Auditors must be aware of these standards when

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address standards for internal control within member firms. Auditors must be aware of these standards when auditing member firms. Internal control reports are discussed in more detail in Chapter 16. Another regulator, the Securities and Exchange Commission (SEC) , affects Canadian auditors whose client firms have dealings with U.S. securities markets. In recent years, many Canadian companies have gone to American and other international markets to raise cash through initial public offerings (IPOs) . Because they need to file regulatory docu- ments in each province, which increases the cost of financing, many Canadian companies are finding it cheaper to raise money through public markets in other countries. The Canadian Department of Finance has for a number of years explored the idea of creating a national securities regulator (like the SEC in the U.S.), or some national coordinator of provincial securities commissions, to improve the quality and competitiveness of Canadian securities markets. 5 The impact of the SEC on auditors is discussed in more detail in Appendix 1B. An important development in the regulation of the Canadian accounting profession was the creation of the Canadian Public Accountability Board (CPAB) on July 17, 2002. The Board represents the public interest through being dominated by non-CA members (seven of the eleven Board members are to be non-CAs). The Board monitors audit practice and conducts annual inspections of accounting firms to assess their ability to protect the pub- lic interest. It has the power to sanction any auditor that fails to protect the public interest, and is viewed as the first in a series of major structural reforms to protect the integrity of Canada’s financial accounting systems. Other steps include the CICA’s evolving standard for auditor independence and the creation of provincial boards to oversee the professional conduct and peer-review systems. Finally, there are regulators, such as provincial ministries of the environment and natural resources, that indirectly impact the profession by placing restrictions on 5 A. Freeman and K. Hawlett, “Keep IPO’s at Home: Martin,” The Globe and Mail , March 8, 1996, B1.
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24 PART I Introduction to Auditing, Public Practice, and Professional Responsibilities activities that the clients themselves may need to disclose as part of the client’s busi- ness risk. It should be clear from this brief review that the profession is facing an increasingly complex regulatory environment and that auditors must be sensitized to regulatory con- cerns in order to do a proper audit. Auditors also need to be concerned with meeting the demands of regulators in different countries. One part of the solution is using worldwide standards whenever feasible. 17 Identify several types of professional accountants and their organizations.
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  • Fall '12
  • Smith
  • Accounting, Financial audit, auditors

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