Overview

One of the goals of the Canadian Public Accountability Board (CPAB) is to enhance audit quality and investor protection by providing content to help stakeholders improve audit quality and perform their roles more effectively. On November 27, 2017, CPAB announced that it plans to launch a new project to advance this effort relating to Comprehensive Review of the Auditor in 2017/2018.

CPAB notes that, in 2013, the Enhancing Audit Quality initiative (a collaboration between CPAB and CPA Canada) recommended that audit committees perform a comprehensive review of their audit firm at least every five years. A number of audit committees have performed such reviews, and more are planning to in the near-term. There is interest in understanding how other audit committees, management and auditors have performed their comprehensive reviews.

Ac­cord­ingly, the pro­ject’s ob­jec­tives in­clude: (i) to bet­ter un­der­stand the chal­lenges around au­di­tor eval­u­a­tion; (ii) to iden­tify best prac­tices in per­form­ing a com­pre­hen­sive re­view for shar­ing with the au­dit firm, au­dit com­mit­tee and pre­parer com­mu­ni­ties; and (iii) to ob­tain feed­back on the cur­rent com­pre­hen­sive re­view tools and guid­ance.

In May, 2019, the CPAB released an Exchange Bulletin, entitled, “The Comprehensive review: What have we learned?”. The Bulletin summarizes the results of CPAB’s discussions in 2018 with audit committee chairs, external auditors and members of management to understand how comprehensive reviews are currently being performed.

Key insights from this CPAB project include: (i) providing feedback to the auditor is an ongoing process including quarterly discussions, annual reviews and periodic comprehensive reviews; (ii) the comprehensive review should be customized to gain the most benefit; (iii) incorporating audit quality indicators (AQIs) can significantly improve the depth and quality of the comprehensive review; (iv) the audit committee, management and the auditor play important and distinct roles in achieving an effective comprehensive review.

Overall, CPAB found that stakeholders say the comprehensive review is a worthwhile exercise with a number of benefits: (i) shifts the auditor’s focus to the audit committee as the client, rather than management; (ii) allows the audit committee to more clearly define what they expect from the auditor over the short and longer term; (iii) improves audit committee understanding of the audit process; enhanced auditor and audit committee discussions; (iv) provides more detailed feedback to the auditor on areas to improve; and (v) access to more information augments audit committee understanding of audit quality processes across the audit firm.

For further details of the results of CPAB’s findings re comprehensive reviews, refer to the CPAB Exchange Bulletin.

Other de­vel­op­ments

May 2019

On May 6, 2019, CPAB issued an Exchange Bulletin summarizing the results of their discussions in 2018 with audit committee chairs, external auditors and members of management to understand how comprehensive reviews are currently being performed.

November 2017

On November 27, 2017, CPAB announced that it plans to launch a new project relating to Comprehensive Review of the Auditor in 2017/2018.