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Practicing in Association with Non-Members

CAN A CPA WORK FOR A NONMEMBER AND SIGN REPORTS (ASSURANCE OR COMPILATION)?

The common answer is no.

CPA Saskatchewan only has jurisdiction to register, licence, investigate and discipline registrants in Saskatchewan. CPA Saskatchewan does not regulate the practice of non-registrants.

CPA Saskatchewan Rules do not contemplate a CPA engaging in the practice of professional accounting or other regulated services as an employee or contractor when engagements are being issued by a non-registrant. Meaning, the regulation of the profession requires that members who provide services to or for the benefit of a client must register a firm. Firms may be sole proprietors, partnerships, another type of entity or professional corporations. Therefore, a CPA working or contracted as an employee of a non-registrant firm would be required to register a firm, obtain PLI and be subject to inspection. Rare exceptions occur, contact registrar@cpask.ca for more information or to set up a call.

This means that a CPA cannot carry on the practice of professional accounting through an entity owned or coowned by a non-member. You can only provide professional accounting or other regulated services through a firm fully owned by CPAs, that is licensed and registered with CPA Saskatchewan.

BUT WHY?

The government has delegated to the Institute self-regulatory status, with those objects as fundamental requirements for CPA Saskatchewan, as follows:

(2) The objects of the institute are:

(a) to regulate the practice of the profession and to govern the registrants in accordance with this Act and the bylaws; and

(b) to assure the public of the knowledge, skill, proficiency and competency of registrants in the practice of professional accounting and other services provided by registrants.

To fulfill the objective of the legislation, CPA Saskatchewan must be in a position to assure the public of the work performed by registrants, and to do that we need jurisdiction over their conduct.

UNDERSTANDING THE RULES

When a CPA works with a non-member in the practice of professional accounting or other regulated services, you are directly responsible for their compliance (or failure to comply) with the CPA Code, which is deemed to apply as if the non-member were a member. This also applies when a non-member owns an interest in or works for a “related business or practice”.

Always ensure that non-members performing services under the authority of a CPA have adequate training and supervision. The following considerations, although not an exhaustive list, are critical when a CPA associates with a non-member:

1. Ensure the non-member complies with the fundamental principles of the CPA Code, in addition to specific rules that apply to them. Advise them that they have a fundamental responsibility to act in the public interest by maintaining professional behaviour, integrity, due care, objectivity, professional competence and confidentiality.
2. Evaluate the professional competence of the nonmember. Consider their relevant experience, education, professional development, credentials, qualifications, reputation and other professional standards to which they must adhere. If you have not worked with them before, heighten your professional skepticism.
3. Ensure adequate training and supervision of the nonmember, as follows:
   1. Supervise, direct and evaluate the adequacy of the non-member’s work.
   2. Provide them with detailed descriptions of the nature of their responsibilities and the objectives and scope of their work, along with the necessary instructions and information to perform their work.
   3. Review their working papers on a timely basis to evaluate its quality and the conclusions reached.
   4. Ask about or provide relevant training to ensure they are qualified for the work being performed.
   5. Remain alert to changes in conditions or results that impact your initial evaluation of them.
4. Consider whether you or the non-member is ultimately responsible for the work product or engagement. If you are responsible for the work product or engagement, you should:
   1. maintain a direct relationship with the client,
   2. obtain an engagement letter, and
   3. sign and issue the relevant engagement report (if any). If the non-member engaged the client, obtain the client’s consent to access all information required to perform your role in the engagement.
5. Mitigate your exposure to professional liability risk for the non-member’s work. Consider whether the nonmember is covered under your firm’s professional liability insurance policy or whether they have separate, adequate coverage.
6. Prepare an agreement with the non-member. Outline the following:
   1. terms of the engagement,
   2. roles and responsibilities of each party,
   3. nature or scope of their work,
   4. relevant technical performance standards or other professional or industry requirements, and
   5. effective date or work period covered. Consider having the agreement reviewed by a lawyer.

If your firm has engaged a non-member who is an expert in a field other than accounting or auditing to assist you in obtaining sufficient, appropriate audit evidence in an audit engagement, you must meet additional requirements in CAS 620.11 in the Assurance Handbook. Overall, it is your responsibility to ensure that any association with a non-member in the practice of professional accounting meets the high standards of the CPA profession. As no two situations are identical, CPAs are responsible for ensuring that their own situation complies with the CPA Saskatchewan Rules.

Please note that this article is considered to be nonauthoritative guidance only.