The Canadian Public Accountability Board (CPAB) published its 2026 interim inspection results, identifying significant findings in four of 66 audit files reviewed at Canada’s four largest audit firms, compared with 10 of 62 in 2025. The assessments completed through Sept. 30, 2026, indicate improved performance and suggest that firms’ efforts to strengthen audit quality are contributing to the reduction. Inspections target more challenging audit areas rather than a representative sample, so the results cannot be extrapolated across firms’ entire audit portfolios. Recurring weaknesses include insufficient evidence supporting management forecasts and inadequate challenge of optimistic assumptions or contradictory information. Auditors also need to establish the reliability of information flowing through automated systems and evaluate whether controls supporting inventory cycle counts operate effectively throughout the period. An increase in audits rebutting the presumed fraud risk in revenue recognition raises concerns where conclusions lack sufficient supporting evidence. Rebuttals should be exceptional and grounded in circumstances specific to the entity, rather than effective controls or management’s perceived integrity alone. Disclosures of key audit matters must accurately reflect documented audit procedures and relevant limitations. Firms are expected to remediate file deficiencies before the reporting issuer’s next quarterly report and must share inspection findings and remedial action with the relevant audit committee. The fraud observations come ahead of revised Canadian Auditing Standard 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements, which applies to periods beginning on or after Dec. 15, 2026. Full inspection results and observations on firms’ systems of quality management are due in March 2027, with firm-specific results also to be published in 2027.
Canadian Public Accountability Board identifies significant findings in four of 66 audit files at Canada’s four largest firms
The Canadian Public Accountability Board’s interim inspections found significant deficiencies in four of 66 audit files at Canada’s four largest firms, down from 10 of 62 in 2025. Despite the improvement, weaknesses persist in accounting estimates, automated systems, inventory controls and evidence supporting rebuttals of presumed revenue fraud risk. The inspections target challenging audit areas and are not representative of firms’ entire portfolios.