CPAB's Annual Report and Regulatory Oversight Report Notes -Mixed Results

The Canadian Accountability Board (CPAB) has released its 2022 annual report, 20022 Annual Report: Committed to Strengthening Audit Quality in Canada. “The report includes themes and insights from our audit quality assessments in 2022.”

“Inspection results for all categories of firms showed mixed results,” the report notes. “Some firms demonstrated strong improvements while others received significant inspection findings at a rate higher than CPAB’s target of 10 per cent.” 

Consistent with the inspection insights published last fall, CPAB continues to observe that firms with strong systems of quality management are more likely to have fewer files with significant inspection findings.

This year, CPAB saw an improvement in inspection results at most annually inspected firms. “However, the aggregate findings rate of 19 per cent is above the target of no more than 10 per cent of files inspected with significant findings. Conversely, there was a significant increase in the findings rate at non-annually inspected firms. The improvements realized at annually inspected firms are encouraging given the significance of the reporting issuers audited by these firms; they reinforce the importance of a strong system of quality management to support the consistent execution of quality audits. Of significant concern is the high number of restatements that arose from inspections conducted in 2021.”

In 2022, CPAB published recommendations on intended changes to the information it will disclose about the results of its oversight of participating firms that audit Canadian reporting issuers. “These changes will be introduced in a phased approach. In the first phase, which was effective January 2023, CPAB started to disclose all significant enforcement actions arising from regulatory assessments. Interested parties can receive CPAB enforcement action updates by subscribing to the CPAB Bulletin on CPAB’s website. For more information on planned changes, see CPAB’s disclosure recommendations document published in September, 2022.” 

CPAB encourages audit firms to provide the Regulatory Oversight Report: 2022 Annual Inspections Results report to their reporting issuers’ audit committees. Audit committees should discuss this report, any file-specific findings and any remediation action taken, if applicable, with their external auditor. 

Get the report at CPAB’s Regulatory Oversight Report: 2022 Annual Inspections Results.