Alert: CPAB Consultation - Disclosures Related to Results of Regulatory Assessments (July 2021)

Date: July 19, 2021
Category: Alerts

Alert: CPAB Consultation - Disclosures Related to Results of Regulatory Assessments (July 2021)

In July 2021, the Canadian Public Accountability Board (“CPAB”) issued for public comment, the Consultation Paper, The Canadian Public Accountability Board seeks public input on regulatory disclosures, proposing to enhance the public disclosures about the results of regulatory reviews, including the enforcement action imposed on audit firms.

In the Consultation Paper, CPAB is considering several disclosure principles against which the potential changes would be evaluated. These disclosure principles include improvement in audit quality, enhancement of the protection of investing public, decline in the timeliness of remediation of inspection findings, implementation of timely actions to close gaps in audit firm quality management systems, and a cost vs. benefit analysis of the potential changes.

The Consultation Paper specifically discusses the following three areas of disclosures:

  • Communication to audit committees – Currently, audit firms voluntarily share the results of individual audit file inspections with the reporting issuer’s audit committee (or those charged with governance if there is no audit committee). In this Consultation Paper, CPAB is proposing to make the sharing of the result of individual audit file inspections with the audit committee or those charged with governance mandatory for all reporting issuers, including venture issuers.
  • Disclosure of the results of CPAB’s regulatory oversight activities – CPAB provides a summary of firm level inspection themes, quality management systems assessments, recurring issues, trend, and emerging issues in its public inspection report. CPAB’s report does not identify the audit firms or reporting issuers whose audit files were investigated. In the Consultation Paper, to align with the disclosure practices internationally, CPAB is proposing to disclose the results of regulatory reviews by individual audit firms in its public report. The following alternative approaches are proposed for disclosing results:
  • Information on number of files reviewed, number of files with significant inspection findings, results of CPAB’s review of quality management systems would be disclosed by individual audit firm in CPAB’s annual public inspection report.
  • The disclosure of some or all of the individual firm private inspection reports would be made public.
  • A voluntary program would be adopted for participating audit firms to elect to publicly report the results of the CPAB inspections, subject to appropriate safeguards.
  • Disclosures related to CPAB’s enforcement actions – While CPAB has the authority to publicly disclose the results of its regulatory reviews and enforcement actions, so far it has not publicly disclosed any of its enforcement actions. Now, CPAB intends to exercise its discretion to publicly disclose any enforcement actions imposed on an audit firm, with a focus on the most significant breaches of professional standards.

CPAB is seeking input from all stakeholders on these disclosure areas and is open to all suggestions, including those that may require changes to applicable rules and legislation in order to support implementation.

The Consultation Paper is open for public comment until September 30, 2021.


2021 CPAB Disclosures Public Consultation page can be accessed here.

This communication contains a general overview of the topic and is current as of July 19, 2021. This information is not a substitute for professional advice and we recommend that any decisions you take about the application or not of any of the information presented be made in consultation with a qualified professional. Contact your local MNP representative for customized assistance with the application of this material. MNP LLP accepts no responsibility or liability for any loss related to any person's use of or reliance upon this material. © MNP LLP 2021. All rights reserved.

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Michelle Balmer CPA, CA

Vice President, Assurance

Michelle Balmer, CPA, CA, is a Senior Assurance Services Partner with MNP. With 14 years of experience in public practice, Michelle helps a broad range of public and privately held companies in a variety of industries. She also works on special projects, including costing studies, benchmarking and best-practice studies, operational analyses, litigation support and due diligence.

As a key member of MNP's Assurance team, Michelle has played an instrumental role in assurance policy development, implementing accounting and assurance standards firm-wide and educating assurance practitioners regarding methodologies and new pronouncements. She also provides technical advice and consultation on accounting and assurance issues, as well as on rules of professional conduct issues, to all MNP practitioners.

Michelle was certified a Chartered Accountant (CA) after obtaining a Bachelor of Commerce degree from the University of Alberta. She has been actively involved with the Institute of Chartered Accountants of Alberta, including the Chartered Accountants School of Business, in an instructional and marketing capacity. An avid volunteer, she has assisted numerous groups such as the Easter Seals of Alberta, Paralympic Sports Association and Junior Achievement of Northern Alberta.