Licensed public accountant (LPA)

If a lender or buyer asks for financial statements that carry an audit or review report, who may do that work in Ontario is set by statute. When a seller offers such statements, ask what licence the accountant holds and in which province.

What the Ontario Act says

The Public Accounting Act, 2004 defines the practice of public accounting, subject to prescribed limits, as providing independently of the person served either assurance engagements, including an audit or a review engagement, or compilation services, where it can reasonably be expected that the work will be relied upon or used by a third party. A compilation with the prescribed notice is not public accounting under section 2(3). A person engaged in the practice must be licensed (an individual) or hold a certificate of authorization (a professional corporation), subject to the exceptions in section 3. To be eligible for a licence, a person must be a member of CPA Ontario, whose objects under the CPA Ontario Act, 2017 include licensing its members as public accountants.

What to ask

• Whether the accountant is licensed in Ontario and whether the firm holds a certificate of authorization.
• Which engagement was done: audit, review or compilation. See compilation, review and audit engagements.
• If the company is outside Ontario, which body licenses accountants where it is.

For how an audit differs from a buyer’s own financial review, see quality of earnings vs audit. This entry covers Ontario only; check the rules where you are.