Practice inspection of the standards of the profession occurs on inspectable services (i.e., audits, reviews and compilation engagements). Every registered firm is subject to a notice of practice inspection. If a firm does not perform inspectable services, the firm needs to provide a written explanation indicating that to CPA Saskatchewan.
Practice inspection will occur for every registered firm at least once in a 4-year risk-adjusted cycle. Meaning, a firm may be inspected more than once within 4 years depending on the risk level of the firm.
A firm practicing in all service areas (i.e., audits, reviews and compilation engagements) should expect inspection of at least 4 files per practice leader. More files may be selected at the discretion of the inspector. Less files may be selected when the firm provides evidence of a strong system of quality control.
Practice inspection reports include: an index of files inspected, practice advice (non-reportable deficiencies) and reportable deficiencies. Practice advice is between the inspector, CPA Saskatchewan and the practitioner. Reportable deficiencies are those reported to the Professional Practice Committee for determination. For an item to be reportable, it would be a material or non-quantifiable matter relating to non-compliance with a financial statement presentation and disclosure, audit, review or compilation engagement documentation standard, an area of lack of adequate quality control, or non-compliance with the Rules of Professional Conduct.
CPA Saskatchewan publishes an annual article on common deficiencies.
The Professional Practice Committee is the authority for practice inspections, and they may make one of the following determinations:
- No further action is required on the part of the firm,
- The firm is required to submit a corrective action plan for review and acceptance that outlines their plan to remedy reportable deficiencies,
- The firm is required to undergo a re-inspection within one year of Committee determination,
- The firm shall be restricted in its areas of practice, or
- The firm shall be referred to the Professional Conduct Committee for a conduct investigation.