Canadian public accounting firms of all sizes need to do more to improve audit quality and adhere consistently to internal and professional standards, the Canadian Public Accountability Board said.

In its fourth public report on inspections of firms, the board made recommendations to every one of the firms it inspected, and placed requirements on a trio of smaller firms -- meaning that they cannot accept new audit clients until they have implemented the board’s recommendations.

The actual inspections occurred between 2005 and early 2006, and the report, though echoing many concerns voiced by the U.S. Public Company Accounting Oversight Board in its own inspections, is divided into topical areas of interest.

Of 121 audit engagements selected by CPAB for review among the country’s six national firms (primarily high-risk files), nine engagements had serious deficiencies in the documentation of the work done. In a handful of other cases, financial statements had to be reissued, restated or corrected in the subsequent year.

As of Sept. 30, 2006, nearly 250 Canadian accounting firms and 40 foreign accounting firms had registered to become participants in the CPAB oversight program.

Canada’s six national firms -- BDO Dunwoody LLP, Deloitte & Touche LLP, Ernst & Young LLP, Grant Thornton Canada, KPMG LLP and PricewaterhouseCoopers LLP -- audit more than 4,500 public companies and other reporting issuers in Canada. Those firms represent about 70 percent of the total market share by numbers of clients, and the board estimates more than 90 percent if measured by market capitalization.

The report is available at www.cpab-ccrc.ca/Fourth%20Public%20Report%20-%20Eng.pdf.

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