CPA Ontario provides recommendations in 2025 quality management report for accounting firms

TORONTO, July 20, 2025 – Accounting firms need to do a better job of documentation, archiving and lock-down of files, according to a new report by Chartered Professional Accountants of Ontario. CPA Ontario recently released its quality management report for the current year, Upholding High Standards to Protect the Public, which includes key takeaways for chartered professional accountants and accounting firms. 

CPA Ontario’s Enhanced Quality Management Review (EQMR) program focuses on audit, review and compilation engagements, as well as other related services and assesses firm’s systems of quality management, including how policies, procedures, and controls are designed, implemented, and operated. 

The EQMR program was rolled out to three firms in 2023, the results of which were included in the CPA Ontario Regulatory Report 2024, following the introduction of the Canadian Standards on Quality Management (CSQMs), which marked a significant change for firms. Rather than a quality control model under the old standard, the new standard required firms to design policies and procedures for managing quality that were unique to their own firm, and unique to the risk profile of the work that they perform. 

2025 Report Findings

In 2023 and 2024, twelve firms that audit reporting issuers were subject to the EQMR. All twelve firms were issued a report that included recommended actions regardless of the outcome of their review. Ten of the twelve firms had findings that did not pose a material risk to the public. One firm inspected in 2023 had a “significant number of deficiencies” that were subsequently addressed. A second firm was referred to CPA Ontario’s professional conduct committee and is currently under review. 

Some broad-based themes identified for all twelve firms include the need to improve documentation of partner evaluation and compensation models to demonstrate a clear link to quality; the need to enhance documentation of procedures, professional judgment and conclusions reached in engagements performed; and the need for consistent archiving and lock-down of engagement files in a timely manner. 

Some of the recommended actions include:

• Governance and Leadership: Document the determination of Partner compensation to demonstrate a clear link to quality indicators such as monitoring results, inspection results and instances of restatements.
• Relevant Ethical Requirements: Carefully document whistleblower policies to detail the adequate protections provided to whistleblowers, with specific messaging and training for staff to reinforce reporting obligations.
• Engagement Performance: Enhance guidance materials and training for engagement teams and reassess engagement budgets to ensure there is sufficient time to prepare required documentation.
• Resources: Implement a policy requiring all Partners and staff to attend CPD in relevant accounting and assurance frameworks as a prerequisite to being assigned to engagements reporting under those frameworks.
• Monitoring and Remediation: Perform a thorough assessment of the experience and technical skills of the individuals performing the monitoring activities, such as mapping to the nature of the firm’s practice. 

“The responsibility of maintaining quality rests with every firm, and with every CPA,” explains Janet Gillies, executive vice-president, regulatory and standards. “The recommendations in this report are not just applicable to firms that have been subject to our quality management review. The insights from this review can be applied broadly across the profession to every engagement where the Canadian Standards on Quality Management apply.” 

Colin Ellis is a contributing editor to Canadian Accountant.