CPAB climate thematic review


CPAB is interested in how climate-related matters are addressed by auditors, given climate-related risks can have a material impact on a reporting issuer's financial results.

Our goal is to understand the current state of how climate matters are captured within audit activity today to inform our future inspections and other activities, including contributing to the development of sustainability reporting and assurance standards by international standard setters.

With this in mind, CPAB has been conducting a climate thematic review concurrently with our file inspections to understand how auditors evaluate the impact of climate-related risks in their financial statement audits.

What we are seeing

  1. Canada’s four largest audit firms each have specific guidance and training materials to support auditors in considering and addressing climate-related risks in their financial statement audits.
  2. The quality of resources provided to the audit practice varies across all firms. There is a range of guidance and training seen at the other annually inspected firms, with many firms at the early stage of developing their approach in this emerging area.
  3. In most files we inspected to date, there was no change to the audit approach to respond to the climate-related audit risks.
  4. In instances where climate-related factors are considered by auditors as part of their risk assessment, the extent and quality of work performed varies significantly.

Looking forward

CPAB encourages audit firms to continue to prepare their teams to consider and address climate-related risks in their audits.

Firms should also increase their monitoring of this area to ensure that audit teams, particularly those auditing reporting issuers in industries more likely to be impacted by climate-related risks, are using their existing guidance and resources.

CPAB is also supportive of the ongoing work amongst standard setters to develop sustainability reporting and assurance standards. The reliability of sustainability-related reporting is important and CPAB supports moving towards assurance requirements for certain of those disclosures. 

CPAB will continue monitoring this topic and plans to continue to collect information on how auditors are considering climate-related risks through its inspections.