NLIS 6
February 7, 2003
(Government Services and Lands)

 


Minister responds to comments regarding accounting regulations consultation

Walter Noel, Minister of Government Services and Lands, said opposition leader Danny Williams apparently does not understand a consultation process. "While we welcome his comments on changes being considered for accounting regulations, his suggestions that we are going overboard and have not done our homework are ludicrous. Our Discussion Paper on Public Accounting is clearly identified as designed to focus discussion. We have been meeting with and hearing from many stakeholders, including senior representatives of the accounting profession, provincially and nationally. We intend to do what is in the public�s best interest."

The Public Accountancy Licensing Board, and some of the professional accounting bodies, have asked government to make certain amendments to accounting legislation. These include the ability for public accountants to practice as corporations and limited liability partnerships, and to require all individuals who perform review engagements to be licensed by the Licensing Board.

Minister Noel said, in preparing legislation, government has a duty to protect the public at large, and cannot focus solely on the desires of the accounting profession. There has been considerable public debate about auditing due to massive losses of employees and investors in publicly traded companies in the United States. This has been partially attributable to the practices of accounting firms. In Canada, the Canadian Public Accountability Board (CPAB) has been established to develop rules to help prevent such occurrences in this country. Many of the proposed rules of CPAB are clearly applicable only to large corporations. However, some of the proposals are based on principles that may apply to the auditing of all firms, regardless of size.

One of these principles is the principle of independence of the external auditor. The proposals to prohibit the external auditor from performing such services as internal audits, information technology system design, valuation services, actuarial services, and corporate finance services, and to limit the period of appointment of external auditors to seven years are intended to preserve the independence of the external auditor. After all, independence is a foundation of an external audit.

"We therefore included proposals in our discussion paper with respect to auditor independence," said Minister Noel. "We want input from a broad section of society including accountants, the business community, the financial services community, all readers of financial statements and the general public with respect to these proposals.

"While not being specific, it appears Mr. Williams agrees with the proposal to require all accountants performing review engagements to be licensed. We have received comments from some that this will create significant costs for small businesses, particularly in rural areas of the province. This is the same argument Mr. Williams uses against the proposals to ensure auditor independence.

"We are currently reviewing responses to our proposals and I expect to make my recommendations to government known in the near future. I will only recommend what makes sense and has broad support."

Media contact: Sam Whiffen, Communications, (709) 729-4860.

2003 02 07                                         5:25 p.m.


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