The Institute of Chartered Accountants of India (ICAI) has officially postponed the implementation of Phase IV of its Peer Review Mandate by one year. The phase, which was earlier set to come into force from January 1, 2026, will now be applicable from December 31, 2026. The decision was announced through an official notice issued by the Peer Review Board on December 31, 2025.
The extension offers temporary relief to several chartered accountancy firms that were gearing up to meet the new requirements at the start of 2026. It also reflects ICAI’s decision to give firms more time to prepare and align themselves with the peer review framework.
What is the peer review mandate?
ICAI introduced the Peer Review system to ensure that audit and accounting services adhere to prescribed professional standards. The system focuses on improving the quality of attestation and audit work by checking whether firms follow laid-down procedures, ethical norms and regulatory requirements.
Over the years, the peer review mandate has been rolled out in phases. With each phase, more categories of firms have been brought under mandatory peer review, making it an increasingly important compliance requirement for practising chartered accountants.
Who does Phase IV apply to?
Phase IV of the Peer Review Mandate covers two major categories of practice units. The first includes firms that intend to undertake audits of branches of Public Sector banks. For these firms, holding a valid Peer Review Certificate is a mandatory condition before accepting or continuing such audits.
The second category includes firms that provide attestation services and have three or more partners. These firms are required to obtain a Peer Review Certificate before accepting any statutory audit assignment. Both categories were originally expected to comply with the mandate from January 1, 2026.
Revised implementation date and ICAI’s decision
As per the official notice, ICAI has decided to extend the effective date of Phase IV by exactly one year. The revised date from which peer review will become mandatory for Phase IV firms is December 31, 2026.
The notice also clarified that the extension applies uniformly to all practice units covered under Phase IV. Until the revised date, the existing peer review framework and earlier phases will continue to operate without any change.
Why the extension matters for firms
The deferment gives firms additional time to complete the peer review process, which involves documentation, compliance checks and interactions with peer reviewers. Several small and mid-sized firms had raised concerns about their readiness, especially those planning to take up Public Sector bank audits or expand their statutory audit work.
Peer review is a detailed and time-consuming exercise that requires internal preparation and system reviews. The extended timeline reduces immediate pressure and allows firms to plan their compliance in a more organised manner.
Impact on chartered accountancy firms
For firms aiming to audit Public Sector bank branches, the extension means they can continue their preparations without the risk of immediate ineligibility due to the absence of a Peer Review Certificate. Similarly, multi-partner firms offering attestation services get more time to meet eligibility conditions before accepting statutory audit assignments.
However, ICAI has made it clear that the requirement itself has not been diluted. The extension only shifts the deadline, and firms must still obtain peer review certification before the revised implementation date to remain eligible under Phase IV.
ICAI has advised practice units to use the extended period effectively and complete the peer review process well before December 2026 to avoid last-minute compliance issues. While the deferment provides breathing space, it also sends a clear message that Phase IV will be enforced as scheduled.
