At Angry in the Great White North, there is an analysis of Canadian Public Accountability Board (CPAB), the entitiy that sets standards for audit firms. Sounds dry, I know. But it is actually a story of how a group of quasi-governmental bodies with only the minimal oversight of the provincial governments can act with near impunity. The bodies, the provincial securities commissions, have created a cartel of sorts, the Canadian Securities Administrators (CSA), to set these national rules. There are no legislative acts to give these new bodies, the CSA and the CPAB, the specific statutory power to do these things. All there is in Ontario, for example, is the Securities Act, which says that the Ontario Securities Commission can set the rules, and submit them to be be signed off on by the minister in charge (normally the finance minister, but because of Greg Sorbara’s legal troubles with the OSC, the OSC reports to the Minister of Government Services, Gerry Phillips). The minister has 75 days to sign off on it or reject it. The rule is not presented to the legislature, not evaulated by a legislative committee, or even debated in cabinet. But it does have the force of law. If the Minister doesn’t sign off, the rule becomes permanent by default.
Nice eh? Nothing like a state within a state.
Does it matter? The CPAB has ruled that Certified General Accountants cannot audit publicly traded firms. CGA-Canada is not pleased. But because this is the case of a private entity, the CPAB, setting public rules instead of a legislature body making law, CGA-Canada has to go take the CPAB court instead of working for amendments with elected parliamentarians.
Is there a better way to do this? In the US, in the aftermath of Enron and other auditing failures, the Public Company Accounting Oversight Board was created to set standards for audit firms. The PCAOB was the model for the CPAB, which was created a year later. The huge difference is that the PCAOB was created by an act of Congress, the Sarbanes-Oxley Act of 2002.
The CPAB, on the other hand, was created by rule 52-108, drafted behind closed doors by the CSA, and signed off by a minister in the privacy of his office. Instant law without all that messy debate to slow things down.
BTW…..whatever happened, (or not), with regard to Mr Brison’s Income Trust decision tipoff e-mails?
Accountability is a real issue, but as long as these bodies do their job in an effective manner they should be left alone. Introducing government into the mix would only heighten the political pressures and lobbying, and probably drive investment out of the country.
The link so nice, Steve posted it twice!
The OSC is a sick joke. Does anyone remember BRE-X, how about the magnet co. a front for Russian mafia, with David Peterson as a director. Hollinger had to to tried in the U.S. because OSC refused to act, ditto Nortel.
The sooner we get rid of this secret society and allow Ont. investors to directly invest in the U.S. thru regulated securites markets the better off we’ll be.
Steve Jenke (I can’t post on the other thread for some reason) you have a good point, maybe it’s about “transparency” and trust, so maybe it should have to go to legislature for the simple reason that the capital markets work best when there is a high level of trust and they fail when there isn’t.
My accounting friends can throw back a lot of beer on this subject, actually on any subject ;>)
But I think any director of a public company would want a world class firm looking after the books, that means a CA firm with offices in various parts of the world where the company would hopefully be growing and generating business. CGA’s just can’t provide that level of global sophistication and depth of operations.
Therefore something tells me this is all a bit of a red herring and that we wouldn’t want to tie up our legislatures with this when they could be doing more important stuff like designing day care delivery for parents who are too busy and incompetent and … blah , blah blah … you know what I mean.
Cut’ N Run Rae’s eminences grises are AdScam Chretien, Power, Desmarais, Strong, Gagliano, Libranos$, et al.
Chretien appointed Zack to the post. Surprise? …-
RCMP BOSS OK WITH RAE
RCMP Commissioner Giuliano Zaccardelli should stay on as head of the federal police force, despite the damning Arar report, says Liberal leadership candidate Bob Rae. …-
national newswatch
CPAB a self-regulating body for public accountants, not some creation only of “OSC tyranny”. Why would the right want the government to take over regulation of a public body like this? Is government oversight of the auditing profession really the answer?
This isn’t a general public issue, it’s an issue between public companies, auditors and the finance community.
Also, it’s not absolutely necessary for any accounting firm auditing public firms to be a part of CPAB. Association is voluntary, etc.
BTW: the next time someone takes Janke seriously when he commits to going off on the accounting industry (or anything, really), the sentence “I don’t know the difference between a CA and a CGA” should be a huge tip off-The guy doesn’t know what he’s talking about.