Practice Inspection General Information

Practice inspection is mandated by Regulation 18-1, adopted by the Council pursuant to our governing legislation and by-laws. Initiatives by the provincial bodies have resulted in the implementation of a harmonized approach to the performance of inspections and the evaluation of inspection results.

Objective and scope of practice inspection

The objective of practice inspection is the protection of the public by assessing if offices that perform assurance, compilation and other specified engagements comply with professional standards. In instances of non-compliance, appropriate follow-up or remedial action is taken. Practice inspection provides an educational experience to members, further protecting the public.

Through an assessment of quality management and a review of current assurance and compilation engagement files, practice inspection identifies areas where an office may require assistance in maintaining prescribed professional standards. Practice inspection does not set standards, nor is it a part of the disciplinary process of CPA Ontario.

Files subject to inspection

All engagements addressed by the standards in the CPA Canada Handbook – Assurance are subject to inspection, including, but not limited to:

  • audits and reviews of financial statements
  • other assurance engagements
  • compilation engagements (see FAQs for further guidance, re: tax work)
  • quality management standards

Scheduling the practice inspection

Practice inspection will assign an inspection date and inspector(s) based upon the information submitted. The inspection date will be communicated to the office's Firm Representative and Designated Administrator with adequate lead time prior to the assigned inspection date. This communication will also indicate the type of inspection (visit, remote or desk), and identify the inspector(s) assigned. Refer to FAQs for the definition of a visit, remote and desk inspection.

The inspector assignment takes into account information included in the Practice Profile Questionnaire submitted by the office.

The assigned inspection date can only be changed in exceptional circumstances with the consent of CPA Ontario’s Director, Practice Inspection.

Selection of offices for inspection

All members and offices engaged in the practice of public accounting or providing accounting services to the public are subject to practice inspection.

Each office selected for inspection is notified of its selection in a communication sent by CPA Ontario in January (or in limited cases, in May) of the current year. Inspections take place between May and February. 

All offices are inspected a minimum of once every three years, over a three-year risk-adjusted cycle. A new firm, or office of a firm, that has not yet undergone a practice inspection will be selected for inspection in accordance with Regulation 18-1. Risk factors are considered and practice inspections may occur more frequently if considered necessary. Factors which might necessitate an accelerated cycle include:

  • practice is registered with the Canadian Public Accountability Board (CPAB) and/or the Public Company Accounting Oversight Board (PCAOB)
  • change in practice profile of the office, such as taking on new types of engagements
  • merger, the loss of a significant number of partners or the addition of new partners
  • other relevant information coming to the attention of CPA Ontario

The practice inspection

The files selected for inspection will be chosen from a client listing provided by the office. This listing should include the engagement partner responsible for each engagement, the engagement type (i.e., audit, review, compilation), and other relevant information.

The inspection will also include review of the office’s quality management system. All inspections assess compliance with professional standards as set out in the CPA Canada Handbook and the relevant portions of the CPA Ontario Member's Handbook.

All practice inspectors are members in good standing with CPA Ontario and are required to be independent of the offices that they inspect.

The inspection will occur on the date(s) set out in our communication to the office's Firm Representative and Designated Administrator (see "Scheduling" above). A meeting between the inspector and a representative of your office will occur to discuss the draft inspection report at the conclusion of the inspection.

Offices are expected to provide:

  • access to files
  • access to the office’s quality manual
  • an opportunity to meet with the Firm Representative (or another representative of your office) to discuss the draft inspection report

The following occurs post-inspection:

  • the office has 21 days to respond in writing to any reportable deficiencies raised in the draft report. An Action Plan template is available to assist offices in structuring their responses to the deficiencies raised. If the office disagrees with any reportable deficiencies raised in the draft report, supporting documentation may be submitted along with the Action Plan
  • the inspection file, as well as the office’s response to the deficiencies raised, are subject to a detailed review at CPA Ontario
  • the Practice Inspection Committee will determine the outcome of the inspection
  • a communication outlining the outcome, along with the final report, will be sent to the Firm Representative and Designated Administrator. The invoice with respect to the inspection will be sent separately

Practice Inspection Committee decisions

The Practice Inspection Committee will determine whether:

  • the inspection is complete requiring no further action by the office.
  • the office needs to take a specified course of action, such as the submission of an acceptable action plan, to meet the requirements of practice inspection in the current cycle
  • remedial action is required, ranging from a partial or full reinspection, to a referral of the matter to the Professional Conduct Committee. Mandatory professional development courses deemed relevant to addressing the deficiencies raised may also be prescribed

Please note that your only opportunity to submit a response to the Practice Inspection Committee is during the twenty-one (21) day period after you have received the draft report from your inspector. All decisions of the committee are final, and there is no appeals process on the committee's decision.