Today, the Certified General Accountants Association of Canada (CGA-Canada) filed an Application for Judicial Review with the Ontario Superior Court of Justice to address longstanding concerns regarding the structure and processes of the Canadian Public Accountability Board (CPAB).
“CPAB – the body set up by governments and securities regulators to oversee the auditing of reporting issuers in Canada – is fundamentally flawed,” said Dany Girard, FCGA, Chair of CGA-Canada’s Board of Directors. “Because of CPAB’s close relationship to the profession it oversees, CGA-Canada believes that CPAB is unable to make independent decisions and lacks the procedural safeguards necessary to protect against institutional bias.”
“Until recently, we believed that CPAB would effect the changes in its structure and processes to begin addressing concerns that we and others have expressed since its creation in 2002. We have been patient. But recent actions clearly demonstrate that CPAB does not have the public interest at the centre of its preoccupations,” said Girard.
The decision to challenge the work and composition of CPAB comes after months of discussion and ongoing consultation with CPAB in regards to CGA-Canada’s independence standard. As a result of corporate malfeasance, accounting organizations across the world developed a new type of standard -- independence standards – to address the public’s concerns that accounting firms be independent in both appearance and fact, and that they be able to conduct engagements and provide an audit opinion free from client influence or other conflicts of interest.
Despite ongoing collaboration with CPAB and CPAB’s acknowledgement that the CGA independence standard is equivalent to the one CPAB has already recognized, CPAB has deferred its approval of the CGA independence standard and has not given effect to the required rule change.
“By virtue of legislation, CGA-Canada has the responsibility to set standards for its members,” explained Girard. “Our provincial and territorial affiliates have the obligation to enforce standards. Our members are required to adhere to those professional standards. This is a matter of public interest. We would be shying away from our professional responsibilities by simply adopting other standards. CPAB actions have in effect interfered with our professional obligation to our members and the public.”
The legal action undertaken by CGA-Canada seeks to have the Court rule that:
- CPAB is a public body and its composition must be representative of all accounting organizations who are affected by its decision-making;
- CPAB must discharge its mandate in accordance with the principles of natural justice and fairness;
- The decision to defer a rule change proposed to recognize the CGA independence standard is unreasonable because it discriminates against CGAs and is made in bad faith for reasons that are not in the public interest.
Ever since the creation of CPAB in 2002, CGA-Canada has maintained that in order to fulfill its mandate, the oversight body requires:
- A fully transparent process for deliberations and decisions;
- Procedural safeguards to ensure an arms-length relationship between the CPAB board and the accounting/auditing profession itself;
- Broad representation on the CPAB board;
- Broadly-based funding; and
- Legislative accountability.
“Canadian governments believe that it is in the best interests of the public to have multiple accounting designations in the marketplace. They have adopted legislation to enact this. Therefore, the accounting profession in Canada exists as a multi-jurisdictional landscape. CGAs have worked collaboratively with CPAB since it was formed in 2002. Despite this, CPAB has failed to recognize the jurisdiction of all accounting bodies to undertake professional standard setting as set out by Canadian legislation. We would be failing in our responsibility to the public if we don’t act,” concluded Girard.
About CGA-Canada
CGA is the fastest-growing accounting designation in Canada. The CGA designation focuses on integrity, ethics and the highest education requirements. Recognized as the country’s accounting business leaders, CGAs provide strategic counsel, financial leadership, and overall direction to all sectors of the Canadian economy.
The Association sets standards, develops education programs, publishes professional materials, advocates on public policy issues, and represents CGAs nationally and internationally. The Certified General Accountants Association of Canada represents 64,000 CGAs and students in Canada, Bermuda, the Caribbean, Hong Kong, and China.
For more information, please contact:
Taylore Ashlie
Director, Communications
CGA-Canada
Telephone: 604 605-5055
Cell: 604 307-0212
Email: tashlie@cga-canada.org
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