Practice Inspection

Objectives of the Practice Inspection Program

Practice inspection is a key component of CPA Saskatchewan’s monitoring function within our regulatory framework. The main objective of practice inspection is to protect the public. All registered firms are subject to practice inspection notice, with all licensed firms inspected for their compliance with the relevant standards for accounting, assurance and related services and the Rules of Professional Conduct (i.e., applicable professional standards).

A secondary objective of the practice inspection program is to provide firms with an educational experience. This is achieved by supporting firms with information and guidance about available tools, courses and other materials developed by the profession that they can use to improve the quality of their engagement files with the aim of enhancing their knowledge and application of professional standards.

Firms Subject to Inspection and Frequency of Inspection

All registered firms, regardless of the services offered by that firm, are subject to notification of practice inspection. Some firms may be approved for a waiver of practice inspection when they carry out certain services that are not subject to practice inspection (defined within the Bylaws as “other regulated services”), when they are not actively providing inspectable services to the public, or when the firm is inspected by another provincial body (i.e., an affiliate firm). Waivers for affiliate firms are assessed on a case-by-case basis, depending on the results of inspection in the other jurisdiction and the extent of their professional practice within Saskatchewan. Request for Waiver of Practice Inspection form

Licensed firms carrying out inspectable services by practicing in assurance engagements (i.e., the firm executes audit, review, and/or other assurance reports) and/or by practicing in compilation engagements are subject to the practice inspection process. As nearly all registered firms in Saskatchewan are also licensed (holding one of three tiers of licensing: comprehensive, specified and compilation licences), most registered firms are inspected.

Practice inspections are carried out on a four-year, risk-adjusted cycle, meaning that some firms will be inspected more frequently than once every four years and some may reach the maximum of four years between inspections. Firms who audit reporting issuer clients are required to be inspected every three years, at minimum. For newly licensed firms, a practice inspection is completed within the first twelve months of operations or when at least a minimum number of assurance and/or compilation engagements have been completed by the firm. Firms who were unsuccessful in a previous inspection are subject to reinspection within twelve months of the previous inspection decision.

The Inspection Process and Outcomes

During the practice inspection, the inspector selects a risk-targeted sample of the firm’s client engagements, covering (to the extent possible):

all service areas practiced by the firm (audits, reviews, other assurance, compilations),
various financial reporting frameworks for assurance clients,
various industries, and
any areas of higher risk as identified by the firm, engagements requiring engagement quality reviews, or areas of risk identified through other regulatory activities, as applicable.

Within the sample of engagements selected for inspection, the inspector may identify deficiencies in the firm’s compliance with professional standards in material or significant classes of transactions, account balances, and disclosures and in engagement file documentation. These are classified into and referred to as ‘reportable deficiencies’. Reportable deficiencies are reported to the Professional Practice Committee (“Committee”). Based on the nature, frequency, and significance of the reportable deficiencies identified as well as the pervasiveness of the deficiencies across the engagement files inspected, the inspector assesses and recommends to the Committee for determination one of three categories of inspection outcomes:

Meets Requirements: no further action is required but the firm is expected to address the reportable deficiencies (if any) within its next engagements. The firm will be inspected in the next practice inspection cycle;
Meets Requirements with Action Plan: the firm is required to submit an action plan for review and approval that outlines the specific actions the firm will undertake going forward to address all reportable deficiencies. The inspector may also recommend the Committee consider other remedial actions, such as recommending the members of the firm complete professional development in specific topics or that the firm develop review processes to ensure its templates and checklists are reflective of current professional standards. After review, when the action plan and any other actions are deemed satisfactory, the firm will then be inspected in the next regular practice inspection cycle; or
Does Not Meet Requirements: Within this category, there are a range of consequences to the firm:

a. The firm is required to undergo a re-inspection within a certain period of up to one year, either in one area specifically (i.e., partial re-inspection) or in all areas of practice (i.e., full re-inspection). Other actions may be considered by the Committee, such as the requirement for the members of the firm to complete continuing professional development (CPD) in a specific topic, or to update/amend firm templates, tools or checklists to be reflective of current standards, or for the firm to update its system of quality management (SOQM) policies and procedures to be reflective of current standards. Any required actions would become conditions on the licences of the member and/or firm, as applicable.

b. The Committee may place restrictions on the licences of a member and/or firm, which may include specific reporting requirements or the requirement for the licensed member(s) of the firm to obtain monitoring/supervisory services from another licensed member (either internal or external to the firm).

c. Considering the seriousness of risks posed to the public, the Committee may cancel a licence and/or may raise a complaint to the Professional Conduct Committee to proceed through the professional conduct process.

The Committee determines the outcomes on all completed inspections, considering the recommendations made by the inspector and any comments provided by the firm, and finalizes the inspection reports.

To ensure objectivity of all inspection decisions, all information provided to the Committee is on an anonymous and redacted basis. The Committee is provided with certain demographic information about the firm (e.g., the number of licensed members within the firm, number of engagements recently completed and total engagement hours for each type of engagement, whether the firm trains CPA candidates, whether there is a history of re-inspections within the inspection cycle, information about any licence conditions or restrictions, and indication whether the firm has undergone a practice administration review previously). This demographic information is used by the Committee to determine the extent of risk to the public.

In determining the outcome of a practice inspection, the Committee’s considerations include, but are not limited to:

the public interest;
the extent to which the requirements of the Practice Inspection Program have not been met;
the nature, pervasiveness and severity of the reportable deficiencies;
if received for Committee review, the adequacy of the firm’s action plan and commitment towards rectification of issues identified and towards improving overall firm quality;
the cooperation of the member/firm throughout the process; and
on a re-inspection, the results of the previous practice inspection(s) of the member/firm and the degree to which the member/firm addressed deficiencies identified in the previous inspection(s) and the extent of new deficiencies.

Committee Composition and Representation

During 2024-25, the Committee is comprised of 12 individuals: 11 CPAs practicing through licensed firms, with 9 CPAs holding one of the three available licence types (comprehensive, specified, or compilation), and one public representative. The Committee met 6 times throughout the year to discuss various matters, including making practice inspection determinations.

Committee members represent various geographic regions across the province and range in representation of all firm sizes (sole practitioner, regional and large national firms).

CPA Saskatchewan is appreciative of each of the Professional Practice Committee members for their contributions to the practice inspection process and invaluable expertise over this past year.