CPAB publishes recommendations for changes to information disclosure
TORONTO, October 4, 2022 – The Canadian Public Accountability Board (CPAB) published its recommendations today on how it intends to change its approach to information disclosure. A detailed overview can be found on CPAB’s website.
In 2021, CPAB conducted a public consultation to gather stakeholder input and invite a dialogue on potential changes to the information it discloses about the results of its regulatory assessments. An overview of feedback received was published on CPAB’s website in early 2022.
The recommendations published today are a result of this consultation process; a review of disclosure approaches by audit regulators in other jurisdictions and, a desire to provide more information and align with disclosure approaches in similar jurisdictions while respecting the Canadian regulatory environment in which CPAB operates.
“Given continued high levels of inspection findings, and changes in audit and regulatory practices and stakeholder expectations, it is appropriate to evolve our current disclosures approach, including how we communicate the results of our assessment of individual firms, and increase transparency” said Carol Paradine, CPAB’s chief executive officer.
Recommended changes touch on three areas: disclosure of information related to CPAB’s enforcement actions; communication to audit committees; and disclosure of the results of CPAB’s regulatory assessments.
CPAB’s recommended disclosure changes include near term changes which are expected to be implemented in 2023, and longer-term modifications which require rule and legislative changes. These longer-term changes are expected to take a minimum of 2-3 years because changes to CPAB’s Rules and its governing legislation require the involvement of provincial governments and securities regulators.
In the near-term, beginning in 2023, CPAB, where possible, will disclose:
- Significant enforcement actions imposed on a firm.
- Recommendations which were included in a firm report but not addressed by the firm.
Over the longer term, CPAB will work to secure rule or legislative changes which will allow the following:
- Mandatory disclosure of issuer-specific significant inspection findings to the reporting issuer’s audit committee.
- Individual public inspection reports for each audit firm inspected by CPAB.
These changes are broadly consistent with the level of disclosure of other international audit regulators. Many audit firms already operate in other jurisdictions where national audit regulators require a level of disclosure consistent with what CPAB will implement with its new enforcement disclosure framework in 2023, and with what CPAB is proposing as part of its next phase of disclosure changes.
The Canadian Public Accountability Board (CPAB) is Canada’s independent, public accounting firm regulator. Charged with overseeing audits performed by registered public accounting firms, CPAB contributes to public confidence in the integrity of financial reporting and is committed to protecting Canada’s investing public. CPAB promotes audit quality through proactive regulation, dialogue with domestic and international stakeholders, and practicable insights to inform capital market participants. CPAB has offices in Montreal, Toronto and Vancouver.
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