Canadian Public Accountability Board (CPAB) Report 2011

Since its incorporation in 2003, the Canadian Public Accountability Board (CPAB) has issued seven annual public reports. The first five reports summarized inspection findings. Two years ago, CPAB changed its approach to focus on the root causes of audit deficiencies and to highlight the key recommendations that, if implemented, would have the greatest impact on improving audit quality. In the past year, CPAB has enhanced its risk assessment capabilities and now uses a more robust risk analysis process to identify high risk firms and audit engagements, improving the effectiveness of its inspections. CPAB has also increased the frequency of its inspections of firms that audit fewer than 100 reporting issuers.

According to CPAB, audit quality in Canada continues to be sound. Nonetheless, the 2010 inspections showed no significant improvement in audit quality from the previous year. The report identifies the major areas that would enhance audit quality. These include engagement supervision and review, application of professional skepticism, improving substantive analytical procedures, providing sufficient audit evidence, improving communication with audit committees, preparing significant issues and completion memos, and enhancing consultation on 25 complex, non-routine transactions.

(Read the CPAB Report on the 2010 Inspections of the Quality of Audits Conducted by Public Accounting Firms, issued in April 2011.