APPENDIX C MULTILATERALNATIONAL INSTRUMENT 52-108 AUDITOR OVERSIGHT PART 1 DEFINITIONS AND APPLICATION 1.1 Definitions - In this Instrument “CPAB” means the Canadian Public Accountability Board/Conseil canadien sur la reddition de comptes, incorporated as a corporation without share capital under the Canada Corporations Act by Letters Patent dated April 15, 2003, and any of its successors; “participant in good standing” means a participating audit firm that meets the following conditions: (a) its participation agreement is not suspended or terminated by the CPAB, and (b) it has complied with, and, if applicable, continues to comply with, any sanctions or restrictions imposed by the board of directors of the CPAB; “participation agreement” means ana written agreement between the CPAB and a public accounting firm in connection with an oversight program of public accounting firms established by the CPABthe CPAB’s program of practice inspections and the establishment of practice requirements; “participating audit firm” means a public accounting firm that has entered into a participation agreement and that has not had its participant status terminated, or, if its participant status was terminated, has been reinstated in accordance with CPAB by-laws; and “public accounting firm” means a sole proprietorship, partnership of individuals, corporation or other legal entity engaged in the business of providing services as public accountants and includes, where the context permits, an individual carrying on business as a sole proprietor and any professional corporation through which either a partner or a sole proprietor carries on its business;. 1.2 Application - Sections 2.1, 2.2and Transition – (1) This Instrument applies to reporting issuers and public accounting firms. (2) Section 2.1 and Part 3 do not apply in Alberta or, British Columbia and Manitoba. (3) Part 2 does not apply unless (a) the CPAB’s prescribed time period for the public accounting firm to submit a participation agreement has expired, and
(b) the auditor’s report prepared by the public accounting firm is dated on or after March 30, 2004. PART 2 AUDITOR OVERSIGHT 2.1 2.1 Participation Agreement with the CPAB -Public accounting firms – A public accounting firm that issuesprepares an auditor’s report with respect to the financial statements of a reporting issuer must enter into a participation agreement within the time period prescribed by the CPAB.be, as of the date of its auditor’s report, (a) a participating audit firm, and 2.2 Participant in Good Standing - A participating audit firm must be a participant in good standing when it issues an auditor’s report with respect to the financial statements of a reporting issuer. (b) in compliance with any restrictions or sanctions imposed by the CPAB. 2.3 Auditor’s report filed with Financial Statements - (1)2.2 Reporting Issuers – A reporting issuer that files its financial statements accompanied by an auditor’s report with financial statements may only file an auditor’s report issued by ’s report must have the auditor’s report prepared by a public accounting firm that is, as of the date of the auditor’s report, (a) a participating audit firm that is a participant in good standing at the time the auditor’s report is issued., and (2) A reporting issuer is exempt from the requirement in subsection (1) if, at the date on which an auditor’s report is issued with respect to the issuer’s financial statements by a public accounting firm, the time period prescribed by the CPAB within which that public accounting firm must enter into a participation agreement has not expired. (b) in compliance with any restrictions or sanctions imposed by the CPAB. PART 3 NOTICE 3.1 Notice of SanctionsRestrictions - (1) A participating audit firm must, if the board of directors of the CPAB imposes sanctions on it, notify that is appointed to prepare an auditor’s report with respect to the financial statements of a reporting issuer must, if the CPAB imposes restrictions on the participating audit firm intended to address defects in its quality control systems, provide notice to the regulator. (2) The notice required under subsection (1) must be in writing and include a complete description of (a) the defects in the quality control systems identified by the CPAB, and
(b) the restrictions imposed by the CPAB, including the date the restrictions were imposed and the time period within which the participating audit firm agreed to address the defects. (3) The notice required under subsection (1) must be delivered within 2 business days of the restrictions being imposed. 3.2 Idem - (1) A participating audit firm that is subject to CPAB restrictions intended to address defects in its quality control systems and that is informed by the CPAB that it failed to address defects in its quality control systems, to the satisfaction of the CPAB, within the agreed upon time period, must provide notice to (a) the audit committee of each reporting issuer for which it is appointed to prepare an auditor’s report, or, if a reporting issuer does not have an audit committee, the board of directors or the person or persons responsible for reviewing and approving the reporting issuer’s financial statements before they are filed, and (b) the regulator, if the participating audit firm is appointed to prepare an auditor’s report with respect to the financial statements of a reporting issuer. (2) The notice required under subsection (1) must be in writing and include a complete description of (a) the defects in the quality control systems identified by the CPAB, (b) the restrictions imposed by the CPAB that were intended to address defects in its quality control systems, including the date the restrictions were imposed and the time period within which the participating audit firm agreed to address the defects, and (c) the reasons it was unable to address the defects to the satisfaction of the CPAB. (3) The notice required under subsection (1) must be delivered within 10 business days of the participating audit firm being informed by the CPAB that it has failed to address the defects in its quality control systems. 3.3 Notice of Sanctions – (1) A participating audit firm that is subject to sanctions imposed by the CPAB must provide notice to (a) the audit committee of aeach reporting issuer for which it has been engaged to issue an auditor’s report and is appointed to prepare an auditor’s report, or, if a reporting issuer does not have an audit committee, the board of directors or the person or persons responsible for reviewing
and approving the reporting issuer’s financial statements before they are filed, and (b) the regulator if the issuer is, if the participating audit firm is appointed to prepare an auditor’s report with respect to the financial statements of a reporting issuer in the local jurisdiction. . (2) The notice required under subsection (1) must be in writing and include a complete description of the sanctions imposed by the board of directors of the CPAB, including the date the sanctions were imposed. (3) (3) The notice required under subsection (1) must be delivered within 510 business days of the sanctions being imposed. 3.2 Idem - A participating audit firm must, if it is making a proposal to undertake an audit of a reporting issuer, advise the reporting issuer’s audit committee of any sanctions that have been imposed by the board of directors of the CPAB within the preceding 12 months. 3.3 Notice of Restrictions - (1) A participating audit firm must, if the board of directors of the CPAB imposes restrictions on it in order to address defects in the participating audit firm’s quality control systems, notify the regulator if it has been engaged to issue an auditor’s report with respect to the financial statements of a reporting issuer in the local jurisdiction. (2) The notice required under subsection (1) must be in writing and include a complete description of (a) the defects in the quality control systems identified by the CPAB and (b) the restrictions imposed by the board of directors of the CPAB, including the date the restrictions were imposed and the time period within which the participating audit firm agreed to address the defects. 3.4 Notice of Restrictions and Sanctions Prior to Appointment – (1) Prior to accepting an appointment to prepare an auditor’s report with respect to the financial statements of a reporting issuer, a participating audit firm must provide notice in accordance with (3) The notice required under subsection (1) must be delivered within 2 business days of the restrictions being imposed. (a) subsections 3.2(1) and 3.2(2), if the CPAB informed the participating audit firm within the 12-month period immediately preceding the expected date of appointment that it failed to address defects in its quality control systems to the satisfaction of the CPAB, and
3.4 Idem - (1) If a participating audit firm is informed by the CPAB that it failed to address, to the satisfaction of the CPAB, the defects in its quality control systems within the time period agreed to between the participating audit firm and the CPAB, it must notify (a) the audit committee of a reporting issuer for which it has been engaged to issue an auditor’s report with respect to the issuer’s financial statements, and (b) the regulator if it has been engaged to issue an auditor’s report with respect to the financial statements of a reporting issuer in the local jurisdiction. (b) subsections 3.3(1) and 3.3(2), if the CPAB imposed sanctions on the participating audit firm within the 12-month period immediately preceding the expected date of appointment. (2) The notice required under subsection (1) must be in writing and include a complete description of (a) the defects in the quality control systems identified by the CPAB, (b) the restrictions imposed by the board of directors of the CPAB, including the date the restrictions were imposed and the time period within which the participating audit firm agreed to address the defects, and (c) the reasons it was unable to address the defects to the satisfaction of the CPAB. (2) For the purposes of subsection (1), the references to “is appointed” contained in subsections 3.2(1) and 3.3(1) shall mean “is expected to be appointed.” (3) The notice required under subsection (1) must be delivered within 5 business days of the public accounting firm being informed by the CPAB that it has failed to address the defects in its quality control systems. (3) A participating audit firm is not required to provide notice under subsection (1) if, pursuant to a notice provided under sections 3.2 or 3.3, the reporting issuer and regulator have been provided notice of the participating audit firm’s failure to address the defects in its quality control systems to the satisfaction of the CPAB and of the sanctions imposed by the CPAB. PART 4 EXEMPTION 4.1 Exemption -– (1) The regulator or the securities regulatory authority may grant an exemption from this Instrument, in whole or in part, subject to such conditions or restrictions as may be imposed in the exemption. (2) Despite subsection (1), in Ontario, only the regulator may grant such an exemption. PART 5 EFFECTIVE DATE 5.1 Effective Date of Instrument -– This Instrument comes into force on [January 1, 2004].March 30, 2004.
Document comparison done by DeltaView on December 19, 2003 3:42:19 PM Input: file://L:/Admin/Teams/Team3/Jean_Paul_Bureaud/Auditor Document 1 Oversight/Rule - Final (approved by quorum - June 23, 2003).doc Document 2 file://L:/Admin/Teams/Team3/Jean_Paul_Bureaud/Auditor Oversight/Rule - Final (Draft 16 - December 7, 2003).doc Rendering set Standard Legend: Insertion Deletion Moved from Moved to Style change Format change Moved deletion Inserted cell Deleted cell Moved cell Split/Merged cell Padding cell Statistics: Count Insertions 57 Deletions 38 Moved from 4 Moved to 4 Style change 0 Format changed 0 Total changes 103
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