KPMG Canada Leads Big Four in Audit Deficiencies, Regulator Finds

Canada's audit regulator found significant problems in one-fifth of KPMG LLP's inspected audit files in 2025, the worst rate among the country's Big Four accounting firms, in a disclosure that marked the first time the Canadian Public Accountability Board published firm-level inspection results.

CPAB, which oversees accounting firms that audit publicly traded companies, identified six significant findings across five of the 24 audit files it reviewed at KPMG, a rate of just over 20 percent. Three of those findings involved audits of revenue and related accounts, with single issues found in business combinations, inventory and a category listed as "other." KPMG's file count was the largest single sample in the review; all four major firms received at least one significant finding.

A significant finding, as defined by CPAB, is identified when an accounting firm falls short of accepted auditing standards for a material part of a company's financial statement. When one is found, the firm must perform additional audit work.

The Big Four average for files with significant findings was 16 percent in 2025, up from 12 percent the prior year but consistent with the 16 percent recorded in 2023. Bloomberg reported that the rate for Big Four network firms other than KPMG ran closer to 13 percent, a figure that diverges slightly from the Financial Post's broader average across all four firms.

The publication of named, firm-level inspection reports represents a significant shift in how Canada regulates its top auditors. Previously, CPAB released aggregate findings without identifying individual firms by name. The change aligns Canada with regulators in the United States, where firm-specific inspection results have long been made public.

CPAB CEO Sonny Randhawa said the new reports "are an important step forward in the organization's commitment to transparency and will provide greater insight into the results of CPAB's regulatory oversight of public accounting firms."

KPMG Canada, described by Canadian Accountant as the second-largest accounting firm by revenue in Canada despite being the smallest of the Big Four globally, has faced regulatory scrutiny before. A 2023 PCAOB inspection found multiple deficiencies across five issuers, with KPMG Canada serving as principal auditor in nine of the ten engagements the U.S. watchdog reviewed. In response to those earlier findings, KPMG stated that "consistently executing high-quality audits is our top priority." Bloomberg reported that KPMG Canada issued an emailed statement in response to the CPAB findings indicating it was making "substantial" changes, though the full text of that statement was not available.

The CPAB inspections are weighted toward higher-risk audit areas and more complex companies, meaning the findings reflect scrutiny of particularly demanding engagements rather than a random cross-section of each firm's work.