The Institute of Chartered Accountants of India has deferred the implementation of Phase IV of the Peer Review Mandate by one year, extending the deadline from 1 January 2026 to 31 December 2026. The extension gives Practice Units (CA firms) in scope additional time to obtain a Peer Review Certificate — without which they will be ineligible to accept statutory audits under the relevant categories from the new effective date.
Quick reminder — what is the Peer Review Mandate?
The Peer Review Mandate is the ICAI’s requirement that audit firms holding themselves out for certain categories of statutory audit hold a valid Peer Review Certificate. The certificate is issued by the ICAI’s Peer Review Board after a peer review of the firm’s practice — review of working papers, risk assessment, sampling rationale, internal control documentation, partner sign-off discipline and quality control procedures — conducted by an independent peer reviewer.
The mandate was rolled out in phases, expanding the categories of firms required to be peer-reviewed:
- Phase I — from 1 April 2022. Firms auditing listed entities.
- Phase II — from 1 April 2023. Firms auditing unlisted public companies above a specific size.
- Phase III — from 1 April 2024. Firms auditing other significant public-interest entities.
- Phase IV — originally 1 April 2025; pushed to 1 January 2026; now further deferred to 31 December 2026.
Who is in Phase IV?
Phase IV brings two categories of Practice Units into the mandatory peer-review net:
- Practice Units that propose to undertake audits of branches of Public Sector Banks. A Peer Review Certificate becomes a prerequisite for empanelment for PSB branch audits.
- Practice Units rendering attestation services and having three or more partners. Any audit firm with three or more partners that signs attestation engagements (statutory audit, tax audit, certifications) falls into this bucket regardless of client type.
The second category is the larger by count — many mid-sized CA firms across India qualify on the “three partners” criterion alone.
What it means in practice
For an in-scope firm without a Peer Review Certificate at the new effective date:
- You cannot accept new statutory audit assignments in the relevant categories from 1 January 2027 onwards (after the new effective date).
- Existing engagements continue, but renewals or new appointments will be blocked until certification is in place.
- Empanelments — PSB branch audit empanelment, NABARD listings, certain government-sector audit panels — treat the certificate as a hard prerequisite.
Why the deferral — and what to do with the time
The Peer Review Board cited capacity constraints — the number of firms in scope and the available pool of peer reviewers wasn’t a clean match for the original timeline. The deferral is meant to ease the bottleneck, not to relax the standard.
If your firm is in Phase IV scope and doesn’t yet have the certificate, the additional 12 months are best used to:
- File the application early. The Peer Review Board’s queue grows as the deadline nears. Filing in early 2026 is materially faster than filing in October.
- Tighten your working papers. A peer reviewer’s checklist starts with the Standard on Auditing 230 working-paper documentation. If your last few audits don’t have a planning memo, materiality computation, sampling rationale and a documented internal review, fix that first.
- Document your quality control framework. SQC 1 (Quality Control for Firms that Perform Audits) requires a documented quality-control system. Many firms operate the substance of one without writing it down. Write it down.
- Reconcile your engagement letters and signed reports for the past three years. Mismatches and missing engagement letters surface during review.
- Train articled assistants and audit staff in working-paper discipline. The peer reviewer samples engagements; if a junior’s working papers are below standard, they’re your firm’s working papers.
- Run a mock review with a senior CA from outside your firm before the actual review. Cheaper to find the gaps in a friendly review than during the formal one.
How long does a peer review take?
From application to certificate, the typical cycle is 4–9 months:
- Application to Peer Review Board with prescribed documents and fee
- Allotment of a Peer Reviewer (1–6 weeks depending on Board capacity)
- Peer reviewer sends initial questionnaire
- On-site review at firm office (1–3 working days for most mid-sized firms)
- Reviewer’s report — can be a clean report or a report with observations requiring action
- If observations: corrective action and re-review
- Final certification by the Peer Review Board
Plan backwards. To have a certificate in hand by 31 December 2026, the application should ideally be submitted no later than mid-2026.
What we recommend
- Confirm whether your firm is in Phase IV scope. Three-or-more partners + attestation services covers many firms; check.
- Don’t wait until late 2026. The queue concentrates as the deadline approaches; early filing saves stress.
- Treat the run-up as a quality-improvement exercise, not a paperwork compliance exercise. The substantive benefits (cleaner documentation, sharper sign-off discipline, defensible audit files) outlive the certificate.
- Coordinate with peers. If your network of CA firms have similar timing, a shared peer-reviewer panel and shared mock-review buddies works well.
- If you’re a Phase I–III firm, your existing Peer Review Certificate is on a 3–5 year cycle. Track its expiry and renewal calendar separately.
If your firm is preparing for Phase IV and would like a working-paper readiness review or an SQC 1 documentation walkthrough, write to us at [email protected].
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