Regulating audit quality in a pandemic: An update from the Canadian Public Accountability Board

The COVID-19 pandemic continues to significantly impact Canadian reporting issuers and their auditors. The Canadian Public Accountability Board (CPAB) is focused on audit quality, protecting the investing public, identifying challenges auditors are facing and providing our perspectives on key issues related to the performance of high-quality audits.

Audit firms, audit committees and management are sharing issues they are encountering and their insights with CPAB on how the audit industry is responding to the crisis. Our conversations indicate that management and auditors have acted quickly and effectively to address the challenges encountered to date. However, more challenges are expected as we navigate the response and recovery.

The following is a brief update on CPAB’s activities related to our regulatory oversight during this crisis.

What’s new at CPAB

Audit quality assessment program

Our 2020 audit quality assessment program is well underway and we are currently conducting all audit engagement file reviews remotely. We continue to be flexible in conducting our inspections, leveraging technology and balancing the need to continue our regulatory oversight while being sensitive to the strains the pandemic is placing on audit firms and their people.

Our quality management systems assessments at Canada’s four largest audit firms are also proceeding as planned and we have recently communicated our updated evaluation criteria and key concepts to the firms we regulate.

Continuing the dialogue on key audit quality matters

CPAB is in regular dialogue with our stakeholders including participating audit firms, audit committees, investors and regulators and is providing our perspectives on key audit quality matters.

Auditing implications of COVID-19

Our most recent communications regarding the impact of COVID-19 on various audit areas are here; check out the Resources sidebar on our COVID-19 web page for additional content on fraud, going concern and what audit committees should be considering in terms of their oversight role, among other topics.

In May, CPAB, CPA Canada and the Auditing and Assurance Standards Board (AASB) delivered a webinar to share perspectives on the impact of COVID-19 on going concern assessments. Learn more here.

In August, CPAB, the AASB, CPA Canada and BDO delivered a webinar on COVID-19 implications for internal controls. Learn more here.

Audit committee outreach

In June we co-hosted a panel discussion for corporate directors on the impact of COVID-19 on the audit – more than 500 audit committee members participated. Learn more here.

In July we published COVID-19 public company audit implications: considerations for audit committees. This publication outlines key focus areas for audit firms and audit committees to consider as we collectively address the impact of COVID-19 on the financial reporting and audit process.

In the summer we transformed our audit committee forum series into a virtual program; our first sessions launched across Canada in June and included more than 50 corporate directors and corporate finance leaders. Discussion topics included CPAB inspection findings, audit committee oversight challenges and accounting issues arising from COVID-19 including going concern and impairment assessments. Learn more here. The audit committee forum series will continue virtually through the rest of the year with forums planned across a variety of industries. Click here for more details including registration.

What’s ahead

We anticipate continued stresses and challenges to high-quality audits as the pandemic endures. A longer-term response will require the ongoing efforts of all key stakeholders in the financial reporting supply chain, including audit firms, audit committees, regulators and standard setters. We encourage all stakeholders to get involved in the dialogue.

To support the conversation and to accelerate audit quality, CPAB continues to monitor current and emerging issues related to the COVID-19 pandemic’s impact on public company audits.

We thank all CPAB staff for their continued diligence and flexibility during this time and are working on a plan to reopen our offices when it is safe to do so. The health and safety of our employees is our main priority and we are all working remotely.

Learn more

For more information, email us at info@cpab-ccrc.ca.

 
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