The Canadian Securities Administrators, an umbrella organization of Canada’s provincial and territorial securities regulators, has proposed changes to its auditor oversight rules with the goal of giving securities regulators more insight into situations where Canada’s audit firm regulator has imposed sanctions on an audit firm.

In an effort to improve its monitoring of Canada’s capital markets, work towards addressing issues before they become significant, and ultimately provide greater investor protection, the CSA proposed Thursday to amend the “triggers” for when an audit firm must notify securities regulators about any significant remedial actions imposed by the Canadian Public Accountability Board on an auditing firm. The CSA is also proposing amendments to NI 52-108, “Auditor Oversight,” concerning the content of the notices issued by the CPAB, which is the Canadian equivalent of the U.S.’s Public Company Accounting Oversight Board.

“Auditors are key gatekeepers, so it is important to improve the extent of information securities regulators receive when the Canadian Public Accountability Board identifies significant audit quality issues,” said Bill Rice, who chairs the CSA and is also chair and CEO of the Alberta Securities Commission. “Receiving information about audit firms enables securities regulators to better assess systemic issues and consider, in a timely manner, whether regulatory action is needed. This in turn will increase investor confidence in the quality of financial reporting in Canada.”

The CSA said it also recognizes the importance of information made available to audit committees. In May 2013, the Enhancing Audit Quality initiative, led by the Chartered Professional Accountants of Canada and the CPAB, recommended that the CPAB and the audit firms it oversees develop a protocol to enhance information flow to audit committees. The CSA will monitor the CPAB protocol developments and consider whether further amendments are needed.

The comment period on the proposed changes is open until Jan. 15, 2014.

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