Prior To Becoming Publicly Traded…Choose Your Auditor Wisely!

By David Danziger, MNP LLP and Jeffrey Stanger, ITB Solutions

For companies in Canada that are considering the transition from private to publicly traded status in the near or medium term future, it is important to think about your audit requirements – not only going forward, but right now.

What is a CPAB Registered Auditor?

The Canadian Public Accountability Board (“CPAB”) was incorporated in 2003 under the Canada Corporation Act. Its mission is:

To contribute to public confidence in the integrity of financial reporting of reporting issuers in Canada by effective regulation and promoting quality, independent auditing.

CPAB is a regulating body in Canada which has oversight responsibility for its participating audit firms. CPAB registration is a requirement for audit firms whose clients include public companies in Canada – otherwise known as “reporting issuers”.

Regular inspections by CPAB officials are conducted on the participating firms.  Those audit firms with 100 or more public company clients are inspected annually.  Those with more than 50 are inspected at least once every two years, and those firms with fewer than 50 reporting issuers for clients receive inspections from CPAB every three years.

In order to be a publicly traded company in Canada you need to have a CPAB registered audit firm engaged to conduct your company’s annual audits and any other required assurance work in connection with being a reporting issuer.

When should I engage a CPAB auditor?

It’s a good question, and hopefully you are asking it before you are actually public.

Three years of historical audited financial statements are typically required by securities commissions of a company that is going public.  While these audits need not be performed by a CPAB auditor, the next required audit (following a public listing) will only be acceptable if it is performed by a registered firm.  Private companies seeking access to the public capital markets are routinely advised to engage a CPAB auditor to avoid the time and expense of switching once they are public. Often times you may be faced with having to file documents that require the consent of the auditors for a period of years.  It is generally cheaper and simpler to have a minimum number of auditors involved in your future filings.

As well, the markets generally do not like to see changes in audit firms so arranging for your CPAB registered auditor early can be a desirable action.  CPAB registered auditors tend to be very knowledgeable about the requirements of the various securities commissions and stock exchanges since they deal with them quite regularly.  This generally provides for a smooth process with your listing application, IPO or RTO documents.

What is PCAOB?

If your plans include a US Listing then you should likely consider engaging a firm that is also similarly recognized in the United States by the Public Company Accounting Oversight Board (“PCAOB”).

Serving a very similar function to Canada’s CPAB, the PCAOB is a nonprofit corporation established by Congress to oversee the audits of public companies in order to protect investors and the public interest by promoting informative, accurate, and independent audit reports.  The PCAOB also oversees the audits of broker-dealers, including compliance reports filed pursuant to federal securities laws, to promote investor protection.

While many private companies very typically employ non-CPAB/PCAOB auditors, those companies with the longer view and foresight to see that they may well one day wish to access the public capital markets and become publicly traded in Canada, and/or potentially the United States, do well to hire auditors with the requisite registration – on both sides of the border – well ahead of time.

Having a CPAB and PCAOB auditing team in place well ahead of time can make sound business sense, and save your company a lot of time, expense, and shareholder concern at a critical time for the Company’s public confidence.

The Take Away

In short, if you own or are managing a private company that is currently harboring the intention of accessing the Canadian capital markets and becoming publicly traded in Canada, one of the best steps you can take is to source out a CPAB and sometimes a PCAOB registered audit firm.  The best ones will not only take care of your corporate regulatory compliance and financial accounting requirements, but will provide invaluable advice to you on an ongoing basis regarding your compliance needs as well as your mandated corporate governance requirements.


Since 1945, MNP LLP has provided audit, accounting, tax planning and management solutions for Canadian and international clients, and those clients have been as diverse as business itself. We’ve served the needs of companies large and small, public and private, at home and abroad, during all phases from start-up to maturity, through IPO and beyond.

MNP LLP is a Registrant of:

(Canada) Canadian Public Accountability Board (CPAB)
(USA) Public Company Accounting Oversight Board (PCAOB)

MNP LLP is licensed to audit reporting issuers on any stock exchange in North America.

David Danziger is a National Head of Public Company Accounting at MNP LLP. He serves in both the audit function and as a compliance adviser to various public companies, and private firms looking to become public. You can find David as well as more information on MNP LLP at MNP LLP – David Danziger.

Since 2005 ITB Solutions has provided listings development services to stock Exchanges in Canada such as the Canadian Securities Exchange. ITB Solutions currently provides New Listing Services to the NEO Exchange. We assist companies with the listing application and managing the process to become publicly tradable in Canada, as well as offering advice on how to make the most of your public listing. You can reach Jeffrey Stanger at 647-500-0492 or by email at