Reviewer and Authorised
Assistant are required to sign a Statement of
Confidentiality and submit the same to the Peer Review
Board.
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….CONTD

EXISTENCE OF CHINESE WALL :
In view of the necessity of safeguarding the interest
of the Practice Units , ICSI has ensured to bring in
existence a “ Chinese Wall ” between the Peer Review
Process and Disciplinary Proceedings that in the event of
any deficiencies noticed by the Peer Reviewer, no
Disciplinary Proceedings shall be initiated against the
Practice Unit.
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….CONTD

IMMUNITY FROM LIABILITY:
A Practice Unit , which shall make all the documents
or records or any information available shall not be liable
for violation of the Code of Conduct under the Company
Secretaries Act, 1980.
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….CONTD
DISPUTE RESOLUTION MECHANISM :
Any matter of dispute arising between the
Practice Unit and the Peer Reviewer in the matter of Peer
Review, the same shall be forwarded to the Board within
2 months and the Board shall decide the matter within 6
months. On dissatisfaction by the Practice Unit , it shall
refer the same matter to ICSI Council within 2 months.
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FUTURE OUTLOOK

Peer Review Process- An outstanding tool for
(a) Reviewed firms to improve their practices; and
(b) Users of PCS services to make decisions on whom to hire

Upholding the standards of profession by providing reassurance
of maintenance and enhancement of quality of professional
services rendered by ICSI members
Peer Review Certificate – Hallmark of excellence in services
rendered by PCS
Enhanced Global presence by Peer Reviewed Firms/PCS
Peer Reviewed Firms/PCS may get privilege over other firms in
case of listed companies



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OBLIGATIONS OF THE PRACTICE UNIT
Practice Unit (PU) 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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THE REVIEWER’S APPROACH
• Should be courteous, professional and helpful,
• Should be appreciative of good practices while
suggesting areas of improvement,
• Collaborative approach and minimum disruption
• Provide practical and insightful comments,
• Should try and give value addition to PU
• In determining subjective issues, the Reviewer has 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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EXPECTED QUALITIES OF REVIEWER
•
Well acquainted with the technical aspects
•
Awareness on the provisions of Code of Conduct of
ICSI
•
Should have studied the provisions of the Code of
Conduct of ICSI
•
Acquaintance with decisions of various courts on
“deficiency in service”
.
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….CONTD
•
Knowledge on relevant provisions of CS Act, 1980,
Consumer Protections Act, Evidence Act, IPC, etc.
•
Good in Drafting and Communication skills.
•
Professional ethics and courteous behavior while on
visit
•
Recognizing his limitations
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METHODOLOGY TO BE FOLLOWED BY
REVIEWER
Offsite Review
 Study
of information given by PU in the
Questionnaire and based on the same make own
observations
about
possible
areas
where
enhancement is possible and note other aspects to be
discussed in personal meeting with PU
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….CONTD
Onsite Review
 Authentication of information given by Practice Unit
(PU). Test checks in respect of attestation
assignments handled by PU
 Communication with the staff & trainees of PU
should be part of Peer Review
 Inspection of the records of the client maintained by
PU to verify compliance
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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
Confirmation of visit by Reviewer.
Initial Meeting.
Compliance Review – General Controls.
Selection of attestation services engagements to be
reviewed.
Review of Records.
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PEER REVIEW - EXECUTION

On site review for two or three days on the assumption
that the PU has made records and information ready on
hand.

Initial Meeting to discuss the agenda and confirm the
accuracy of the responses in the Questionnaire.

Compliance Review on General controls based on their
installation , operation and maintenance.
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.... CONTD

Selection of attestation services engagements to be
reviewed which include the number of attestation
services engagement, not to undertake services subject to
disciplinary proceedings.

Review of Records to adopt either a compliance
approach or substantive approach
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PEER REVIEW - REPORTING
PRELIMINARY REPORT
• Preliminary Report of
Reviewer at the end of on-site
review before the report is
made to the Board.
• After on-site review, reviewer
may communicate with PU
and seek clarifications and
consider sending a preliminary
report if replies not found
satisfactory
• After on-site review, in case of
deficiencies in systems and
procedures or noncompliances the reviewer to
issue preliminary report to PU
immediately
• Reviewer to take care not to
mention any names
• Scope of review performed
and scope limitations, if any,
to be mentioned
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INTERIM REPORT
• Interim Report based on
representation made by the
Practice Unit and follow up
review.
• Reviewer to issue interim report
if not satisfied with reply of the
PU and deficiencies are of such
serious nature that they do not
ensure quality of attestation
services performed by the PU weakness in compliance with
technical standards and/ or in
internal quality control systems
• Report to clearly indicate
"Interim Report"
• On receipt of interim report by
the Board or receipt of response
from the PU, the Board may
instruct the reviewer to carry out
a follow up review after a period
ranging from 6 months to 12
months at the discretion of the
Board
FINAL REPORT
• Final Report of Reviewer to
the Board.
• Reviewer to submit Final
Report to the Board with a
copy to the PU
• Final Report should
incorporate the findings as
discussed with the PU
• Final report to be submitted to
the Board.
• The Board shall consider the
report and if satisfied, will
issue Peer Review Certificate
• If not satisfied, the Board may
issue recommendations to the
PU and direct the reviewer for
further review
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ESTABLISHMENT OF ICSI PRB
(1)The Board shall be established by the Council.
(2) The Board shall consist of a maximum of seven members to
be appointed by the Council, of whom at least four shall be
from amongst the Members of the Council.
(3) The balance members of the Board shall be drawn from
amongst prominent members of high integrity and reputation,
including but not limited to former public officials,
regulatory authorities etc.
(4) The Council shall appoint the Chairman and the ViceChairman from amongst the Members of the Council.
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…CONTD
(5)At least one-half of Council Members on the Board shall
hold Certificate of Practice.
(6) The tenure of the Peer Review Board shall be coterminus with the tenure of the Council and the term of a
member shall be for such period as may be prescribed by
the Council.
(7) Any vacancy(ies) on the Board shall be filled in by the
Council.
(8) Members of the Disciplinary Committee of the Institute
of Company Secretaries of India shall not concurrently
serve on the Board.
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ICSI PRB
Mr. Harish K
Vaid,
Chairman
Mr. R Sridharan,
Vice-Chairman
Mr. Ashok
Kumar Pareek,
Member
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Mr. Sanjay
Grover, Member
Mr.Mahesh
Ananth Athavale,
Member
Mr. V
Sreedharan,
Member
Ms. Savithri
Parekh, Member
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OBJECTIVE OF ICSI PRB
The main objective of Peer Review is to ensure that in
carrying out the assurance service assignments, the
members of the Institute :
(a) Comply with Technical, Professional and Ethical
Standards as applicable including other regulatory
requirements thereto and
(b) Have in place proper systems including documentation
thereof, to amply demonstrate the quality of the
assurance services.
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…CONTD
Thus Peer Review is meant for the purpose of enhancing
quality of professional work, transparency in technical
standards used, world class procedures and techniques
resulting into more reliable reports and it has no
relationship whatsoever with any disciplinary or any
other regulatory mechanism. The review begins with the
assumption
that professionals
discharge their
responsibilities properly and the aim of review is to
enhance those attributes of professionalism that serve to
keep the profession in India.
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POWERS OF ICSI PRB
To call for information from
practice units in such form as it
deem fit
To send a Panel of at
least three reviewers
(from the Board’s own
panel) to the practice
unit and allow the
practice unit to choose
any one reviewer from
the panel so forwarded
to it
To examine the aspects
of basis of selection of
records pertaining to
the attestation services
in terms of the
appropriate Technical
Standards.
On considering the
Report of a reviewer,
to do any or all of the
following:(a) To issue
recommendations to
the practice unit;(b) To
order a further peer
review to be carried
out
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To maintain a panel of
Reviewers.
To arrange for such
training programs for
reviewers as may be
deemed appropriate
After considering the
report of the reviewer
and compliance of
recommendations by
the Practice Unit,
wherever deemed
appropriate by the
Board, to issue Peer
Review Certificate.
To define the terms of
appointment of the
reviewers
To prescribe the
system, practice and
procedure to be
observed in relation to
peer reviews
To guide the members
on best practices on
peer review.
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CONCLUSION
Peer Review , as a self – regulatory mechanism allows a professional
to reassure the society and the stakeholders at a large that this
profession is conscious of its responsibilities and is determined to do
its best by ensuring the members to observe high standards.
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