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.