Country
Canada
1. Organization
Insert the name of the Organization, both in the local language and in
English
Canadian Public Accountability Board.
Include the basis for establishment and the mission/responsibilities and
authority re auditing
Establishment
CPAB was established on April 14, 2003 by letters patent under the Canada
Corporations Act by the securities commissions, the Canadian Securities
Administrators, the Office of the Superintendent of Financial Institutions
and the accounting profession as part of a regulatory response to perceived
deficiencies in financial reporting by reporting issuers. CPAB’s objects are
set out in its letters patent:
1. To contribute to public confidence in the integrity
of financial reporting of reporting issuers by
promoting high quality, independent auditing
including, without limitation, by overseeing the
implementation and ongoing effectiveness of a
system of practice inspection, and establishing
and maintaining the participation requirements,
for firms that audit reporting issuers in Canada;
2. To contribute to ongoing discussions among
regulators, the industry, the public and other
interested parties about, among other things,
industry best practice approaches relating to
various aspects of auditing reporting issuers;
3. To develop and implement awareness campaigns
to educate the general public about the mandate
and activities of CPAB;
4. To coordinate with similar oversight entities in
other countries, or with a transnational oversight
entity, the oversight of Canadian auditing firms
that audit public companies operating outside
Canada or which are affiliated with auditing firms
located outside of Canada; and
5. To do all things in furtherance of the above
objects, and as incidental and ancillary thereto, to
exercise any of the powers as prescribed by the
Canada Corporations Act or any other statutes or
laws from time to time applicable.
Mission/Responsibilities
CPAB’s mission is to contribute to public confidence in the integrity of
financial reporting of public companies in Canada by effective regulation
and by promoting high quality, independent auditing.
The mandates to support the mission are:
1. Participation Requirements - Establish and monitor participation
requirements for firms that audit reporting issuers in Canada.
2. Quality Inspections - Oversee the implementation and monitor
the ongoing effectiveness of a program of practice inspection of
firms that audit reporting issuers in Canada.
3. Discipline - Develop and implement a program of disciplinary
action against firms or individuals that CPAB determines did not
perform audits in accordance with professional standards.
4. Professional Standards - Monitor and support the continuing
development of Canadian and International accounting, auditing
and independence standards.
5. Communications - Build CPAB's profile by informing
participants in the Canadian and International Capital Markets of
CPAB's role, activities, findings and opinions.
6. Education & Awareness - Establish a program of ongoing
discussions among regulators, the accounting profession,
business and academia.
7. International
a) Coordinate with international counterparts or with a
transnational oversight entity, the inspection of Canadian
auditing firms that audit public companies that are
registered in jurisdictions other than Canada.
b) Coordinate with international counterparts or with a
transnational oversight entity, the inspection of audit firms
based outside of Canada that audit all or part of a Canadian
reporting issuer.
Authority re Auditing
The Canadian Securities Administrators enacted National Instrument 52108 (NI 52-108) in 2004, imposing certain requirements on reporting issuers
and on auditors that prepare auditors' reports with respect to the financial
statements of reporting issuers. NI 52-108 requires financial statements
filed by a reporting issuer to be audited by a ‘participating audit firm’ (i.e.
an audit firm that has entered into a participation agreement with CPAB
and thereby becomes subject to CPAB's oversight). A comparable
requirement is imposed on audit firms, requiring them to be participating
audit firms if they audit the financial statements of a reporting issuer.
2. Board
Composition and
Members
Describe the current composition of the Board, the requirements for the
Board members. Also include whether there is a cooling-off period for
former auditors/practitioners.
The Board is appointed by the Council of Governors and has overall
responsibility for managing and supervising the management of CPAB’s
property, activities and affairs. In accordance with CPAB’s By-laws, the
Board of Directors consists of 11 directors that have been appointed based
on following criteria:

At least four directors, but no more than five must be Professional
Accountants to ensure the Board has members with accounting
expertise (resulting in seven or six Non-Accountant Directors as the
case may be).

At least two directors must have oversight regulatory experience,
including at least one professional accountant and at least one
person with audit oversight regulatory experience.
There is a cooling-off period for former auditors/practitioners. By-law No.
1 - 1.1(w) defines a ‘Professional Accountant’ (for purposes of appointment
to the Board) as an individual with a professional accounting designation;
who is not a partner, employee or sole proprietor of a participating audit
firm and; in the one year prior to appointment as an Accountant Director
was not a partner, employee or sole proprietor of a participating audit firm.
With the exception of holding a professional accounting designation, the
same requirements are applicable to Non-accountant director per By-law
No. 3 – 3.3.
Are the majority of the governing body non-practitioners
√ Yes
3. Funding
arrangements
No
Describe the main funding arrangements, including the setting and
approval of the budget and the fees, if any.
CPAB derives all of its revenue from Canadian reporting issuers. CPAB
invoices audit firms a fee which the firms in turn bill to their reporting issuer
audit clients per agreement with CPAB and with the understanding of the
reporting issuer.
CPAB’s management annually prepares a strategic plan, budget and
proposes an annual participation fee percentage designed to enable CPAB
to recover its annual operating costs and provide a reasonable reserve for
contingencies. The strategic plan, budget and proposed fee percentage is
presented to the Board of Directors for approval.
Is the funding free from undue influence by the profession
√ Yes
4. Inspection
system
No
Describe whether inspections are performed by the Member body, or,
whether or not in part, by any other organization. If so, also describe the
arrangements for overseeing these inspections.
CPAB performs most of its own inspections. CPAB’s Rules (Section 400) set
out the provisions regarding inspections:
http://www.cpabccrc.ca/EN/content/CPAB_RULES_Final_Jun_2006_eng.pdf
CPAB has entered into memoranda of understanding with the provincial
regulators of public accountants who perform inspections of some of the
smaller audit firms. CPAB’s Senior Director of Interprovincial Relations
reviews the provincial inspection reports and will supplement a provincial
inspection if necessary.
Describe the requirements and practices regarding the frequency of
inspections.
CPAB’s Rules 403 and 404 specify the required frequency of inspections of
participating audit firms:



If 100 or more reporting issuer audit clients – annual inspection.
50 – 99 reporting issuers – inspected at least every two years.
Less than 50 reporting issuers – inspected at least every three years.
Do you have the responsibility for recurring inspections of audit firms
undertaking audits of public interest entities
√ Yes
No
CPAB’s mandate is to inspect, on a recurring basis, participating audit firms
that audit reporting issuers.
Is this responsibility directly or through oversight of inspection undertaken
by professional bodies
√ Directly
Through oversight
5. Audit and
Financial Market
Describe the number of audit firms subject to inspections. Include an
indication of the number of public interest audits and other audits in the
jurisdiction. Please give some indication of the size and market share of
each of the largest audit firms.
As of January 2012, 295 participating audit firms were registered with
CPAB and therefore subject to inspection. CPAB’s mandate is limited to the
inspection of firms that audit listed entities in Canada. There are more than
7,000 reporting issuers in Canada, all of which must be audited.
Canada’s six National firms audit more than 92% of the market
capitalization of reporting issuers in Canada.
6. Main other
tasks performed
by Member
Describe whether the Member also performs other tasks, such as
registration, education, standard setting and enforcement in the area of
auditing, or other supervisory tasks, such as supervision of financial
reporting or securities regulation.
Please refer to Question 1 where CPAB’s responsibilities are set out.
7. Other
information
Include relevant contact information, including postal address, telephone
numbers, a link to the website and other relevant information.
Canadian Public Accountability Board
150 York Street, Suite 900
P.O. Box 90
Toronto, Ontario
Canada
M5H 3S5
Tel: 416-913-8260
www.cpab-ccrc.ca
Brian A. Hunt, FCPA, FCA
Chief Executive Officer
brian.hunt@cpab-ccrc.ca
Barbara Maynard, CPA, CA
Senior Director, International Relations
barbara.maynard@cpab-ccrc.ca
8. Major Events
and Activities
Include the major events and activities that have taken place during the
past years

Implemented a new strategic plan that sets the organization’s direction
for the period 2013-2015. CPAB will undergo a strategic shift over the
next 3 years by focusing on priorities that include: 1) thought
leadership; 2) enhanced stakeholder engagement; 3) risk management;
and 4) focused, effective inspections. The strategic plan is available on
CPAB’s website. (Link)

Continued to actively participate in IFIAR initiatives, including chairing
the Global Public Policy Committee Working Group.

Launched a consultation process jointly with the Canadian Institute of
Chartered Accountants (CICA) to gain stakeholder input on key issues
emerging with respect to enhancing audit quality globally, and the
impact on Canada. During 2012, working groups were established and
discussion papers were developed to address priority areas including
auditor independence, auditor reporting and audit committees.

Hosted an Audit Quality Symposium in December 2011 and 2012 which
brought together thought leaders and policy makers from around the
world to discuss issues related to auditing.

Entered into arrangements with a number of foreign audit oversight
regulators to facilitate cooperation in the areas of public oversight,
inspections and investigations of auditors.

Initiated a multi-phase project to review the quality of auditing in
foreign jurisdictions. The first phase included the inspection of audit
files for 24 Canadian public companies with operations primarily based
in China and the issuance of a Special Report summarizing the results
in February 2012.