Canada’s audit regulator, the Canadian Public Accountability Board, recently published its first individual firm inspection reports.

This is how the news release put it:

• The reports are now available on CPAB’s website and will be published on an ongoing basis. This initiative enhances transparency and provides stakeholders with greater insight into the results of CPAB’s regulatory oversight of public accounting firms that audit Canadian reporting issuers. 
• “Today’s achievement represents an important step forward in CPAB’s commitment to transparency,” said Sonny Randhawa, Chief Executive Officer of CPAB. “Public disclosure of these reports strengthens confidence in audit quality and delivers meaningful information to investors, audit committee chairs, and other stakeholders across Canada.” 
• The publication of individual firm inspection reports builds on earlier disclosure enhancements introduced by CPAB in recent years, including the public disclosure of significant enforcement actions and unresolved recommendations, as well as requirements for firms to share issuer‑specific inspection findings with audit committees. These changes follow extensive public consultation and the implementation of related rule and legislative amendments completed in March 2025. 

The media pounced on the information, with Canadian Accountant contriving the silly headline that “Deloitte Canada comes out on top,” as if CPAB were scoring a weekend golf tournament. This is from the Globe and Mail:

• Of the Big Four firms, KPMG had the highest number of identified issues found by CPAB – with six significant findings in five of the 24 audits it inspected.
• The review found three infractions pertaining to audits of revenue and related accounts, while business combinations, inventory and “other” were also flagged once each.
• …Both Ernst & Young and PricewaterhouseCoopers had two significant findings found in two of the audits out of 11 and 14 audits CPAB inspected, respectively, while Deloitte had one significant finding found in one of the 13 audits conducted.

(For background, CPAB defines a significant inspection finding as “a deficiency in the application of auditing or other relevant professional standards, as defined in Section 300 of CPAB’s Rules, where the audit firm must perform additional audit work to support the audit opinion and/or is required to make significant changes to its audit approach. CPAB requires firms to carry out additional audit procedures to determine the need, if any, to restate the financial statements due to material error, or to substantiate that the firm obtained sufficient and appropriate audit evidence with respect to a material balance sheet item or transaction stream to support their audit opinion.”)

Spokespeople for the various firms were predictably quoted in the Globe as “(taking) the findings from the CPAB inspection process seriously,” as making “enhancements” to existing processes, and so forth. Canadian Accountant breathlessly noted that “(as) recently as 2023, as reported by Canadian Accountant, KPMG Canada has been one of the most successful national accounting firms in Canada,” seeming to imply that the CPAB findings somehow undermine that status. But I must admit to being skeptical that any of this really constitutes “meaningful information.” Knowing for example that the review of KPMG yielded several significant findings relating to revenue doesn’t really equip investors or audit committees or anyone else to do anything. Perhaps the committees might ask a few more probing questions in that area than they would have otherwise, but as CPAB didn’t describe the specific issues, they would merely be shooting in the dark. Investors might try to exercise additional diligence when looking at the revenue numbers and disclosures of KPMG-audited entities, but it’s hard to see where that would get them. And presumably KPMG will have learned from its mistakes, for all we know now outpacing the other firms on the quality of its auditing in that area. Maybe the value is a broader one, in reminding users that audit firms are fallible and that one shouldn’t have excessive confidence in an entity’s audited financial statements, but anyone who didn’t know that already isn’t likely to tune in now. However you look at it, we can safely assume that it’ll take more than this to kick KPMG into oblivion.

The individual inspection reports are certainly less useful then than some of CPAB’s other publications. For example, on that same issue of revenue, a recent report went through the example of an online web platform that earns revenue by providing customers with access to downloadable digital content hosted on an in-house IT system, recognizing revenue when the customer downloads the digital content. The report summarizes the audit approach and comments: “the engagement team‘s identification and assessment of the risks of material misstatement related to revenue was based on an incomplete understanding of the reporting issuer’s system of internal controls,” on which it then expands in some detail, providing examples of additional procedures carried out to remediate the findings (such as involving an IT specialist to evaluate the design and implementation and operating effectiveness of relevant IT applications). Useful information for some at least, one hopes…

The opinions expressed are solely those of the author.