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, in 2022 CPAB conducted our inaugural climate thematic review focused on understanding how auditors evaluate the impact of climate-related risks in their financial statement audits.

What we found

  1. Canada’s four largest audit firms each had 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 varied across all firms. There was 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 in 2022, there was no change to the audit approach to respond to the climate-related audit risks.
  4. In instances where climate-related factors were considered by auditors as part of their risk assessment, the extent and quality of work performed varied significantly.

Looking forward

CPAB encourages audit firms 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 report 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.