Canadian Public Accountability Board eases enforcement action against Smythe LLP

TORONTO, June 1, 2025 – Two years after prohibiting Smythe LLP from accepting new publicly traded audit clients, the Canadian Public Accountability Board is easing its restrictions on the Vancouver-based accounting firm. Instead of prohibiting the firm from accepting new reporting issuers, the Canadian audit watchdog’s restriction has been modified, and the firm is prohibited from accepting new high‐risk reporting issuers, including those resulting from initial public offerings, reverse takeovers or other transactions. 

The move comes two months after the Public Company Accounting Oversight Board — the American equivalent of CPAB — found Smythe LLP had a 100 per cent deficiency rate in three 2023 audits the PCAOB inspected in 2024. The PCAOB, as reported by Canadian Accountant, also found Smythe non-compliant with rules related to communications with issuer audit committees and reporting. 

In view of various factors, according to an enforcement action published by CPAB, “the Firm’s improved inspection results over the previous two inspections (2023 and 2024) and compliance with all previously imposed enforcement actions, CPAB determined it appropriate to modify the practice restriction. 

“CPAB determined that certain requirements should remain in effect, with some modifications, including reperformance of a culture survey, development and implementation of an audit quality action plan and enhanced regulatory monitoring.” 

Earlier this year, CPAB also eased its enforcement action against a Calgary-base firm, PKF Antares Professional Corporation, Chartered Professional Accountants, which is now permitted to accept new medium-risk reporting issuer audit clients, including those resulting from initial public offerings, reverse takeovers, or other transactions. 

Smythe censured on both sides of the border

In 2023, Smythe became the subject of enforcement actions on both sides of the border, when Smythe became the first firm to be publicly censured by CPAB under new disclosure rules for enforcement transparency, and the PCAOB censured Smythe for using unregistered overseas firms. 

The PCAOB enforcement action pointed out that, although Smythe was the principal auditor, a substantial portion of the audit work was conducted by the unregistered firms. According to the PCAOB, Smythe reasoned that its performance of additional audit procedures would serve to “overcome” the substantial role participation of the unregistered firms. 

CPAB remedial actions in effect

In its 2025 enforcement action, CPAB states that “certain requirements should remain in effect, with some modifications, including reperformance of a culture survey, development and implementation of an audit quality action plan and enhanced regulatory monitoring. 

“Each enforcement action shall continue until the Firm has, to CPAB’ssatisfaction, demonstrated sustained improvement in audit quality or until the above noted enforcement actions are otherwise terminated pursuant to an application under Rule 605.” 

Colin Ellis is a contributing editor to Canadian Accountant.