What is Quality review Board?
QRB is a statutory body established by the Central Government under Section 28A of the Chartered Accountants Act, 1949. The Board consist of 10 members and a chairperson. Out of it, 6 members inclusing the chairperson are nominated by Central Government (from bodies like CBDT, MCA, CAG, SEBI, etc and 5 are nominated by the ICAI council. It is pertinent to note that the majority of QRB members are independent of the accounting profession, meaning they are not directly part of the ICAI, thereby ensuring objectivity in reviews.
What is the Role of QRB?
Primary function of QRB is to assess the quality of audit work done by practicing CAs and ensure adherence to technical, legal, and ethical standards. Based on its review, QRB issues guidance and advisories to firms in context of improving the service quality and adherance to regulations. It also makes recommendations to the ICAI Council regarding the quality of services provided by its members.
How does QRB's review mechanism work?
Selection for review
The selection of the audit firms for review are made on the basis of following criteria:
- Entity based (client based) selection
- Audit firm based selection
- Selection on the basis of media report and references made to QRB
Inspection:
Technical Reviewers conduct detailed inspections of audit files and procedures.
Reporting:
Findings are compiled into reports, which may include recommendations, advisories, or disciplinary referrals. It can refer cases of non-compliance to ICAI’s Disciplinary Directorate.
Why is QRB needed, when we have already have NFRA that oversees auditing profession?
NFRA is an independent regulator under Companies Act 2013, that oversees auditing for listed entities and large unlisted public companies (usually high-risk or public interest entities), QRB primarily reviews entities not covered by NFRA such as: private companies, smaller unlisted public companies and referrals from NFRA. While NFRA primarily focuses on Enforcement, investigation and disciplinary action, QRB provides advisories and recommendations to improve audit quality, in addition to conducting technical reviews of audit work.