Disciplinary Measures

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:

  • Prohibiting the firm from taking on any new reporting issuer audits
  • Requiring the firm to engage an external monitor to review its audit work prior to the release of an audit opinion
  • Prohibiting a partner from acting as the engagement partner on a reporting issuer audit
  • Requiring partners and staff to take training in areas where they are deemed to be deficient.

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:

  1. terminate an audit engagement;
  2. engage an independent monitor to observe and report to CPAB on the participating audit firm’s compliance with professional standards;
  3. engage an external reviewer or supervisor to oversee the work of the participating audit firm;
  4. limit the type or number of new reporting issuer audit clients the participating audit firm may accept

The 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. ​​

 

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