US audit watchdog reports deficiencies in 2024 audit by Baker Tilly WM LLP

Download the Baker Tilly WM LLP 2024 inspection report from the PCAOB.

TORONTO, June 8, 2025 – In it latest Canadian inspection report, released this past week, the Public Company Accounting Board found deficiencies in an audit conducted last year by Baker Tilly WM LLP. The PCAOB also found issues related to non-compliace with independence rules and standards in its 2024 audit inspection of the Vanouver-based accounting firm.

This is the first time on record that the US audit watchdog has inspected Baker Tilly WM. The PCAOB reviewed one audit, conducted in 2024, during which Baker Tilly WM was the principal auditor, and had one engagement partner working on the audit. The audit was related to an unnamed public company (“Issuer A”) in the communications services sector.

PCAOB focus on independence flags issues

According to its inspection report, the PCAOB focused on two audit areas: revenue and related accounts, and goodwill and intangible assets. While the audit did not have an incorrect opinion on the financial statements or internal controls, the PCAOB found multiple defiencies related to the engagement of a specialist to perform a quantitiative assessment of the impairment of goodwill.

The firm did not perform procedures to address the appropriateness, relevance and reliability of “certain significant assumptions” developed and used by management’s expert in the QA. The firm also did not have an “appropriate rationale for limiting its testing of entries it identified as having certain fraud risk characteristics to certain entries.”

In this instance, Baker Tilly WM was non-compliant with PCAOB standards or rules, specifically CAS 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements.

In 2023, the US audit watchdog introduced a new development in its inspection reports, in which it asked firms to voluntarily identify areas in which independence may have been compromised. While Baker Tilly WM did not bring to the attention of the PCAOB any potential issues related to independence, regulator noted that the firm could not provide “persuasive evidence of the necessary audit committee pre-approval” of the engagement.

The PCAOB also noted that the firm’s client appeared to have indemnified the auditor with respect to certain liabilities, which the US audit watchdog says is “inconsistent” with its general standard of independence.

Baker Tilly WM acknowledges useful observations of PCAOB

As reported by Canadian Accountant in 2021, Baker Tilly WM LLP is the result of a merger between Wolrige Mahon, Collins Barrow Vancouver and CW Group. In an “historic shift,” the former Collins Barrow rebranded as Baker Tilly Canada, in 2019: “The largest group of independent accounting firms in Canada has bid farewell to an historic name and embraced a new stage in its brand evolution as Baker Tilly Canada.”

The firm had an excellent year in 2020: “With 12 new engagements and no departures, the clear winner in net new engagements” among smaller, regional accounting firms in Canada. “Baker Tilly WM also posted almost $1.4 million in new audit fees, good for sixth place overall among all audit firms.”

In its response to the inspection report, Baker Tilly WM stated that it had “carefull evaluated the inspection findings with reference to the applicable auditing standards and have taken appropriate action consistent with our focus on continual learning anc ompliance with relevant professional standards.”

The firm also stated its commitment to serving the public interest through consistent performance of quality audits, and fully support the intent of the PCAOB inspection process.

Colin Ellis is a contributing editor to Canadian Accountant.