US audit watchdog finds multiple deficiencies in Vancouver accounting firm Smythe LLP audits

Download the Smythe LLP 2024 inspection report from the PCAOB.

TORONTO, May 17, 2025 – The Public Company Accounting Oversight Board in the United States found multiple deficiencies in three audits conducted by Vancouver accounting firm Smythe LLP in 2023. As detailed in its recently released inspection report, the PCAOB examined three audits in which the firm was the principal auditor, and found deficiencies in all three audits, as well as issues of non-compliance with the audit watchdog’s rules.

The US audit watchdog therefore determined, during its 2024 inspection, that Smythe had a 100 per cent deficiency rate for the three audits combined.

According to its report, the PCAOB reviewed areas of revenue and related accountants in all three audits, among other areas, and found deficiencies in all three audits. The PCAOB also found Smythe non-compliant with rules related to communications with issuer audit committees and reporting.

Finally, while the firm did not self-report any issues related to maintaining independence, the PCAOB found that Smythe’s agreement with an audit client to indemnify its auditor with respect to certain liabilities was inconsistent with its general standard.

Accounting firm in “full support” of PCAOB inspection report

According to information posted by the Canadian Public Accountability Board, Smythe has four offices in British Columbia, but its Vancouver office handles all reporting issuer audit clients. While the PCAOB inspection report does not reveal the names of the issuer clients it inspected, CPAB information reveals that the accounting firm’s clients are typically resource and technology companies listed on the TSX Venture Exchange.

Smythe was the subject of regulatory enforcement actions on both sides of the border in 2023. As reported by Canadian Accountant, Smythe, under new disclosure rules for enforcement transparency, became the first firm to be publicly censured by the Canadian Public Accountability Board. Later that year, the PCAOB also censured Smythe and imposed a six-figure fine on the firm, for violations of audit quality standards.

According to CPAB, Smythe continues to be prohibited from accepting any new reporting issuers, an action that was first imposed in 2023, continued in 2024, and is currently in effect.

In its reponse to the PCAOB, the firm stated: “Smythe LLP is committed to performing high quality audits and is in full support of the PCAOB’s inspection process. We have carefully reviewed and considered the matters brought to our attention in the Draft Report and are taking appropriate actions to enhance our policies and procedures to improve our audit methodologies and quality control processes.”

As reported by Canadian Accountant, the PCAOB is currently attack from the Trump Administration in the United States, which intends to dissolve the regulator and move its functions within a pared-down US Securities and Exchange Commission. PCAOB audit enforcement hit a record high in 2024 in terms of monetary penalties and enforcement actions against US firms.

Canadian accounting firms, however, were the top non-US target of the PCAOB, in terms of both inspection reports (eight) and enforcement actions (three, tied with Mexico).

Colin Ellis is a contributing editor to Canadian Accountant.