What is the Protocol?
The Protocol sets out how audit firms communicate CPAB’s inspection findings to audit committees. It applies to audit file inspections commencing on or after March 1, 2014. Please see the
Frequently Asked Questions for more details.
Why did CPAB develop the Protocol?
It’s all about improving audit quality. Audit committees are responsible for overseeing and evaluating their company’s external auditor. They have been asking for more information about CPAB’s inspection findings to help them perform this important role more effectively.
Access to more information about CPAB’s inspection findings will help audit committees and audit firms have open and candid discussions about audit quality. It will help audit committees be more effective in their oversight role, and will promote a culture of continuous improvement in audit quality. Developing a way to increase the amount of inspection information available to audit committees was also a key recommendation of the
2013 report from the Enhancing Audit Quality initiative Audit Committee Working Group.
How does it work?
Under the Protocol, audit firms will provide the audit committees of all their reporting issuer clients with:
• CPAB's annual Public Report: The Public Report highlights CPAB's common findings across its inspections in a given year, as well as recommendations to improve audit quality. The report has always been available to audit committees, but having the audit firm provide it will encourage audit committee members to discuss audit quality issues with their audit firm.
In addition, if CPAB has inspected a reporting issuer's audit file that year, the audit firm will also provide that reporting issuer's audit committee with:
• Significant findings specific to a reporting issuer's audit file inspection: The significant inspection findings will be written by CPAB and include the audit firm response to ensure a fair and balanced communication to the audit committee. Audit committee members receiving the information should ensure it remains confidential. The audit firm will provide CPAB with a copy of the specific inspection findings information it gives to the audit committee.
Which audit firms are participating in the sharing of findings under the Protocol?
This Protocol is voluntary and has been developed with input from key stakeholders to respond to demand from audit committees for additional information about CPAB’s inspection findings. To provide transparency on the implementation of the Protocol, audit committees and other stakeholders can
click here to access a list of the audit firms participating in the Protocol.
Audit committees of reporting issuers in Canada have been requesting greater transparency into CPAB's inspection findings to support them in their role of overseeing and evaluating the external auditor. A key recommendation of the Audit Committee Working Group of the
Enhancing Audit Quality initiative was that CPAB and the audit firms develop a protocol to increase the inspection information available to audit committees.
In 2013 CPAB consulted with key stakeholders including corporate directors, audit firms, and securities regulators to develop the draft Protocol.
The objective of sharing inspection findings is to provide audit committees with relevant information regarding CPAB's inspection findings to support them in their role in overseeing and evaluating the external auditor.
We believe the primary benefit of sharing inspection information is to improve audit quality by enhancing the nature and depth of discussions between the auditor and Audit Committee on audit quality. This will allow the audit committee to more effectively oversee the work of the auditor and promote a culture of continuous improvement.
CPAB encouraged all stakeholders to provide feedback on the draft Protocol from November 29, 2013 – January 24, 2014. The matters on which we particularly welcomed comments were listed in the Specific Questions for Comment section of the Consultation Paper.
Comment letters received and a summary of CPAB’s responses to comments received are listed below. All comments received were made public unless respondents specifically requested otherwise.
Materials for download
Please note that comment letters have been posted in the language that they were written.
CPAB Response Letter for Download
In response to the letters received from the TSX Venture Exchange (see above), CPAB prepared the following response.
Audit Firm Webcast
On January 8, 2014, CPAB held a webcast for audit firms about the CPAB Protocol. To view the archived webcast and to download the webcast slides, please click on the links below:
Audit Committee Webcast
On January 15, 2014, the Institute of Corporate Directors (ICD) and CPAB held a webcast for audit committee members about the CPAB Protocol. ICD members can view the archived webcast and download the webcast slides by following this