If we believe an audit firm is not performing up to professional standards and is therefore placing the public at risk, we can impose three types of disciplinary measures: a Requirement, a Restriction or a Sanction. While each type of discipline may contain several common elements, each disciplinary measure escalates in severity in respect to which remedial action CPAB will choose to impose at each incremental step.
Common types of disciplinary actions include:
Disciplinary actions are confidential, except notice
must be given to the securities regulator if the audit firm must take any of
the following remedial actions:
CPAB Board of Directors must approve any resolution to impose a disciplinary action on a firm. A disciplinary action will only be terminated after we have conducted a follow-up inspection, including inspecting an engagement file. We must be satisfied that the audit firm has met the conditions imposed by the disciplinary action.
The CPAB Board of Directors must also approve the termination of a disciplinary action on a firm.
Learn more about CPAB's disciplinary measures by accessing CPAB’s Rules. Section 600 deals with Requirements, Restrictions and Sanctions. Section 700 deals with review proceedings, and the ability of an audit firm that is the subject of a disciplinary action to petition for a review of that action. CPAB maintains a Roster of Hearing Officers and, in the event of a review proceeding, the Chair of the Roster appoints three members of the Roster to serve as a review panel. Since inception there have only been two review proceedings initiated, which both settled at an early stage with the audit firm ultimately accepting the disciplinary action.