Have your say: Independence Standing Committee (ISC) Exposure Draft

Share your views with the CPA profession’s Public Trust Committee (PTC) on the ISC’s Exposure Draft, “Proposed Revisions Relating to Definitions of Public Interest Entity and Listed Entity in Canadian Independence Standards”. Read more about the proposed revisions to the harmonized Canadian Independence Standards (Rule 204) and have your say! 

Exposure Draft Overview

The ISC is recommending defining a public interest entity (PIE) for the purpose of the harmonized Canadian Independence Standards (Rule 204), to align with the definition in International Independence Standards in the International Ethics Standards Board for Accountants (IESBA) Code, and to ensure that the scope of the additional independence requirements or “prohibitions” in Rule 204 is appropriate. More specifically, the ISC’s proposals are to:

• Establish the definition of a PIE to meet Canadian stakeholders’ heightened expectations regarding auditor independence because of the significance of the public interest in the financial condition in certain types of entities, including:
  
  • A reporting issuer, other than an entity that has, in respect of a particular fiscal year, market capitalization and total assets that are each less than $10,000,000 
  • An entity one of whose main functions is to take deposits and that is subject to either:
    
    • regulation under the federal Bank Act, Trust and Loan Companies Act or Cooperative Credit Associations Act; or
    • provincial regulation as a credit union or caisse populaire, other than an entity that has, in respect of a particular fiscal year, less than $500 million in total assets
  • An entity one of whose main functions is to provide insurance that is either a:
    
    • federally incorporated insurance company, regulated under the Insurance Act; or
    • provincially incorporated insurance company, other than an entity that has, in respect of a particular fiscal year, less than $500 million in total insurance revenue.  
  • An entity that is a provincially regulated pension plan or pension fund, other than an entity that, in respect of a particular fiscal year, has less than $500 million in plan assets
  • An investment dealer that is a member of Canadian Investment Regulatory Organization (CIRO) and that is permitted under the rules of CIRO to hold the cash and securities of a client or investment fund   
  • An entity, other than those set forth in Categories A to E above, for which an audit is required by a legislative or regulatory body to be conducted in compliance with the same additional independence requirements that apply to audits of public interest entities  
• Provide guidance for firms to identify additional PIEs if there is evidence of significant public interest in their financial condition
• Remove the definition of a listed entity from the Canadian Independence Standards

The PTC is seeking comments from interested and affected stakeholders on the ISC’s proposed revisions to the Canadian Independence standards by September 30, 2024. Comments will be published on the ISC’s webpage and considered by the ISC and PTC in making final revisions to the harmonized Canadian Independence Standards (Rule 204), for proposed adoption by the provincial bodies in their own codes of ethics for use by all Canadian CPAs.

Read the ISC's current invitations to comment on the IESBA's proposals

The PTC and ISC are inviting feedback from stakeholders on the ISC’s Exposure Draft, Proposed Revisions Relating to Definitions of Public Interest Entity and Listed Entity in Canadian Independence Standards.