Inspections
CPAB carries out its mission by conducting inspections of the firms over which it has oversight responsibility. This applies to firms who audit reporting issuers as determined by any of the provincial securities commissions. Firms with 100 or more reporting issuer clients are inspected annually, those with between 50 and 99 reporting issuer clients are inspected at least once every two years and those with less than 50 reporting issuer clients are inspected at least once every three years. In addition to these policies set out in CPAB’s Rules:
- CPAB has entered into memoranda of understanding with provincial accounting oversight bodies (CAs and CGAs) under which those bodies will carry out inspections of smaller firms on behalf of CPAB.
- CPAB has entered into a protocol with the Public Company Accounting Oversight Board (PCAOB) in the U.S. whereby CPAB has agreed that it will review all firms that are registered with the PCAOB at least once every three years.
Scope of Inspections
In its inspections of a firm, CPAB reviews the policies and procedures of a firm in the areas of Tone at the Top, Independence and Ethics, Client Acceptance and Continuance, Human Resources/Professional Development, Engagement Performance, Engagement Documentation and Quality Monitoring and then tests the firm’s compliance with these policies and with those standards established by external professional bodies in these areas. In addition, CPAB also reviews part or all of a number of audit files which support the opinions given on the financial statements of reporting issuers. It should be noted that CPAB does not review every aspect of every file selected for review. The absence of any comments should not be noted as an endorsement that the financial statements were necessarily fairly presented or that all aspects of the audit were fully compliant with professional standards. At the end of each review CPAB sets out for the firm a series of recommendations which the firm is required to implement if it wishes to retain its registration status.
If CPAB is not satisfied with the quality of work either on files or in one of the other areas, CPAB may place a requirement, restriction or sanction on the firm.
Standards
CPAB’s activities are significantly influenced by changes in auditing, accounting and independence standards. A representative of CPAB sits on the Auditing and Assurance Standards Oversight Council (AASOC). CPAB also monitors all exposure drafts issued by the Auditing and Assurance Standards Board (AASB), International Federation of Accountants (IFAC) and the Accounting Standards Board (AcSB) commenting on areas where it considers that the proposed standards might be improved.
Click Here to see copies of CPAB’s submissions.
CPAB also considers proposed standards issued by the FASB, PCAOB and the CSA and other groups that influence Canadian and international auditing and accounting standards.
International
CPAB is a member of the International Forum of Independent Audit Regulators and attends meetings with its international counterparts at least annually. CPAB also participates in the development of training courses for use by members of this group and in certain task forces dealing with aspects of regulating the audits of companies which have operating in more than one country.