The Canadian Securities Administrators (CSA), along with its participating jurisdictions, have published Notice and Request for Comment Proposed Amendments to National Instrument 52-108 Auditor Oversight and Proposed Changes to Companion Policy 52-108 Auditor Oversight (together, the Proposed Amendments), for a comment period ending January 1st, 2020.
The Proposed Amendments specifically cover the audit work done for reporting issuers with operations within foreign jurisdictions. Currently, Participating Audit Firms (PAFs) under Canadian Public Accountability Board (CPAB) auspices often utilize the services of audit firms in these locales (known as component auditors) to support the auditor’s report issued by the PAF.
Because these component auditors are not under CPAB’s jurisdiction, the regulator has experienced difficulty in obtaining the audit records from some firms. If approved, the Proposed Amendments will enable CPAB to perform audit inspections of the work of those component auditors who are employed by PAFs at a significant level (significant component auditors).
If a given significant component auditor did not voluntarily agree to an inspection, under the Proposed Amendments, reporting issuers will be required to direct them to enter into an agreement with CPAB permitting access to the audit files (a CPAB access agreement) which gives CPAB the ability, upon request, to inspect the audit work. If the component auditor refuses to enter into a CPAB access agreement, a PAF after a transition period would not be permitted to use the audit firm as a significant component auditor.
Notice and Request for Comment Proposed Amendments to National Instrument 52-108 Auditor Oversight and Proposed Changes to Companion Policy 52-108 Auditor Oversight, are available for download from the websites of the participating jurisdictions.
For more information, please call Barbara Hendrickson at BAX Securities Law (416) 601 -1004.
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