The Canadian Public Accountability Board (CPAB) published its Audit Quality Insights Report on 2025 interim inspection results, summarising initial observations from engagement file inspections and reviews of firms’ systems of quality management based on regulatory assessment work completed up to September 30, 2025. CPAB identified significant inspection findings in nine of 59 files inspected at Canada’s four largest audit firms, compared with eight files with significant findings across 65 inspections in 2024, and found significant findings in four of 10 files inspected at other firms. The report highlights recurring themes in deficiencies related to the use of technology in audits, identification and response to fraud risks, audits of group financial statements under the revised group audit standard, and the evaluation of accounting policies. The most common significant findings continue to relate to revenue and significant estimates, including business acquisitions, asset impairments, and valuation of financial instruments, where CPAB notes increased estimation uncertainty in the current macroeconomic environment. In technology-assisted testing, CPAB observed cases of overreliance on tools, including instances where testing focused only on tool-identified outliers and approximately 98% of reported revenue was not subjected to further procedures, and cases where cash receipts were treated as primary evidence for revenue recognition without sufficiently tailoring procedures to the underlying performance obligations. Fraud-related findings included circumstances where whistleblower reports, complaints, or short seller reports were not evaluated as fraud risk factors, and CPAB pointed to inspections of acquisitions followed by significant year-end impairments, referenced in its October 2025 risk alert. For group audits under the revised Canadian Auditing Standard 600, findings included insufficient procedures around understanding the group and environment, assessing whether work performed addressed risks of material misstatement, evaluating group-wide controls and information technology risks, and oversight of fraud considerations. CPAB also reported ongoing deficiencies in auditors’ assessment of accounting policies, sometimes associated with restatements, and reiterated expectations around remediation, including additional audit procedures or adding evidence to support the audit opinion and sharing inspection outcomes with audit committees under its mandatory protocol. CPAB said full 2025 inspection results will be published in its annual report in March 2026, including findings from system of quality management evaluations for the four largest firms. It also plans to begin publishing firm-specific results starting in 2026, commencing with the four largest firms, and to start issuing individual firm public inspection reports in the first quarter of 2026.
Canadian Public Accountability Board 2025-10-23
Canadian Public Accountability Board publishes interim 2025 inspection results with significant findings in 9 of 59 large-firm audit files
The Canadian Public Accountability Board (CPAB) released its Audit Quality Insights Report on 2025 interim inspection results, highlighting significant findings in nine of 59 files at Canada's four largest audit firms and four of 10 files at other firms. Key deficiencies were noted in the use of technology in audits, fraud risk identification, group financial statement audits, and evaluation of accounting policies. CPAB will publish full 2025 inspection results in March 2026 and begin releasing firm-specific results and individual firm public inspection reports in 2026.