The Canadian Securities Administrators yesterday proposed changes to auditor oversight rules intended to enhance the integrity of financial reporting by reporting issuers mainly focused on changes to National Instrument 52-108 Auditor Oversight. NI 52-108 imposes certain obligations on both reporting issuers and auditors, including the requirement that any public accounting firm that audits the financial statements of a reporting issuer be a member in good standing with the Canadian Public Accountability Board (CPAB).
The proposed changes would expand and clarify the circumstances in which public accounting firms must provide prescribed types of notices to both reporting issuers and regulators. Proposed changes to a long form prospectus under Form 41-101F1 would also prescribe disclosure in circumstances where the auditor of the reporting issuer was not, or its financial statements were not audited by, a CPAB firm. The timing for making, filing or sending various types of notices and other documents in connection with a change of auditors would also be reduced. Finally, amendments to National Instrument 71-102 are also proposed to clarify the application of NI 52-108 to “designed foreign issuers” and “SEC foreign issuers” and their auditors.
The CSA also stated that they are deferring consideration of changes in regards to when a public accounting firm must inform a reporting issuer's audit committee of remedial actions imposed by CPAB until further developments occur on the recommendations initiated by the Chartered Professional Accountants of Canadaand CPAB.
The CSA is accepting comments on their proposals for 90 days expiring on January 15, 2014.