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Practice Inspection FAQs
Is my office subject to practice inspection?
Offices and members engaged in public accounting or the provision of accounting services to the public are subject to practice inspection. Engagements addressed by the standards in the CPA Canada Handbook – Assurance and compilation engagements, fall under practice inspection’s scope.
The FAQs which discuss bookeeping services and per diem working paper preparation address exempt services.
Offices involved in the preparation of tax returns only, and/or schedules, e.g. CRA schedules of income and expenses, would NOT be subject to PI. However, if Notice to Reader communications are prepared, the office would be subject to PI.
A member may be exempt from practice inspection; refer to Regulation 10-1, section 3 for details. If after receipt of a selection letter, this is still unclear send questions by email to Practice Inspection, with the subject line "Questions re: exemption from inspection." Written responses will be provided.
Why was my office selected for practice inspection this year?
The frequency of an office’s selection for practice inspection is set out in Regulation 10-1, paragraphs 4 to 9.
Generally, a firm is inspected not more than three years from its previous inspection year (including inspections carried out by all legacy bodies); this timeline will vary based on the circumstances set out in the Regulation. An office’s most recent decision letter will include the year of its next inspection.
An office that has undergone reinspection, and which now meets the requirements of practice inspection as a result of that reinspection, will undergo its next inspection:
- in three years from the date of the reinspection, if the reinspection was in respect of its full assurance practice, or
- in three years from the date of the most recent previous full inspection of the office, if the reinspection was in respect of only part of its assurance practice.
I perform bookkeeping/accounting/management services. Are these services subject to inspection?
No, they are not, as they are not addressed in the CPA Canada Handbook – Assurance.
If you are uncertain if your engagements are subject to inspection, please email Practice Inspection, using the subject line “Questions re: exemption from inspection,” and include your inspection number and details of your situation. All questions must be submitted in writing and all responses will be provided in writing.
I do per diem work but am not the engagement partner and issue no communications thereon. Am I inspected for such work?
No, they are not. Only work performed for clients of your own office is subject to inspection.
For clarification, contact Practice Inspection, using the subject line “Questions re: exemption from inspection.” Include your inspection number and details of your situation. Written responses will be provided.
My professional corporation was selected for inspection. Am I subject to practice inspection?
If you are engaged in the practice of public accounting or in providing accounting services to the public under the name of the professional corporation (PC), then the PC is subject to practice inspection.
If you are a shareholder of a PC whose sole purpose is to hold your interest in another public accounting practice, AND you perform no public accounting services under the name of the professional corporation itself, your PC may qualify for an exemption.
Any public accounting services you perform under the name of the other public accounting practice, the interest in which is held in your PC, would be subject to inspection in such other practice.
Please email Practice Inspection, using the subject line “Questions re: exemption from inspection,” and include your inspection number and details of your situation. All responses will be provided in writing.
Who else may be eligible for an exemption?
A member who has not engaged in the practice of public accounting or provided accounting services to the public in the preceding 12 months; or
A member who has withdrawn, or will be withdrawing within three months from the date of a notice of selection for inspection, from the practice of public accounting and providing accounting services to the public.
If you require further clarification, please email Practice Inspection, using the subject line “Questions re: exemption from inspection,” and include your inspection number and details of your situation. All responses will be provided in writing.
How do I apply for an exemption from PI?If you believe your office is eligible for exemption from PI, complete and submit the appropriate Declaration for Exemption form, which is available on a secure website only to offices that have received a notification for selection letter. The link to that site is provided in the letter.
How do I change who can access the planning questionnaire?
The office’s designated Practice Inspection Contact is the only person with access to the planning questionnaire and to whom all correspondence in connection with the inspection will be addressed. This person must be a member of CPA Ontario.
In order to change the Practice Inspection Contact, one of the office’s designated contacts must log in to the Firm Secure Area and make the appropriate changes. Any other changes required to the office’s information, such as a change in address, should be done through this secure site. The following people are considered to be the office’s designated contacts:
- Local Senior Officer
- Alternate Designate
- Firm/ATO Address and Contact
If my firm's PI Contact and/or address changes AFTER submission of the planning questionnaire, what should I do?
Please follow the procedure as set out in "How do I change who can access the planning questionnaire." Please also contact the coordinator named in your selection letter, so that the information for your inspection can be updated on a timely basis.
We have multiple offices selected for inspection – does each office need to complete a Planning Questionnaire?
Yes. Each office is assigned a unique PI number and requires separate information.
Some multi-office firms group their various locations into “business units”, which may create difficulty in splitting out the information between the offices selected for inspection. Practice Inspection considers each office’s roster of staff and partners as set out in the member listing generated from our database; those engagement partners who are included on a particular office’s roster are inspected as part of that office. An engagement partner who issues reports from multiple offices in the firm would only be included on one office’s roster.
If an office has not been included in the current year’s selection, but is part of a business unit whose other offices were selected for inspection, please contact your practice inspection coordinator.
What if I can't meet the deadline(s) to submit the requested forms or files, or do not respond to correspondence?
If an office is unable to meet the deadlines set out in our correspondence, the coordinator must be contacted as soon as possible (the name, telephone number and e-mail address of the coordinator will be provided in the selection letter). In accordance with Regulation 10-1, Section 48, failure to respond to any PI request to submit information, client files or other documentation will result in immediate referral to the Registrar for suspension.
What dates do I need to include in our inspection blackout period?Apart from statutory holidays, all other dates, including religious holidays, should be included in the blackout period. For example, if your firm experiences peak workloads during May and June, consider whether any weeks in those months should be included in your blackout period. This period cannot exceed eight weeks. If no blackout dates are indicated, we schedule the inspection date. Once scheduled, the inspection dates are considered firm.
How flexible is my inspection date?
Due to the high volume of inspections, we have very limited flexibility in changing inspection dates. Once an inspection date is assigned, it is considered firm and may only be changed in exceptional circumstances with the approval of the director of practice inspection. An exceptional circumstance does NOT include excessive workload or vacation schedules. If such circumstances are anticipated, these dates should be included in the office’s blackout period (see FAQ discussing inspection blackout period).
Who is considered an engagement partner?
The role of the “engagement partner” as it relates to audit and review engagements is defined in the Canadian Standards on Quality Control (CSQC-1) in the CPA Canada Handbook – Assurance. Additional guidance for audits is available in CAS 220 Quality Control for an Audit of Financial Statements.
What is the difference between an office visit and a desk inspection?A visit inspection (office visit), performed onsite at the practice’s premises, is normally arranged for practices with two or more partners performing assurance engagements or, when practical, for a sole practitioner with a large assurance practice.
A desk inspection is performed offsite, usually for sole practitioners with a limited number of assurance engagements or for practices performing only compilation engagements. A sample of files and other information is requested by CPA Ontario upfront, based on the client listing submitted with the planning questionnaire, and subsequently sent to the inspector for review.
Who needs to be available during the inspection?
Office visit: The PI Contact (or another appropriate representative for the office) should discuss with the inspector the process for the selection of files and other information that the inspector will require at the start of the visit, and be available for a meeting at the conclusion of the inspection to discuss the draft practice inspection report. The PI Contact does not need to be present throughout the inspection, nor is it necessary for multi-partner offices for all partners to be available for the inspection.
Desk inspection: The inspector will attempt to arrange a date and time (falling within three weeks after the date on which the office’s files and other requested information is to be submitted to CPA Ontario) to discuss the draft practice inspection report by phone with the PI Contact.
Should I express a preference for a full-time or a part-time inspector (this concerns visit inspections only)?A part-time practice inspector is a member in good standing, currently or recently in public practice, contracted and trained by CPA Ontario to perform inspections. A full-time practice inspector is a member in good standing, formerly in public practice, employed by us on a full-time basis to perform inspections. Both full- and part-time inspectors use the same inspection tools and methodology to assess an office’s compliance with professional standards.
For visit inspections, the Planning Questionnaire provides for a preference (or no preference) for a full- or part-time inspector; desk inspections are assigned, with very few exceptions, to part-time inspectors. While we will attempt to accommodate an office’s preference, we reserve the right to determine inspector assignment.
For a desk inspection, can I submit my files electronically?
Yes, CaseWare and PDF files may be submitted to the PI office either by upload to a secure portal or on a USB key. Additional documentation maintained separately from the electronic file, e.g. engagement letters kept in a permanent file, should be scanned and included in your submission. Our written communication advising of the inspection date will outline the documentation required.
What if I have concerns about the inspector who has been assigned?Contact your coordinator in writing within seven days of receiving the inspection letter. Outline your concern (i.e., independence, potential conflict of interest, proximity of inspector’s practice to your own).
How are specific engagements selected for inspection?
The inspector has discretion as to the number and type of engagements to inspect. (Regulation 10-1, paragraph 19). Consideration is given to quality controls of the office, the number of engagement partners, and the risk profile of the client engagements.
The inspector, and not the office, selects the engagements subject to inspection (Regulation 10-1, paragraph 19.
How do we satisfy practice inspection requirements?
PI assesses compliance with standards set out in the CPA Canada Handbook and CPA Ontario’s Bylaws, Regulations and the CPA Code of Professional Conduct. When deficiencies raised on an inspection, individually or cumulatively, indicate a serious departure from standards, the PI Committee may determine that an office has not met the requirements. For the more common deficiencies encountered on past practice inspections, see examples at Focus on Practice Inspection Reportable Deficiencies.
What is the difference between annual monitoring and a cyclical inspection?
CSQC 1 requires that offices performing assurance engagements (including audits and reviews) for which standards are set out in the CPA Canada Handbook - Assurance establish policies to document and maintain a system of quality control (QC) and to establish procedures necessary to implement and monitor compliance with those policies, regardless of the size of the office or the number of assurance engagements performed. Annual monitoring and cyclical inspection are integral components of an office’s QC policies.
Annual monitoring of the QC system — assesses whether the design of the QC system continues to be relevant and its implementation adequate and effective. (CSQC 1, paragraphs 48 and A64-A68).
Cyclical inspection of completed assurance engagements — includes a periodic inspection of at least one completed assurance engagement for each engagement partner (refer to the FAQ discussing who is considered an engagement partner) over a specified cycle, e.g. three years.
The cyclical inspection must be completed by an individual independent of the specific engagement. In particular, the engagement partner or any individual involved in either the performance of the engagement or its engagement quality control review cannot monitor the completed assurance engagement. Further, neither CPA Ontario’s practice inspections nor second partner pre-issuance review constitutes a periodic inspection of completed assurance engagements. (CSQC 1, paragraphs 48 and A64-A68).
Do we need to maintain documentation of the annual monitoring and/or the cyclical inspection?
Yes, evidence that monitoring has been completed must be documented and retained. That documentation should include:
- Annual monitoring – details of those aspects of the quality control system that were evaluated by the monitor and the conclusions drawn.
- Cyclical inspections – names of the specific engagements selected for monitoring, engagement partner responsible for each, issues raised by the monitor on each engagement, monitor's conclusions, and communications to partners and/or staff arising from the monitoring.
(CSQC 1 paragraphs 50, 53-54, 57-58 and A73-A75).
The Sample Quality Assurance Manual, available from CPA Canada's online store, provides templates for documenting both the annual monitoring and cyclical inspections.
What if I disagree with the contents of the draft inspection report?
You may submit a response to the draft inspection report. Your response should include documentation (such as copies of working papers) that supports your position. PI staff will review your submission during the detail review process and make changes to the draft report if warranted.
When and how is the final outcome of the inspection communicated? Will the inspector inform us?
The role of the inspectors is to be “information-gatherers” on behalf of the Practice Inspection Committee; accordingly, they cannot tell you the final outcome of the inspection, as that determination is subsequently made by the Practice Inspection Committee.
However, the inspector will discuss the reportable deficiencies identified during the course of the inspection with you, in keeping with the educational component of the process. You will then have a period of three weeks to submit a written response to the draft reportable deficiencies raised.
The Practice Inspection Committee’s decision concerning an inspection will be communicated to the practice in writing by the director of practice inspection once the committee has reviewed the inspection file. Our goal is to complete the process within four months.
How much does an inspection cost?
Costs vary depending on factors including size of the office and number and types of files being inspected. There are three components to the fee:
- inspector’s charge (this rate is reviewed and approved by Council annually; the current rate is $205 per hour);
- detailed review of the file by a CPA Ontario reviewer; and
- administrative fee.
What is the purpose of the practice inspection review Public Accounting Experience form?
The Public Accounting Experience form is collected on behalf of the Public Accounting Licensing Board (see CPA Ontario Regulation 9-1 sections 24-42) in compliance with Ontario’s public accounting licensure requirements. CPA Ontario is authorized to issue public accounting licences to eligible members on behalf of the Public Accountants Council for the Province of Ontario. Depending on the number of members holding a public accounting licence at the time of an office’s practice inspection, some or all of them will be required to complete this form.
Information requested includes your practice inspection number, CPA Ontario member number, PA licence number and its expiry date. Documented hours must cover the 12 months ending on the date indicated in the form. This includes work performed for your own practice, as well as work performed on a per diem basis for any other accounting practice.
Assurance hours include work performed on auditing and review engagements.
Compilation engagement hours include those obtained on engagements to which the prescribed Notice to Reader communication is appended (i.e. as set out in CPA Canada Handbook — Assurance 9200), whether for your own firm or on a per diem basis.
Is consideration for student training placement contingent on the outcome of an inspection?
For matters pertaining to student training approvals, either in External Audit or Outside of External Audit, please contact our Employer Relations department. Please note that PI is no longer directly involved in the granting or ongoing oversight of student training approvals in External Audit; those roles are now fulfilled by Employer Relations.