Role of the Audit Committee

Audit committees have a pivotal role to play in enhancing audit quality. Effective audit committees and auditors build confidence in the integrity of financial reporting.

The audit committee plays a critical role in creating the right environment for quality auditing. It is the audit committee's responsibility to create an environment that accommodates an open discussion in a culture of integrity, respect and transparency between management and auditors.

Audit committees are responsible for overseeing the work of the auditors. Among other things, they need to understand the audit strategy, be satisfied that it addresses the major audit risks, and make sure the auditors exercise appropriate professional skepticism. They also need to ensure that the auditor has an appropriately independent mindset from management and is truly objective. Ultimately, this will enable the audit committee to draw conclusions about the effectiveness of the audit.

Audit committees should ask their auditors what they are doing to promote consistency of audit execution, whether additional resources are available if needed to do the audit, and who in the audit firm is accountable for the quality of the work done. Audit committees should consider meeting the engagement quality control review partner (second partner reviewer) as part of the audit process to understand what they did to ensure quality and address any issues that arose.

CPAB believes it is appropriate for audit committees to have a frank discussion with their auditors about what is considered to be a reasonable fee for audit services. However, if the quality of the audit is affected by a fee that is less than reasonable, the audit committee is doing a disservice to the shareholders. Audit committees need to ensure that audit fees are fair and that they are obtaining a quality audit. Investors want and expect a quality audit.

Audit committees can contribute to the solutions to many of the audit quality issues being debated internationally. This includes the risk that, over an extended period of time, audit firms may develop a cozy institutional relationship with their clients that could negatively impact auditor independence and professional skepticism.

Audit committees have told CPAB they want more transparency with respect to inspection findings in order to improve the effectiveness of their oversight role. A key recommendation of the Enhancing Audit Quality Audit Committee Working Group was for CPAB to work in conjunction with audit firms and audit committee representatives to develop a protocol for increasing inspection information made available to audit committees. During 2013 CPAB has consulted with key stakeholders including corporate directors, audit firms and securities regulators to develop a Protocol for Audit Firm Communication of CPAB Inspection Findings with Audit Committees (Protocol). The sharing of inspection findings applies to CPAB's audit file inspections commencing on or after March 1, 2014 which will include inspections of 2013 year-ends.  Please click here for more information.  

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NEWS
CPAB 2016 Annual Inspections Report

​​CPAB releases 2016 Annual Inspections Report.

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Posted: 29/03/2017

NEWS
CPAB Industry Forum Highlights – Financial Institutions

​CPAB held its first Financial Institutions Industry Forum on January 20, 2017 for audit committee chairs serving the boards of banks and insurance companies in Canada.

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Posted: 21/03/2017

CPAB
2016 Audit Quality Indicators Pilot Project – Interim Report

This report outlines our current findings regarding AQIs based on observations of participants in CPAB’s 2016 AQI Pilot Project.  A summary is also available.

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Posted: 23/02/2017

CPAB
2016 Audit Quality Indicators Pilot Project – Summary Interim Report

​This summary highlights observations of participants in CPAB’s 2016 AQI Pilot Project. The full report is also available.

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Posted: 23/02/2017

REPORT
CPAB 2016 Big Four Public Report: Highlights for Audit Committees

​CPAB 2016 Big Four Public Report: Highlights for Audit Committees.

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Posted: 28/11/2016

REPORT
CPAB 2015 Big Four Public Report: Highlights for Audit Committees

​CPAB 2015 Big Four Public Report: Highlights for Audit Committees.

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Posted: 30/11/2015

CPAB
CPAB 2014 all firm inspections report

​CPAB releases 2014 all firm inspections report; overall results positive.

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Posted: 31/03/2015

CPAB
CPAB 2014 inspections report: Highlights for Audit Committees

CPAB has produced a summary to its 2014 all firm inspections report called Highlights For Audit Committees with content of particular interest to audit committee members. 

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Posted: 31/03/2015

PUBLICATION
2014 Audit Quality Symposium Summary

​2014 Audit Quality Symposium Summary.

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Posted: 20/02/2015

PUBLICATION
2014 Audit Quality Symposium Voting Results

​See how the 2014 Audit Quality Symposium participants voted on key questions relating to audit quality.

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Posted: 20/02/2015

PUBLICATION
2014 Audit Quality Symposium Pre-Reads

​2014 Audit Quality Symposium Pre-Reads.

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Posted: 20/02/2015

NEWS
CPAB 2014 Public Report: Big Four Firm Inspections

​CPAB releases 2014 Big Four Public Report, audit quality improving.

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Posted: 25/11/2014

CPAB
Audit Committee Oversight of Foreign Operations

​Critical information for assessing and responding to risk in foreign operations.

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Posted: 21/11/2014

CPAB
CPAB Exchange: Audit Quality Indicators

​Join the conversation about audit quality matters and  key activities to enhance audit quality.

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Posted: 21/11/2014

REPORT
2013 Public Report
CPAB’s 2013 Public Report finds audit quality improved, but sustainability is needed. Learn more…
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Posted: 31/03/2014

NEWS
Protocol for Audit Firm Communication of CPAB Inspection Findings with Audit Committees
CPAB’s Protocol for Audit Firm Communication of CPAB Inspection Findings with Audit Committees is now final and is effective
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Posted: 27/03/2014

NEWS
Protocol for Audit Firm Communication of CPAB Inspection Findings with Audit Committees
Learn more about CPAB’s Protocol for Audit Firm Communication of CPAB Inspection Findings with Audit Committees
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Posted: 04/02/2014

NEWS
Protocol for Audit Firm Communication of CPAB Inspection Findings with Audit Committees
CPAB is currently requesting comments on the draft Protocol for Audit Firm Communication of CPAB Inspection Findings with Audit Committees
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Posted: 18/12/2013

PUBLICATION
Audit Committee Newsletter - May 2013
CPAB’s May 2013 Focus on Audit Committees newsletter includes articles on our 2012 inspection results, the inspection process, and the role of the audit committee.
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Posted: 31/05/2013

REPORT
EAQ Initiative: Enhancing Audit Quality: Conclusions and Recommendations
EAQ Initiative: Enhancing Audit Quality: Conclusions and Recommendations
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Posted: 30/05/2013

REPORT
EAQ Role of the Audit Committee Report
To facilitate the performance of the annual assessment and the mandatory comprehensive review of the external auditor, the EAQ Role of the Audit Committee Working Group recommends ...
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Posted: 29/05/2013

PUBLICATION
Top 10 Questions Audit Committees Should Ask Their Auditors
If you sit on an audit committee, here are CPAB's top 10 questions you should ask your auditor in connection with your 2013 audit.
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Posted: 15/04/2013

REPORT
2012 Public Report
Canadian audit firms must commit to continuous improvement at all levels of their organizations to consistently execute high-quality audits, CPAB says in its 2012 public report.
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Posted: 31/03/2013

PUBLICATION
2012 Audit Quality Symposium Summary
Key issues include the importance of identifying Canadian perspectives to address audit quality concerns; the importance of enhancing auditors’ professional skepticism and audit firm culture to improve audit quality
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Posted: 15/01/2013

PUBLICATION
2012 Audit Quality Symposium Resolver Voting Graphs
See how 2012 Audit Quality Symposium participants voted on key questions relating to audit quality.
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Posted: 14/01/2013

REPORT
2011 Public Report
The Canadian Public Accountability Board's 2011 Public Report
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Posted: 31/03/2012

REPORT
2010 Public Report
2010 Public Report
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Posted: 31/03/2011

REPORT
2009 Public Report
The Canadian Public Accountability Board's 2009 Public Report
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Posted: 31/03/2010

REPORT
2008 Public Report
The Canadian Public Accountability Board's 2008 Public Report
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Posted: 31/03/2009

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​​​​​​CPAB understands and supports the desire for greater transparency. Enhanced transparency in the communication of inspection results, and about the key drivers of audit quality, would help stakeholders in the audit process perform their roles more effectively. ​​​

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