When Enron sought protection from b...

When Enron sought protection from bankruptcy, the landscape of the profession was indelibly changed. Whatever any of us may have cogitation in the shock of those first not many days and weeks after the announcement, it's now accepted that each company, board of directors, audit committee, financial analyst, auditor, and regulator will have to reexamine the way they do business. What remains in question now is the nature of the changes ahead-this, and the part Canadian CAs will play in reshaping the part and perception of the auditor.

On February 8 2002 we forwarded to you CICA CEO David Smith, FCA's note on Enron. (Smith's letter is also available in the Member's merely section of the CICA website at www.cica.ca.) I want to thank you now for your reply First and foremost, you encouraged us to take action-strong and immediate action. a of you encouraged us to use Enron as an opportunity to strengthen the principle-base of the profession. more [i]or[/i] less of you feared the core value of CAs- integrity-was at risk. And still others of you tendered solutions, such as tightening specific sways and mandating maximum terms for auditors.

I'd like to assure you that we are taking action. the couple provincially and nationally, the profession has been working thoughtfully and diligently to address the issues raised by way of Enron, and to ensure that Canadian investors are not at similar risk. We're focusing forward areas critical to public confidence: standards setting, oversight and discipline, auditor independence, quality bridle and more.

Here are just a small in number examples of where we're making progress:

Standard Setting

The Assurance Standards Board moves publishing a new CICA Handbook section entitled "Communications With Those Having Oversight Responsibility for the Financial Reporting Process" This recent standard will replace guideline AuG-11 and will require auditors to disclose to the audit committee the total give a fee tos they receive for nonaudit services. In January 2002 the Assurance Standards Board also approved a revised CICA Handbook section that deals with the auditor's responsibility to consider fraud and error in an audit of financial statements.

Oversight

On February 22 a subcommittee of the independent Accounting Standards Oversight Council (AcSOC) was formed, chaired at Thomas Allen, QC, of the firm Ogilvy Renault, and vice-chaired at the Honourable Michael Kirby. Other participants include the Superintendent of Financial Institutions, Nick LePan. The sub-committee will help AcSOC review the Accounting Standards Board research into which US accounting standards might have been circumvented in the Enron case, and assess whether Canadian accounting standards could be circumvented in a similar manner.

Discipline

We're fortunate to already have hardy discipline processes in Canada. Unlike the US, we have public oversight in all flats of the discipline and appeal proces Furthermore, we have the ability to initiate and continue our investigations during civil and criminal investigations. the pair provide us with a stronger disciplinary backbone that makes integrity more than a value for CAs in Canada-it makes it a codified practice.

With this in mind, we continue to implore the government to allow the ICABC to discipline firms as well as individual CAs.

Auditor Independence

The Profession's Public Interest and Integrity Committee is commonly developing revised rules of manners for the profession that will address the issue of auditor independence. Greater guidance and specific prohibitions will be provided to render certain that public accounting services for public company audits remain independent of consulting services or other activities that could be seen to affect the independence of auditors.

Quality superintendence

The CICA issued a draft document in December 2001 that will improve Management's Discussion and Analysis (MD&A) in financial reports. These novel guidelines will provide shareholders with a meaningful assessment of a company's performance and futurity prospects. Canada has taken a leadership character in this important area; to date, the US hasn't made it a high priority.

These activities will continue for many month to approach We need to provide audit committees with questions to ask their auditors. We ne to bring corporate governance at the top of the corporate agenda. We ne to talk to business about the value of audits. And we ne to continue with our ongoing improvement of accounting standards in Canada. greatest in quantity importantly, we need to work onward all fronts to ensure that CA integrity is upheld. There's frequently to be done, and we'll continue to hold you informed.

You may have noticed a modern article by David Baines in the February 4 2002 issue of Canadian Business, entitled "Justice neither seen nor heard." In the article, available at www.canadianbusiness.com/index.asp, (keyword: Baines), Baines raises issues about the transparency of our discipline proces We'll provide a answer to the article when the case that sparked the issue is complet Our replication will include a discussion of the confidentiality empires that support our discipline proces