(This is a continuation of the series of articles on Independent Data Auditors which emanated from the Event on June 6)

Financial audit professionals have long relied on a system of Peer Review Audits to preserve the integrity, credibility, and quality of the audit profession.

A Peer Review is an independent evaluation of an auditor’s work conducted by qualified professionals who were not involved in the original audit engagement. The objective is not to substitute the judgment of the original auditor, but to assess whether the audit was performed in accordance with accepted standards, regulatory requirements, and established professional practices.

During a peer review, experienced auditors examine the audit methodology, working papers, evidence collection procedures, documentation practices, and reporting conclusions. Such reviews help determine whether the audit process met the expected standards of professional diligence and competence. The process enhances confidence in audit outcomes and promotes continuous improvement within the profession.

In many professions, peer review forms part of a broader quality assurance framework and serves as an important mechanism for maintaining public trust in the audit process.

Peer Review in the FDPPI Framework

As FDPPI develops its framework for DPDPA compliance audits, elements of the peer review concept are being incorporated as a recommended best practice.

Under the FDPPI framework, audit firms may be recognized as Certified Audit Firms for conducting DPDPA audits. Upon completion of an audit, the auditor is expected to submit a Data Trust Score (DTS) report and related audit records. These records may be retained by FDPPI for quality assurance purposes and may be referred for a peer review when circumstances warrant.

Simultaneously, the auditee is encouraged to provide feedback regarding the audit engagement. The availability of inputs from both the auditor and the auditee may occasionally reveal inconsistencies, misunderstandings, or concerns that merit an independent examination. In such situations, FDPPI may recommend a peer review process.

It is important to emphasize that FDPPI does not seek to substitute its judgment for that of the auditor or interfere with the auditor’s professional independence. The purpose of peer review is solely to strengthen the credibility and reliability of the audit ecosystem through constructive quality assurance.

Ethical Foundation

The peer review concept is being proposed as part of the evolving Code of Ethics for Independent Data Auditors under the framework of the Association of Independent Data Auditors of India (AIDAI). These principles may be incorporated into the ethical commitments undertaken by auditors as well as into engagement agreements between auditors and their clients.

At present, these remain voluntary professional standards. Neither FDPPI nor AIDAI possesses statutory authority to enforce such ethical obligations. Their effectiveness therefore depends largely on the willingness of auditors to embrace them as part of their professional responsibility.

Beyond Regulation: The Need for Self-Governance

The long-term strength of any profession depends not merely on external regulation but on the internal values of its practitioners. Ethical conduct becomes meaningful only when it is voluntarily adopted and consistently practiced.

FDPPI therefore urges all empanelled auditors to embrace peer review and similar quality assurance measures as part of a commitment to professional excellence. The objective is not compliance with an external mandate, but the cultivation of a culture of integrity, transparency, accountability, and continuous improvement.

Ultimately, the effectiveness of an Independent Data Auditor is determined not only by technical competence but also by the auditor’s commitment to ethical self-governance. In that sense, the profession requires not merely training and certification, but an “inner engineering” that aligns professional conduct with the larger objective of building trust in the digital ecosystem.

A profession earns public trust not through regulation alone, but through the willingness of its members to hold themselves accountable to standards that are often higher than those imposed by law.

Naavi

(This is in continuation of the previous article)

In the previous article, we discussed the distinction between the objectives of the CISO and the DPO.

The same distinction raises a broader question regarding the independence of DPDPA audits.

If a DPDPA audit is intended not only to assess organizational controls but also to evaluate whether the interests of Data Principals are adequately protected, can management alone determine the scope of the audit?

The Traditional Audit Model

Most governance frameworks recognize the right of management to define the scope of compliance activities.

ISO 27001 follows this approach through the Statement of Applicability.

DGPSI similarly permits management to define implementation boundaries through the Deviation Justification Document.

The rationale is straightforward.

Management bears the business risk and therefore has the right to determine its risk appetite. Risks that are consciously accepted may be mitigated through operational controls, contingency planning, insurance, or other risk-treatment mechanisms.

The Challenge

The problem arises when a management decision affects not only organizational risk but also the rights of Data Principals.

A DPDPA audit is different from a conventional information security audit.

The question is not merely:

“Has the organization managed its risk?”

The question is also:

“Have the interests of Data Principals been reasonably protected?”

An excessively narrow audit scope may therefore conceal significant privacy risks while still appearing acceptable from a management perspective.

The DGPSI Approach

DGPSI addresses this challenge through a structured risk-assessment process.

The auditor is expected to identify risks based on applicable implementation specifications and present these findings to management.

Management may then choose to mitigate, transfer, absorb, or otherwise manage those risks.

Any exclusions or deviations are expected to be documented and justified.

The resulting Data Trust Score (DTS) reflects not only implemented controls but also the residual risks accepted by management.

This approach is comparable to an individual managing health risks through a combination of medication, lifestyle adjustments, emergency medical facilities, and insurance coverage. The risk is not eliminated but consciously managed.

Is Additional Oversight Necessary?

During the discussions, a concern was raised regarding situations in which management may seek to aggressively reduce audit scope by asserting:

“We will deal with the risk if and when it materializes.”

If such decisions significantly affect the interests of Data Principals, should there be an independent validation mechanism?

One suggestion was that the audit scope should be supported by a formal risk assessment and be reviewed by an independent body before the audit proceeds.

The objective would not be to overrule management.

Nor would it be to dictate implementation choices.

The objective would simply be to determine whether the scoping assumptions appear professionally reasonable.

A Possible Role for Audit Quality Control

DGPSI currently contemplates a quality-control mechanism under which completed audits may be reviewed by an FDPPI quality committee if significant concerns arise.

A similar concept could potentially be applied at the scoping stage.

Under such an approach, an auditor may voluntarily submit the risk assessment and proposed scoping document to an Audit Quality Control Committee for validation of the underlying assumptions.

The committee would not certify compliance, approve the audit, or interfere with auditor independence.

Its role would be limited to examining whether significant exclusions have been adequately justified.

Conclusion

As India develops professional standards for Independent Data Auditors under DPDPA, the industry must address an important question:

Can an audit remain truly independent if its scope is entirely determined by management?

The answer is unlikely to be straightforward.

Management must retain the right to determine business priorities and risk appetite. At the same time, DPDPA compliance requires recognition of interests that extend beyond the organization itself.

The suggestions discussed here are exploratory and intended to stimulate professional debate. FDPPI and AIDAI are in the process of developing ethical and professional standards for DPDPA audits, and practitioner feedback will play an important role in shaping these standards.

The objective is not to prescribe answers but to encourage the development of a robust and credible audit ecosystem for India’s emerging data protection framework.

Naavi

(This  is a continuation of the previous article)

During recent discussions on the role of Independent Data Auditors, an interesting debate emerged regarding whether a Chief Information Security Officer (CISO) can effectively discharge the responsibilities of a Data Protection Officer (DPO).

The debate raises a more fundamental question: Do the objectives of the CISO and the DPO naturally converge?

Many organizations assume that they do because both functions deal with information. A closer examination, however, suggests that their primary objectives are significantly different.

The Objective of the CISO

The CISO is fundamentally responsible for protecting the organization’s information assets.

Traditionally this responsibility is expressed through the principles of Confidentiality, Integrity, and Availability (CIA). The CISO seeks to ensure that information is accessible only to authorized persons, remains accurate and trustworthy, and is available when required.

The security architecture, access controls, monitoring mechanisms, logging systems, and incident response frameworks are all designed to support the business objectives of the organization.

The CISO therefore operates primarily from the perspective of organizational risk.

The Objective of the DPO

The DPO operates under a different mandate.

The DPO’s role originates from law rather than from business necessity. Under DPDPA 2023, the processing of personal data is expected to be aligned with the rights of the Data Principal, except in situations specifically exempted by law.

Questions such as:

• • Who may access personal data?
  • For what purpose?
  • For how long?
  • Under what authority?
  • Subject to what rights of correction, access, grievance, or nomination?

are driven not merely by organizational convenience but by the rights recognized under law.

While the DPO is appointed and compensated by the Data Fiduciary, the essence of the role is to ensure that the interests of the Data Principal are respected.

Where the Conflict Arises

The management of an organization naturally seeks to maximize business value from information assets available to it, including customer information wherever legally permissible.

The CISO supports this objective by ensuring that information remains secure and usable.

The DPO, however, must ask a different question.

Not “Can we use this data securely?”

but

“Should we be using this data at all?”

This distinction creates an inherent tension.

A security professional may advocate longer retention periods to support forensic investigations.

A privacy professional may advocate deletion once the original purpose is exhausted.

A security team may seek extensive monitoring to detect insider threats.

A DPO may question whether such monitoring is proportionate and necessary.

The conflict is not accidental. It is built into the governance framework.

Why DPDPA Recognizes Both Perspectives

DPDPA acknowledges that information security is essential and therefore recognizes several legitimate-use situations where security interests may justify processing.

However, the Act does not subordinate privacy rights to security objectives.

Instead, it attempts to balance both interests.

This balancing exercise requires an independent voice within the organization that is capable of representing the perspective of the Data Principal.

Conclusion

The most mature organizations recognize that the CISO and DPO are not substitutes for one another.

The CISO is the guardian of information assets.

The DPO is the guardian of privacy rights.

The Board must balance both perspectives.

When disagreements arise between the two functions, it is often evidence that the governance system is functioning properly. The tension between security and privacy is not a weakness. It is an essential mechanism for ensuring that organizational objectives do not inadvertently override the rights of individuals.

The next question that naturally follows is whether a similar tension should also be reflected in the DPDPA audit process itself.

Naavi

The discussions held on June 6th regarding the role of Independent Data Auditors under DPDPA 2023 generated a number of insightful observations. Among them, two issues stood out as being particularly significant for the future evolution of DPDPA compliance and audit practices in India.

The first concerns the role of the Data Protection Officer (DPO) and whether a person whose primary responsibility is Information Security—such as a Chief Information Security Officer (CISO)—can effectively discharge the responsibilities of a DPO.

The second concerns the independence of the DPDPA audit process itself. If compliance audits are expected to protect the interests of Data Principals in addition to the interests of the organization, should the scope of the audit be determined solely by management, or should there be an independent validation of the scoping assumptions?

At first glance these may appear to be unrelated questions. However, both arise from a common concern: the need to balance the interests of the Data Fiduciary with the interests of the Data Principal.

A DPDPA compliance framework cannot be viewed merely as an extension of Information Security. Nor can a DPDPA audit be viewed merely as another management-controlled assurance exercise. The Act introduces a new stakeholder into governance discussions—the Data Principal—and requires organizations to consciously account for that stakeholder’s rights and interests.

In this context, it is useful to separately examine:

1. Why the objectives of the CISO and the DPO may diverge, and whether the two roles should be combined; and
2. Whether management should have unrestricted authority to define the scope of a DPDPA audit.

The next two blogs attempts to initiate a discussion on these issues. The observations are exploratory and are intended to stimulate debate among privacy professionals, auditors, DPOs, CISOs, and policy makers.

Naavi

The potential conflict between the implementation of the Digital Personal Data Protection Act, 2023 (DPDPA 2023) and the Right to Information Act has already been recognized and is currently under consideration before the Supreme Court. However, another important area of possible regulatory overlap appears to have escaped the attention of both industry and compliance professionals—the interaction between the POSH Act and DPDPA 2023.

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH Act) applies to both public and private sector organizations and imposes several statutory obligations on employers. These include:

• Constituting an Internal Committee (IC) comprising a senior woman employee as Presiding Officer, two employee members, and an external member.
• Providing a safe working environment for women employees.
• Formulating and communicating a POSH policy.
• Conducting awareness and training programs.
• Providing administrative support to the Internal Committee.
• Maintaining confidentiality of complainants and proceedings.
• Providing support and protection to complainants.
• Maintaining records and filing statutory reports.
• Treating sexual harassment as misconduct and imposing appropriate disciplinary action.

While these obligations are well understood from an employment law perspective, the implications under DPDPA 2023 have not yet been adequately examined.

Emerging Areas of Conflict

Several provisions of DPDPA 2023 may create practical challenges when applied to POSH-related investigations and records.

1. Right of the Respondent to Information

DPDPA grants Data Principals the right to know how their personal data is being processed. A respondent in a POSH proceeding may therefore seek details regarding the collection, use, storage, and disclosure of information relating to the complaint.

How should an organization balance such requests with the confidentiality obligations imposed by the POSH Act?

2. Requests for Correction or Erasure

A respondent may exercise rights under DPDPA to seek correction, completion, updating, or erasure of personal data maintained by the organization.

However, records relating to a POSH complaint may need to be preserved for statutory, evidentiary, disciplinary, or appellate purposes. In some situations, the respondent may not even be aware that certain information is being retained as part of an ongoing or concluded POSH process.

Can such requests be denied? If so, under what legal justification?

3. Grievance Redressal Rights

DPDPA requires organizations to establish grievance redressal mechanisms for Data Principals.

If a respondent disputes the handling of his personal data in connection with a POSH investigation, should the matter be addressed through the DPDPA grievance process, the POSH process, or both? The possibility of parallel proceedings cannot be ignored.

4. Rights of Nominees

DPDPA introduces the concept of nomination, under which certain rights may devolve upon a nominee in specified circumstances.

The implications of such rights in relation to sensitive POSH records require careful examination. The confidentiality framework under the POSH Act was never designed with such a concept in mind.

Additional Legal Dimensions

The complexity does not end with DPDPA.

Other laws may also influence the rights and obligations of parties involved in a POSH complaint, including:

• The Information Technology Act, 2000, particularly provisions relating to obscene electronic content.
• Relevant provisions of the Bharatiya Nyaya Sanhita (BNS), including offences such as cyber-stalking and electronic harassment.
• The Bharatiya Sakshya Adhiniyam (BSA), particularly provisions relating to admissibility and certification of electronic evidence.
• Employment and disciplinary laws governing workplace misconduct.

Consequently, a single POSH complaint today may involve a complex interplay of privacy rights, evidentiary requirements, employment obligations, criminal law considerations, and data protection principles.

The Need for a Harmonized Approach

Organizations can no longer treat POSH compliance and DPDPA compliance as independent silos. The preservation of confidentiality under POSH may appear to conflict with transparency obligations under DPDPA. Similarly, data subject rights under DPDPA may collide with statutory record-retention requirements under POSH.

Unless these issues are examined and harmonized, organizations may find themselves caught between competing legal obligations. In practical terms, this could create tensions between the Human Resources function, which is responsible for POSH compliance, and the Data Protection Officer, who is responsible for DPDPA compliance.

The challenge before compliance professionals is therefore not merely to comply with both laws independently, but to develop governance frameworks that enable both statutes to operate without undermining each other.

The issue deserves serious examination before the first major dispute brings these conflicts into sharp focus.

(P.S: Consequent  to this chain of thought, the DGPSI-HR framework may be extended with implementation specifications that addresses conflict with POSH Act, ITA 2000 and RTI Act in the next version.)

Naavi

In continuation of our discussions on how to maintain independence of the “Independent  Data Auditors” in a DPDPA compliance scenario, we discussed the need for share holders to approve the appointment so that the auditor does not feel obligated to the management which makes the payments.

One other best practice criteria which Naavi would like to suggest is  that no Data Auditor should continue to audit the same company for more than  3 consecutive years. This is also consistent with the norms adopted by the statutory financial auditors.

This will be currently suggested for the empanelled auditors of AIDAI as part of the self regulation of the auditors as an ethical conduct.

FDPPI in its mechanism for regulating the Certification partners who conduct their audits would include this as a requirement so that auditors who donot adhere to this norm may lose the accreditation status.

Currently we shall try to include this in the Code of Conduct for AIDAI empanelled Auditors and try to implement it.

Naavi