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The Profession

The PEG is a continual improvement exercise, expert says

FCPA Stuart Hartley, the longtime author of CPA Canada’s Professional Engagement Guide, reflects on its evolution and value

Colleagues brainstorming in coworking office The PEG provides methodologies and training for smaller firms, to ensure they perform audits that meet professional standards (Getty Images/Morsa Images)

CPA Canada’s Professional Engagement Guide (PEG) is designed to help smaller firms perform assurance and compilation engagements of small- and medium-sized entities.

To learn more about the guide’s value and how it reflects the changes in the profession, we spoke with FCPA Stuart Hartley, the outgoing author who has worked on the PEG with his team since 1991. (A search is currently underway for a new author to help update the guide over the next five years.*)

Over the course of his career, Stuart has spent over 50 years working with large and small auditing firms, various institute committees, charities and the Office of the Auditor General of Canada. Now retiring from his role with the guide, Stuart reflects on how it has evolved, its role in supporting CPAs and what’s in store for PEG in the future.

CPA Canada: How did you become involved with CPA Canada’s Professional Engagement Guide?
Stuart Hartley (SH): In the early 1990s, I was approached by CPA Canada and asked if I would consider working on the Professional Engagement Guide [which at the time was called the Canadian Professional Engagement Manual or CPEM]. It looked like an exciting project and, since I enjoy being involved with standards and developing audit methodologies, it seemed like a natural fit. I happened to be completing a term with the Canadian Auditing Standards Board, so I decided to take on the task of writing PEG.

When I started working on the guide, it was about 50 pages and it primarily consisted of copied sections of the official CPA Handbook, setting out key requirements for audits and reviews. I realized the original concept needed a lot of work to meet the ongoing needs of smaller practitioners serving small- to medium-sized businesses.

CPA Canada: Why is the guide needed?
SH: There are hundreds of very small communities across Canada, many of which have public interest entities such as hospitals, municipal offices and charities that require an audit. While the big four accounting firms do the major audits, many small entities in smaller communities like to use their local firms to perform their audits.

The challenge is that a firm located in a smaller community may only perform a few audits each year. It would not be practical for such a firm to develop their own methodologies and training to conduct so few audits. The PEG publication provides the guidance those firms need to get up to speed quickly and perform audits that meet professional standards and practice inspection requirements.

The PEG includes best practices, forms, letters and methodologies that enable smaller practitioners to get up to speed quickly without incurring enormous costs. While training is not included, training based on PEG is available through CPA chapters at the provincial level or through providers.

The PEG forms are an essential element of the guide, especially for firms that only do a few audits per year. Auditors can take the PEG forms and be comfortable that they have been peer-reviewed to ensure that they meet the requirements of the assurance standards.

We have always seen the guide as a continual improvement exercise. We try hard to improve it each year and listen to feedback from practitioners.

CPA Canada: How has the auditing profession changed?
SH: Much has changed in the last 30 years for professionals in auditing and accounting. With the Enron and WorldCom scandals in 2001 and 2002, fingers were inevitably pointed at the auditing profession. In 2002, the profession worldwide made a big step to come together and develop international standards everyone should follow. Before that, each country developed their own standards. Canada signed on to this significant change and, in 2010, a completely revised set of auditing standards were issued for use in Canada.

The new standards resulted in a major increase in requirements for auditors to follow. In fact, the revised standards included over 500 auditor “shall” requirements that every auditor is required to follow, regardless of the size of the entity. These new standards led to significant changes to PEG, the practical guidance being provided, the audit forms to be used, sample letters and other practice aids.

CPA Canada: What challenges do you see for smaller firms in the future?
SH: Automation is leading to significant changes in the industry. Large firms have spent millions of dollars on developing audit tools that small firms simply could not afford. This will be an ongoing issue in the future. The good news is that some commercial firms are now developing automated tools. I expect these tools to be fully available to small practitioners over the next few years.

One of the biggest ongoing challenges for practitioners in serving the public interest as well as their clients is maintaining independence. Auditors tend to work closely with their clients and are tempted to accept what client’s management tells them. They don’t necessarily step back and question whether there is other information that they should be looking at. Auditors should always apply professional skepticism and look for contradictory as well as supporting evidence.


CPA Canada would like to thank Stuart for his work on the PEG for more than 30 years and wish him well in his retirement!

If you have ever wanted to make a lasting impression on the accounting profession, or help your fellow members, this is the perfect opportunity. CPA Canada is searching for the next author(s) to help update the PEG for the next five years and possibly beyond. View our full request for proposal and send in your submissions by October 17, 2022.**

**This article was updated on September 15, 2022 to revise the submission deadline.