Audit inspections may soon have an improved ability to carry out comprehensive investigations. The Canadian Securities Administrators have proposed changes that would allow better access to audit workers, especially under foreign jurisdictions.
According to a recent statement, “Reporting issuers will be required to direct audit firms who are not subjected to CPAB oversight, but complete significant portion of audit work for a reporting issuer’s audit, to enter into an agreement with CPAB to access their files and inspect their work if such firms are not prepared to provide access to CPAB voluntarily upon request.”
An agreement with the Canadian Public Accountability Board would require companies to allow the CPAB to obtain access to relevant information upon request, as part of a system of checks and balances.
This change in audit oversight rules would help the CPAB perform more thorough audit inspections. As audit firms complete their work, their report forms part of the evidence necessary to support the audit’s judgment. The firms completing this work are known as component auditors.
The ability to review all important audit work has been determined by the CPAB as necessary to assist in the smooth operation of the country’s auditing system. The transparency of audit companies is vital to ensure credibility, helping to prove that they are law abiding companies whose work can be deemed authoritative.
Information on the interpretation and application of the proposed amendments is readily available on the CSA website. The comment period for these amendments will close on January 2, 2020.