Canada’s top audit regulator has banned Smythe LLP, a B.C. accounting firm, from taking on any new clients after it found problems in the firm’s work.
CPAB said that after the 2021 inspection, it imposed requirements on Smythe that were designed to improve the firm’s performance. “The results of the 2022 inspection indicate that concerns over audit quality have not been sufficiently addressed,” CPAB said in an order released Tuesday. However, CPAB has been attempting to liberalize its disclosures, subject to federal and provincial statutes. The Marcum action and Tuesday’s Smythe discipline are the first significant enforcement actions disclosed since CPAB’s policy changed Jan. 1.
CPAB also is requiring Smythe to implement measures to improve audit quality, including an analysis of what happened, an audit quality action plan, testing of its operational controls and bimonthly meetings with CPAB staff.The regulator says the client ban will continue until it’s satisfied Smythe “has demonstrated a sustained improvement in audit quality.”
CPAB did not release the names of the companies whose audits triggered the Smythe discipline. The board noted which Canadian audit standards Smythe violated, but didn’t provide specific details of the accounting judgments in question.
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