Audit Watchdog Uncovers Significant Problems at Big Four Accounting Firms in Canada
The Canadian Public Accountability Board (CPAB) has identified significant deficiencies in the audit work of all four major accounting firms that oversee Canadian companies. This marks the first time the regulator has publicly named the firms in its annual review, increasing transparency in the financial oversight process.
Detailed Inspection Results Reveal Widespread Issues
The CPAB's inspection process focuses on higher-risk audit areas of complex companies and sectors where firms may have less expertise. The regulator found at least one significant finding at each of the Big Four firms: Deloitte LLP, Ernst & Young LLP, KPMG LLP, and PricewaterhouseCoopers LLP.
In the largest sample reviewed, KPMG's 24 files showed significant findings in five cases, representing just over 20 percent of the inspected work. Half of these issues were related to revenue and associated accounts, with additional problems identified in inventory management and business combinations.
Increasing Transparency Through Public Identification
The CPAB began identifying individual audit firms by name this year as part of its commitment to greater transparency. However, the regulator emphasized that its inspection process is not designed to select representative samples of a firm's entire audit portfolio, meaning findings should not be extrapolated to all their work.
Conversely, the CPAB noted that inspections don't examine every aspect of audit files, so the absence of significant findings doesn't guarantee full compliance with professional standards across all audit areas.
Statistical Trends and Firm-Specific Findings
The portion of sample files with significant findings at the Big Four firms averaged 16 percent in 2025, higher than the 12 percent average from the previous year but consistent with the 16 percent rate observed in 2023.
At Ernst & Young, the 2025 inspection of 11 files revealed two with significant findings related to long-lived assets and revenue accounts. PricewaterhouseCoopers' review of 14 files identified two problematic cases involving business combinations and inventory. Deloitte's examination of 12 files found one significant issue in the area of business combinations.
Regulatory Framework and Firm Responses
Accounting and audit firms are given 180 days to submit evidence demonstrating they have implemented recommendations to improve their quality management systems. If firms fail to adequately address weaknesses or deficiencies, the CPAB reserves the right to make this information public, though firms are notified beforehand and can request a review of the decision.
In response to the CPAB inspections, all four audit firms submitted letters appended to their annual reports, affirming their commitment to performing high-quality audits and taking the regulator's assessments seriously.
The CPAB's increased transparency initiative represents a significant shift in how audit oversight is conducted in Canada, providing stakeholders with clearer insights into the performance of major accounting firms responsible for verifying the financial health of Canadian corporations.
