Canadian Public Accountability Board narrows Smythe LLP restriction on new reporting issuer clients to high-risk issuers

The Canadian Public Accountability Board (CPAB) published an enforcement report for Smythe LLP and, following its 2024 inspection of two reporting issuer audit files with no significant inspection findings, modified a previously imposed practice restriction. The firm is no longer barred from accepting new reporting issuers generally, but is prohibited from accepting new high-risk reporting issuers. The revised restriction covers high-risk reporting issuers including those resulting from initial public offerings, reverse takeovers or other transactions. CPAB’s earlier inspections in 2021 and 2022 identified nine significant inspection findings across four files, leading to requirements intended to improve audit quality and an escalated restriction after concerns were not sufficiently addressed; the 2023 inspection identified one significant finding across three files. Smythe is a British Columbia limited liability partnership registered with CPAB as a Participating Audit Firm, and had 62 reporting issuer clients at the time of the inspection. Certain requirements remain in effect with modifications, including reperforming a culture survey, developing and implementing an audit quality action plan, and enhanced regulatory monitoring. The enforcement actions continue until CPAB is satisfied the firm has demonstrated sustained improvement in audit quality or they are otherwise terminated following an application under CPAB Rule 605.