The Canadian Public Accountability Board (CPAB) has published a practical guide on performing effective root cause analysis, drawing on observations from its reviews of firms’ root cause analyses and providing illustrative scenarios to help translate Canadian Standard on Quality Management (CSQM) 1 expectations into practice. The publication is tailored to smaller audit firms but is positioned as applicable to any firm conducting root cause analysis as part of monitoring and remediation under CSQM 1. The guide reiterates that CSQM 1 requires firms to identify, understand and evaluate the root causes of deficiencies, including those arising from external inspections, internal monitoring, system of quality management deficiencies and restatements, so that severity and pervasiveness can be assessed and remedial actions designed and implemented. CPAB highlights recurring issues it has observed, including analyses that stop at a single contributing factor rather than identifying broader underlying causes, and sets out good practices such as using independent and trained personnel, completing analyses on a timely basis (ideally within 30 to 90 days of identifying an audit quality event), triangulating evidence through interviews and data analysis, documenting methods and conclusions, and linking findings to targeted action plans with monitoring metrics. The scenarios illustrate how root cause analysis can lead to changes in acceptance and continuance processes, resourcing and workload management, engagement performance (including training on CAS 315, CAS 330, revenue and testing general information technology controls), governance and leadership incentives, and more frequent system of quality management testing.
Canadian Public Accountability Board 2025-06-01
Canadian Public Accountability Board publishes good-practice guidance on CSQM 1 root cause analysis to strengthen audit quality
The Canadian Public Accountability Board (CPAB) released a guide on effective root cause analysis for smaller audit firms, applicable to any firm under Canadian Standard on Quality Management (CSQM) 1. It addresses common deficiencies, emphasizing comprehensive analysis beyond single factors and recommends practices like timely completion, independent personnel involvement, and evidence triangulation. The guide illustrates how root cause analysis can improve processes such as acceptance, resourcing, engagement performance, and governance.