CPA Ontario Firm Inspections to Address Identified Audit Quality Risks
Regulator releases audit quality report on firms that audit reporting issuers
Toronto, ON October 25, 2023 – CPA Ontario, the regulatory body responsible for the licensing and oversight of Chartered Professional Accountants and accounting firms in Ontario, has released the results of its report on audit quality.
Upholding High Standards to Protect the Public: Managing Audit Quality 2023 identifies five areas of risk that, if left unaddressed, could present a threat to audit quality. These risks will now be incorporated into CPA Ontario’s Practice Inspection team’s in-depth review of quality management systems.
“Audit provides a key pillar of trust in our capital markets. It is the responsibility of a firm to maintain that trust by ensuring that its audits are of the highest quality,” said Carol Wilding, FCPA, FCA, ICD.D, president and CEO, CPA Ontario. “Protecting the public is the foundation of the CPA designation, and the cornerstone of our role as the regulator as we monitor and ensure the implementation of the high standards of our profession.”
In its review, CPA Ontario requested firms that collectively audit over 99 per cent of reporting issuers in Ontario provide details on how they manage audit quality. An evaluation of firm responses led to the identification of five areas of risk. These risks do not necessarily apply to every firm, but all firms must focus on identifying and responding to quality risks that arise given the nature of their practice and the engagements they perform:
Governance and decision-making: Reinforcing responsibility and accountability for audit quality at the most senior level.
Ethical mindset: Safeguarding the foundation of trust through professional ethics, values and attitudes.
Talent and technology: Investing in people and technology to support consistent delivery of quality audits.
Working papers: Employing tools and controls to maintain and protect the integrity of working papers.
Monitoring activities: Detecting, remediating, and deterring audit quality issues and deficiencies.
Firms are encouraged to use the findings and effective practices outlined in the report when evaluating their system of quality management, as is required within one year of the implementation of the new standard, Canadian Standard on Quality Management (CSQM) 1.
As the regulator of over 100,000 CPAs and firms in the province, CPA Ontario will continue to ensure that trust in Ontario’s capital markets remains strong through ongoing oversight of audit quality, and appropriate regulatory action for non-compliance, where necessary.
“While our Practice Inspection team undertakes its in-depth review, all firms in Ontario should use this report and its findings as a roadmap for evaluating their systems of quality management,” said Janet Gillies, CPA, CA, executive vice-president, Regulatory and Standards, CPA Ontario. “With last year’s shift from quality control to quality management, it is incumbent on all firms to remain vigilant in ensuring that audit quality remains a priority.”
Upholding High Standards to Protect the Public: Managing Audit Quality 2023 is available on the CPA Ontario website.
About the Chartered Professional Accountants of Ontario
CPA Ontario governs and regulates CPAs and accounting firms in Ontario. We grant CPA designations and public accounting licenses. We enforce the highest professional and ethical standards, provide professional guidance and support the continuing development of our members. We educate and assess students, so they are ready for market demands. We enable mobility of CPAs through inter-provincial and international agreements. We are a community of over 100,000 CPAs, 20,000 students and more than 4000 public accounting licence holders in Ontario.
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