Canadian Public Accountability Board Releases Fifth Public Report on inspections of auditors of publicly listed companies

    CPAB finds although progress made, some of its recommendations are not
    successfully implemented; looks forward to improvement in overall quality
    of audits

    TORONTO, Feb. 29 /CNW/ - The Canadian Public Accountability Board (CPAB)
today released its Fifth Public Report on inspections. The Report covers
findings from inspections conducted between October 1, 2006 and December 31,
2007. Review areas include: Tone at the Top/Leadership, Performance on Audit
Engagements, Monitoring of Quality Control, Independence and Ethics, Client
and Engagement Acceptance and Continuance and Human Resources Policies and
    Over the past four years, CPAB has inspected the public accounting firms
conducting the majority of public company audits in Canada and has recommended
improvements to ensure more consistently high quality audits. The accounting
firms have implemented or are in the course of implementing substantially all
of the recommendations. However a number of areas needing improvement remain.
    "We are pleased with the progress in some areas, however the issues
identified have been raised by CPAB in earlier public reports and the
recommended changes are not being implemented as successfully as we would
like," said Gordon Thiessen, Chair of the CPAB. "These areas require ongoing
improvement in order to enhance overall performance on audit engagements and
to address the reasons that cause the deficiencies in the files that CPAB has
reviewed." The delay in acting on the CPAB recommendations means that in some
areas the audit files reviewed by CPAB do not meet professional standards or
the firm's own internal policies. If the firms continue to have problems, CPAB
will consider taking stronger disciplinary measures against them. Specific
areas of concern that apply to a number of large and small firms include:

    -   overall quality of consultation and documentation;

    -   engagement quality control reviews;

    -   quality monitoring.

    In the larger firms it is usually the case that the controls in a firm's
system have not been applied as designed whereas in the smaller firms, many of
which do only relatively small audits of reporting issuers, there is often an
absence of the control systems themselves.
    Mr. Thiessen continued, "The limitation of the scope of CPAB's reviews is
another area of concern as some individual audit engagements continue to be
restricted by lack of access to documents because of legal privilege. We
understand concerns about legal privilege, however any restrictions on CPAB's
reviews are contrary to its objectives. We look forward to the passage of the
Canadian Public Accountability Board Act (Ontario) 2006 and An Act to amend
the Chartered Accountants Act in Quebec as they will significantly improve
CPAB's situation and our ability to review all relevant documents that are in
the files of the auditor." CPAB continues to seek statutory authority in all
jurisdictions to have access to privileged information without negating that
    As a result of the 2007 reviews CPAB placed 20 requirements on 15 firms,
one of which is a national firm, four of which have more than 50 reporting
issuer clients and 10 firms with less than 50 reporting issuer clients.
    The Fifth Public Report covers a period of 15 months because CPAB changed
the timing of its annual cycle of planning, operations and reporting. That
cycle is now on a calendar year basis and CPAB will report on this basis in
future years. This change maximizes comparability among the results of
inspections as most revisions in audit-related standards are introduced at the
start of a new calendar year. The firms inspected were:

    -   Canada's six national public accounting firms:

    -   Eleven firms that operate on a regional or local scale and have at
        least 50 reporting issuer audit clients;

    -   Thirty firms that have fewer than 50 reporting issuer audit clients;

    -   Four firms based outside of Canada that audit Canadian reporting
        issuer clients

    About the Canadian Public Accountability Board

    Incorporated in April 2003, the Canadian Public Accountability Board is
an independent oversight board with a mission to contribute to public
confidence in the integrity of financial reporting of reporting issuers by
promoting high quality, independent auditing. It is responsible for
implementing an oversight program that includes regular and rigorous
inspections of the auditors of Canada's reporting issuers and recommending
changes to standards and practices in the area of reporting issuer audits.
    Through CPAB, the quality of the audit process in reporting issuers in
Canada continues to be enhanced. The CPAB inspects audit firms and reviews
adherence to standards applicable to reporting issuer auditors, imposes
penalties directly on audit firms and refers disciplinary matters to the
relevant provincial institute or association of professional accountants. The
CPAB may also make recommendations on accounting standards, assurance
standards, rules of professional conduct, and governance practices to the
relevant professional institute or standard-setting bodies. In addition, the
CPAB works closely with the Public Company Accounting Oversight Board, a U.S.
auditor oversight body, to develop a system of mutual reliance in the
oversight of reporting issuer auditors. The CPAB is also a founding member of
IFIAR The International Forum of Independent Regulators (IFIAR) which is a
group of oversight bodies, representing 22 countries, developing protocols to
increase the effective and efficient conduct of audit inspections

    A replay of the conference call will be available from Friday,
February 29 at 11:30 a.m. until Friday, March 21 at 11:59 p.m. Please call
416-640-1917 or 1-877-289-8525, pass code 21264672 followed by the number

For further information:

For further information: Victoria Ollers, (416) 822-2288; or Paul Tyler
(416) 254-0698

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