The Office of the Superintendent of Financial Institutions (OSFI), the Canadian Public Accountability Board (CPAB), and the Canadian Securities Administrators (CSA) recently co-hosted a roundtable addressing the risks impacting audit quality and ways of promoting confidence in financial reporting.
“High‑quality audits are essential to financial system resilience,” said Peter Routledge, superintendent of financial institutions, in a news release. “As risks evolve, from technology to geopolitics to market uncertainty, strong collaboration between regulators and audit professionals helps ensure Canadians can continue to rely on transparent and trustworthy financial reporting.”
Uniting leaders and senior representatives from audit firms, accounting professional bodies, standard setters, and regulators, the event enabled participants to discuss the following topics:
- current and emerging risks affecting audit quality
- artificial Intelligence (AI) and other rapid technological changes
- governance, culture, and ethics in audit firms and throughout the reporting ecosystem
- the evolving risk environment, including fraud risks associated with financial crimes, geopolitical turmoil, technological developments, and third-party reliance
- expectations and issues in auditing and assessing financial statement disclosures amid a volatile environment
The news release noted that participants at the roundtable highlighted the importance of collaboration among regulators and audit professionals to improve the quality of financial statement audits and foster public trust in financial reporting across the country’s capital markets.
“Strong audit quality depends on continuous dialogue and a shared understanding across the regulatory and audit ecosystem,” said Sonny Randhawa, chief executive officer of the Canadian Public Accountability Board, in the news release.
Insights from event
According to the news release, notable insights from the roundtable included the following:
- Identifying and prioritizing key risks is crucial amid the complex and dynamic risk environment
- External auditors ensure integrity, trust, and confidence in financial reporting amid uncertainty and the increase in information
- Regulatory coordination and clear guidance on risks can help decrease regulatory overlap, strengthen risk management, and support sustainable growth
- Technological areas such as AI are impacting decision-making, generating opportunities, and resulting in new risks
- To adapt to rapid technological developments, regulators have modernized their approaches, while audit firms have sought to improve audit quality through newly adopted technologies
- As gatekeepers, auditors need strong oversight, clear accountability, and ethical judgment to avoid breaches in trust in organizations
- Organizations should improve their fraud prevention and detection strategies, possibly with the help of technology
- Improvements are essential for financial statement disclosures, especially those with estimates, judgments, and uncertainty
- Auditors can challenge the clarity and robustness of such disclosures for better decision-making and more confidence in the markets
“Today's roundtable serves as an important forum for collaboration, enabling the CSA and the accounting profession to exchange views on emerging risks and further strengthen confidence in Canada's capital markets,” said Stan Magidson, chair of the Canadian Securities Administrators, in the news release.
“Forums like this roundtable help ensure CPAB's work remains responsive to emerging risks while staying firmly anchored in our mandate to protect investors and support confidence in Canada's capital markets,” Randhawa added.