Canada, US Establish Accountancy Oversight Bodies

In Canada, three bodies (the Canadian Securities Administrators, the Office of the Superintendent of Financial Institutions, and the Canadian Institute of Chartered Accountants) are jointly responsible for the creation of the newly established Canadian Public Accountability Board for Chartered Accountants (Conseil canadien sur la reddition de comptes). Major firms conducting audits of publicly listed companies will now be reviewed annually and their quality control policies and procedures subject to comprehensive examination. Canada's major chartered accountancy firms have agreed to voluntarily implement the new requirements in October 2002, coinciding with the establishment of the new public accountability board.

In the United States, The Investor Protection, Auditor Reform, and Transparency Act of 2002 (known as the Sarbanes-Oxley Act) establishes a Public Company Accounting Oversight Board.  The board must perform annual inspections of accounting firms that audit 100 or more public companies and at least tri-annual inspections of other public company auditors. Auditors of publicly held companies may not provide other services to those companies (see summary of all provisions in the act). In May 2002, the United States General Accounting Office issued a report on domestic auditing which is available online:  The Accounting Profession: Status of Panel on Audit Effectiveness Recommendations to enhance the Self-Regulatory System

Measures in both the US and Canada were intended to restore investor confidence in the markets and in the credibility of financial statements. More information:
US Securities and Exchange Commission
National Association of State Boards of Accountancy
American Institute of Certified Public Accountants

Next