1. 1 Institutional Mechanism for Peer Review in IA&AD Peer Review Board (PRB) at Headquarters: Composition Chair Person: ADAI (Inspection) Participating Members: – Other ADAIs/DAIs – President, Institute of Public Auditors (IPA) or any member of the Central Council of IPA or any senior expert of the level of retired DG/PAG and above nominated by President, IPA – Secretary, Audit Advisory Committee (DG-Audit) – Secretary, Government Accounting Standards Advisory Board (DG-Accounts) – Economic Adviser to IA&AD – Deputy Director General, NIC on deputation to IA&AD Director (Peer Review) to be the Secretary of PRB

2. 2 Peer Review Board PRB was kept under abeyance (for one year from 17-08-2005) PRB revived by CAG with effect from 7-08-2006 All Final Review Reports directly submitted to CAG through ADAI (Inspection)

3. 3 Functions of Peer Review Board The Peer Review Board (PRB) may meet once in a year PRB to review the final peer review reports and monitor signals received from field offices for planning both compliance and rectification measures PRB may advise C&AG about measures to be taken to improve the effectiveness and efficiency of the field offices

4. 4 Peer Review – Present Framework Who will be peer reviewed and who will conduct peer review? Any Office of IA&AD can be subjected to Peer Review. The Chair Person, Peer Review Board (ADAI, Inspection) will select the offices to be subjected to Peer Review as well as the offices to conduct the Peer Review. ADAI(Inspection) will inform the Office selected for Peer Review as well as the Team Leader of Peer Review Group about the selection. Factors to be considered: –Independence –Competence –Credibility

5. 5 Peer Review – Present Framework What will be peer reviewed? (Broad Parameters for Peer Review) In the case of an AUDIT OFFICE the following aspects will be reviewed. Performance Measures, Effectiveness, General Quality Control and General Management Practices Financial Statement Audits {Regularity (Financial) Audit} Performance Audits/Reviews Transaction Audits {Regularity (Compliance) Audit} and application of VLC system in auditing services

6. 6 Peer Review – Present Framework What will be peer reviewed? (Broad Parameters for Peer Review) In the case of an ACCOUNTS OFFICE the following aspects will be reviewed. Performance Measures, Effectiveness, General Quality Control and General Management Practices Accounts, GPF and Pension Wings Review of Application of VLC system in accounting services.

7. 7 Peer Review Composition of PRG for Audit Offices ADAI (Inspection) Coordinator Director (Inspection) Secretary to Peer Review Board PAG/AG/DGA/PDATeam Leader Group Officer of the(If requested by the Team Leader Team Leader to provide continuity) Members of team 2 Assistant Audit OfficersTo be drawn from Office of Team Leader 1 Assistant Admn OfficerFrom Inspection Wing, Hqrs. 1 Assistant Audit OfficerFrom ITA Wing of the office under Review

8. 8 Peer Review Composition of PRG for A&E Offices ADAI (Inspection) Coordinator Director (Inspection) Secretary to Peer Review Board PAG/AG/DGA/PDATeam Leader Group Officer of the(If requested by the Team Leader Team Leaderto provide continuity) Members of team 3 Assistant Accounts OfficersTo be drawn from Office of Team Leader 1 Assistant Admn OfficerFrom Inspection Wing, Hqrs. 1 Assistant Accounts OfficerFrom ITA Wing of the office under Review

9. 9 Peer Review will have the following three stages: Stage I-Planning Stage II-Execution Stage III-Reporting Peer Review Procedure Three Stages

10. 10 Stage I: Planning Notifying the Office The Office selected for Peer Review will be supplied with a format for indicating the General Profile of the Office and Model Check-list for Peer Review The formats to be filled and sent to the Team Leader of Peer Review Group, with a copy to Director (Inspection) at Headquarters

11. 11 Stage I: Planning Operational Plan for Peer Review in IA&AD Terms of Reference of PRG Planning with reference to the strategic and long term operational objectives of the office. Compliance with the technical standards of the Department i.e. – Whether the accounting and auditing services are being performed as per the Departmental standards, manuals and instructions. (This will supplement the existing internal reviews.) – Whether the auditing and accounting methodologies and practices conform to best international practices as adopted by the department. – Whether proper system (including documentation system) for maintaining the quality of the work Initiatives designed to strengthen the knowledge and skills, professional competence, adherence to professional standards and overall effectiveness of the office

12. 12 Stage I : Planning Model Checklist for Peer Review For Audit Offices: The Model Checklist was designed to provide guidance to assist the Reviewer in reviewing the following aspects of functioning of a field office. Performance Measures, Effectiveness, General Quality Control and General Management Practices Financial Statement Audits {Regularity (Financial) Audit} Performance Audits / Reviews Transaction Audits {Regularity (Compliance) Audit}and application of VLC in auditing services

13. 13 Stage I : Planning- Model Checklist for Peer Review For Accounts & Entitlement Offices: The Model Checklist was designed to provide guidance to assist the Reviewer in reviewing the following aspects of functioning of a field office. Performance Measures, Effectiveness, General Quality Control and General Management Practices Accounts Wing, GPF Wing, Pension Wing and Application of VLC in accounting services

14. 14 Operational Plan for Peer Review Stage I: Planning Sample Selection Criteria for Sample Selection: The leader of the Peer Review Group can select the sample for review at his discretion The factors that may be considered in selecting the sample include: – The profile of the Office – The size and nature of audits undertaken – The responses to the Model Checklist

15. 15 Sl. No. Review ProcessTime ScheduleCumula- tive days 1.Chair Person, Peer Review Board (PRB) Reviewer to receive communication & questionnaire with terms of reference Day 15 2.Reviewee to complete the questionnaire and send it to reviewer Within one monthDay 45 3.Reviewer to call for any other information if required after evaluation of the questionnaire Within one weekDay 52 4.Reviewee to reply the additional information asked by the reviewer Within 15daysDay 67 Stage-I: Time Frame

16. 16 Operational Plan for Peer Review Stage II - Execution In case of Review of an Audit Office: The answers to be verified by the Peer Review Group, based upon a review of the office’s working paper files on – Selected specific audits of financial statements – Selected performance audits / reviews – Local audits and – Vouchers subjected to Central Audit The questions to be applied to the sample chosen for review

17. 17 Sl. No. Review ProcessTime ScheduleCumula- tive days 1.Reviewer to carry out the review by visiting the office of the reviewee after fixing date as per mutual consent One week (including ½ day for briefing) Within 2 & ½ months from date of notifi- cation Stage II: Time Frame

18. 18 Stage-III: Reporting The Team Leader of the PRG should prepare a preliminary report and send the same to the Office reviewed for comments. After receiving the reply, the Team Leader shall prepare a final report and submit to ADAI (Inspection) Chair Person, PRB. The PRG should prepare working papers that provide sufficient detail to support the review conclusions and recommendations. The documentation should be appropriately filed, and tailored to meet the specific circumstances of the review engagement and terms of reference.

19. 19 Stage-III: Reporting The Report should state specifically whether the system of quality control has been designed so as to carry out auditing / accounting services in a manner that ensures compliance with technical standards of the Department

20. 20 Sl. No. Review ProcessTime Schedule Cumulative Days 1.Reviewer to send preliminary report to Reviewee for comments Within 15days after completing review Day 90 2.Reviewee to send representation to reviewer to submit final report to ADAI (Inspection) Chair Person, PRB Within 15 days Day 105 Stage III: Time frame

21. 21 Monitoring Progress A System of Monthly Progress Reports to ADAI (Inspection) introduced from 2006-07 Reports to be submitted by the Team Leader / HoD of Reviewer and Reviewee Offices