The Institute of Chartered Accountants of India (ICAI) has launched the Audit Quality Maturity Model version 2.0 (AQMM v 2.0), following the mandatory implementation of version 1.0 from April 1, 2023. AQMM v 2.0 continues to apply to firms auditing listed entities, banks (excluding cooperative banks, except multi-state ones), and insurance companies, excluding those conducting only branch audits. The model assesses firms across three key areas: Practice Management – Assurance, Human Resource Management, and Digital Competency, with a total score of 600. Firms must achieve a minimum of 30% in each section to qualify for a maturity level, ranging from Level 1 (30-50%) to Level 4 (85-100%). AQMM v 2.0 will apply to firms submitting their peer review applications on or after April 1, 2025, covering a review period from April 1, 2022, to March 31, 2025. Firms can opt to adopt AQMM v 2.0 earlier, facilitating a smooth transition from the previous version. The model is part of ICAI’s ongoing efforts to enhance audit quality across the profession, ensuring that firms maintain high standards in practice management, resource management, and digital skills.
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
(Set up by an Act of Parliament)
Centre For Audit Quality
The Institute of Chartered Accountants of India
22nd August 2024
ANNOUNCEMENT
Subject: Audit Quality Maturity Model version 2.0 (AQMM v 2.0)
The Council of the Institute of Chartered Accountants of India has approved the Audit Quality Maturity Model version 2.0 (AQMM v 2.0). The same is available at https://resource.cdn.icai.org/81585caq65805.pdf
Applicability
The AQMM v 1.0 has been made mandatory w. e. f. April 1, 2023, to the firms auditing the following entities:
(a) a listed entity; or
(b) Banks other than co-operative banks (except multi-state co-operative banks); or
(c) Insurance Companies
However, firms doing only branch audits are not covered.
The level of the firm obtained using AQMM v 1.0 is being reviewed by a peer reviewer and recorded on the website of ICAI against the validity of the firms’ peer review certificate.
There is no change regarding the applicability of AQMM v 2.0. Therefore, AQMM v 2.0 is also mandatory for firms auditing the aforesaid entities.
AQMM v 2.0 – Sections and Scores
AQMM v 2.0 comprises the following three sections:
a) Practice Management –Assurance
b) Human Resource Management
c) Digital Competency
The scoring pattern under the three sections is as follows: –
| Section Reference | Maximum Score |
% weightage |
| Section 1 “Practice Management – Assurance” | 370 | 61.67 |
| Section 2 “Human Resource Management” | 150 | 25.00 |
| Section 3 “Digital Competency“ | 80 | 13.33 |
| TOTAL | 600 | 100.00 |
A firm should score a minimum 30% under each section to become eligible for getting a level assigned. If the firm fulfills the above-mentioned eligibility criteria, it shall compute the percentage of score achieved on the basis of the Actual Score divided by the Maximum Score (i.e. 600) multiplied by 100. Based on this percentage of score computed, the firm maturity level shall be determined.
Firm Maturity Level
The firm maturity level shall be determined based on the following range of scores under the AQMM v 2.0:
| Level | Scores Received | |||
| Greater than or equal to | Less than | |||
| Level 1 Firm | 30 | % | 50 | % |
| Level 2 Firm | 50 | % | 70 | % |
| Level 3 Firm | 70 | % | 85 | % |
| Level 4 Firm | 85 | % | 100 | % |
Transitional Provisions:
To ensure a smooth transition from the previous version, AQMM v 2.0 will be applicable to firms (referred to as Practice Units in the context of Peer Review) which submit Form 1 – Application cum Questionnaire on or after 01.04.2025. This will cover firms for which the review period is from 01.04.2022 till 31.03.2025 (other than firms which have been constituted during this period for which the review period shall commence from the date of constitution till 31.03.2025). The Practice Units may however adopt AQMM v 2.0 earlier.
Convenor and Deputy Convenor
Centre for Audit Quality
