42 Auditing standards The external auditor is a particularly important hire for international companies. Having put the effort into making sure your financial statements are appropriately prepared, you’ll want to take the same care in choosing an auditor who adheres to auditing standards acceptable to Canadian authorities and the Exchanges. The acceptable standards are: • Generally Accepted Auditing Standards (GAAS); • U.S. GAAS; • Standards that meet the foreign disclosure requirements of your home jurisdiction, if your company is a Designated Foreign Issuer; or • Standards that are substantially equivalent to International Standard on Auditing. Auditing standards permitted for foreign issuers FOREIGN ISSUERS ACCOUNTING PRINCIPLES SEC foreign issuers Designated foreign issuers Other foreign issuers Canadian GAAS (ISA) • • • U.S. GAAS • • • International standards on auditing • • • Auditing standards accepted in the designated jurisdiction • Source: National Instrument 52-107: Companion Policy and and National Instrument 71-102: Continuous Disclosure and Other Exemptions Relating to Foreign Issuer Responsibilities of the auditor You’ll need to make sure that the auditor you choose is expert in both the GAAP used to prepare your financial statements and the GAAS used to conduct the audit. Like the CFO, the auditor (and the auditor’s partners and/or senior staff) should speak the local languages and understand the local business environment where most of the business is carried out. The auditor’s partners and senior staff should supervise the field work directly. Employing agents to complete audit procedures will only be acceptable in cases where there is a significant international affiliation with robust global audit methodologies, and the signing audit firm retains significant review and oversight in the field.
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