Institutional Mechanism for Peer Review in IA&AD

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

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

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

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. 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. Stage I : PlanningModel 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. 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. Operational Plan for Peer Review Stage I: PlanningSample 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. Stage-I: Time Frame

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. Stage II: Time Frame

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. 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. Stage III: Time frame

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