In an effort to bolster the quality of audit oversight, the Canadian Securities Administrators (CSA) have proposed rules designed to enhance the Canadian Public Accountability Board’s (CPAB) access to audit files, particularly in foreign markets.
In a report published Oct. 3, the CPAB said it continues to face barriers in accessing foreign audit files, particularly in China.
“Investors should be concerned when foreign laws and regulations impede or reduce the level of auditor oversight that they have come to expect in Canada,” the board said.
“Certain countries, including China, continue to prevent CPAB from inspecting the audit work of Canadian public companies conducted in their jurisdictions,” it noted.
To combat the issue, the CSA’s proposals would require issuers with significant foreign audit requirements to enter agreements with the CPAB governing access for file inspection if the auditor doesn’t voluntarily provide access to the CPAB.
“Under the proposed changes, some reporting issuers and audit firms may be required to take steps to provide CPAB with enhanced access to audit working papers, particularly in foreign jurisdictions,” the CSA said.
“High quality audits are essential to the confidence in our capital markets,” said Louis Morisset, chair of the CSA and president and CEO of the Autorité des marchés financiers (AMF).
“The new rules we are proposing will assist CPAB in inspecting audit work, which will lead to improvements in audit quality,” he added.
Comments on the proposals are due Jan. 2, 2020.