CPAB Links Culture to Audit Quality

The Canadian Public Accountability Board (CPAB) has published its “Audit Quality Insights Report: 2026 Interim Inspections Results,” reporting meaningful improvement in audit quality at Canada’s four largest accounting firms and announcing the launch of a multi-year initiative that treats ethics, culture, and governance as foundations of sustainable audit quality.

“Periods of uncertainty test the resilience of financial reporting and emphasize the importance of high-quality audits,” said Sonny Randhawa, CEO of the CPAB. “As risks continue to evolve, effective regulatory oversight plays a critical role in promoting transparency, accountability, and public confidence in financial reporting and Canada's capital markets.”

As of September 30, CPAB had completed 66 of 70 planned inspections at the four largest firms and identified significant findings in four files, compared with 10 of 62 files inspected in 2025. The regulator says the reduction suggests firms’ efforts to strengthen audit quality are contributing to improved performance, although it identifies recurring inspection findings and emerging issues in such areas as accounting estimates, automated information systems, fraud risk assessments, and auditor reporting. CPAB notes that its risk-based inspections target higher-risk and more complex audits and are not designed to be representative of firms’ entire audit portfolios.

CPAB also highlights practices associated with stronger audit execution, including early senior involvement, realistic timelines, timely escalation of complex matters, and ongoing coaching and review. Often embedded in firms’ quality-management systems, it explains that these practices support professional judgment and skepticism.

More broadly, CPAB argues that “ethics, culture, and firm governance are fundamental drivers of audit quality.” Culture shapes professional judgment, skepticism, and whether personnel feel able to raise concerns, CPAB recognizes. Its multi-year initiative will draw on inspection and enforcement findings and stakeholder and international insights, with work planned on whistleblowing, culture measurement, and ethical dilemmas. Separately, CPAB is monitoring the growing use of AI in auditing and financial reporting and its implications for audit quality, emphasizing governance, safeguards, and human oversight.

CPAB encourages audit committees to ask how auditors assess firm culture, including through surveys, whistleblower reporting, and root cause analysis, and what actions follow significant findings. It also recommends challenging auditors on significant judgments, escalated matters, fraud risks, technology use, and the effectiveness of corrective action.