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external confirmations. Where auditors delegated work to component or affili- ated firms in China, CPAB and the OSC are hamstrung by privacy rules that pre- vent working papers from leaving China. Six of CPAB' incomplete by their inability to access documents. Brian Hunt, CPAB' s 24 reviews were rendered disappointed at the findings, which he put down in part to growing pains as emerg- ing market companies are increasingly targeted by Canadian stock exchanges for listing. "This is a wake-up call. I think people s CEO, says he was were naively thinking they could go to China, with a team of Canadians who spoke the language, do the audit, and be very successful, they've realized you also need to under- stand the business practices in those countries and the legal structures. You can't just take audit procedures that are done in Canada and apply them there. It' " Hunt says. "I think business practices or legal structures are right or wrong, it' required remediation, and one audit firm saw its ability to operate in Chinese restricted following disciplinary action arising from the review. Further reviews are planned of issuer audits in other emerging markets. "If we find that firms are continuing in Half of the files CPAB reviewed " their own ways and they're not address- ing these issues, we'll take the appropriate action," Hunt says. Wilkin says he advises compa- nies thinking about going public to get Canadian auditors involved early and to minimize the amount of delegation to local auditors. "We are helping the issuer set up them and adjusting your audit practices accordingly. s not about whether those differences in s just about recognizing Absolute professionalism and respect for you and your client relationships, and the tenacity required to go the distance in pursuit of the best possible outcome. For proven experience in class actions, count on Lerners. Absolute professionalism and respect for you and your client relationships, and the tenacity required to go the distance in pursuit of the best possible outcome. For proven experience in class actions, count on Lerners. Contact our London or Toronto office today and turn our experience to your advantage its internal processes in anticipation of going under the scrutiny, so we've got the Canadian auditors at the centre of the process, whereas they may have been dropped in at a much later stage in the past," he says. Underwriters also came under fire in the OSC report, which noted that there are no standard requirements for due diligence conducted by them. As a result, Contact our London or Toronto office today and turn our experience to your advantage there were wide variations in the thor- oughness of the process. The OSC docu- mented abandoned site visits, unusual growth results that went unquestioned, and little discussion of the risks associated with an issuer' worked with the Hong Kong Securities and Futures Commission, and says he was struck by the contrast between under- writer practices there and in Canada. "The underwriters in Hong Kong have s operations. Pascutto once a full staff in China who are experts in the financial markets there and taking companies public. Canadian underwrit- ers don't have that kind of infrastructure, he says. "In fact, a lot of them have been underwriting Chinese companies without having any staff that even speak Chinese or know China. It' " David Thomas said the organization was working with the OSC to address the In a statement, IIROC spokesman s unbelievable." London: 519 672 4510 Toronto: 416 867 3076 www.lerners.ca INHOUSE WWW.CANADIANLAWYERMAG.COM/INHOUSE AUGUST/SEPTEMBER 2012 • erners_IH_June_12.indd 1 29 12-05-02 9:14 AM

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