June 28, 2023
Manning Elliott Addresses CPAB Enforcement Actions
The Canadian Public Accountability Board (“CPAB”) is responsible for the regulatory oversight of firms performing audits of Canadian reporting issuers. In that capacity, CPAB inspects Manning Elliott LLP’s (“Manning Elliott” or the “Firm”) public company audit division annually through a selection of completed audit files and an assessment of the Firm’s System of Quality Management (SQM).
In October 2022, CPAB announced changes to the information it discloses about the results of its inspections of audit firms (see https://cpab-ccrc.ca/media/2022/10/04/2022-cpab-disclosure-recommendations-news-release-en).
In the spring of 2023, CPAB completed its annual inspection of the Firm. On June 19, 2023, based on certain inspection findings, CPAB issued a letter of enforcement actions, which includes a restriction on Manning Elliott from accepting new high and medium risk Canadian reporting issuer clients and other requirements that are aimed at improving our system of quality control. CPAB’s restrictions do not impact Manning Elliott’s ability to take on new low risk Canadian reporting issuer clients, private company clients, and not-for-profit organizations. Consistent with CPAB’s new disclosure protocols, these enforcement actions are now published on CPAB’s website.
Manning Elliott is committed to upholding the highest standards of professional conduct, audit quality and regulatory compliance. We take inspection results seriously and recognize the importance of addressing CPAB’s recommendations, including implementing improvements to our systems of quality control to ensure we continue to perform high quality audits. We have already completed the remediation procedures required to address CPAB’s 2022 file inspection findings, none of which resulted in any restatements of previously issued financial statements.
In addition, and prior to the completion of CPAB’s 2022 inspection, we had already begun implementing measures to strengthen our systems of quality control to ensure they are robust, effective, and consistent with the highest professional standards. These included a review of our client acceptance and continuance procedures which led us to de-risking our portfolio of high-risk public company audit clients. As a result, we have fully exited the cryptocurrency industry and have significantly reduced our involvement with clients in the cannabis industry. The increase in Manning Elliott’s significant inspection findings in 2020 and 2021 were mainly attributable to audits of reporting issuers in these emerging industries. Over the past year, we have improved our inspection results and have introduced quality control measures, including implementing new processes to enhance audit procedures and evidence gathering used to support audit opinions, and providing additional training and guidance to professionals to ensure that we meet or exceed the required standards for all audit engagements.
At Manning Elliott, we recognize the importance of maintaining trust and transparency in the auditing profession. We will continue to prioritize the interests of our clients, shareholders, and the broader investing community. Our dedicated professionals are determined to implement the necessary changes and become stronger as a result.
We appreciate the ongoing support and understanding of our clients and stakeholders. Rest assured, we are fully committed to providing the highest level of service and maintaining the trust placed in us.
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