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Permit me, if you will, some ancient history. In a past journalistic life, I wrote extensively about Qwest Communications International Inc., one of the secondary accounting scandals of the Enron era. As we learned how the company came to unravel, we discovered a number of things.

One, the company was using a very narrow definition of "materiality," the threshold for disclosure to investors, in failing to describe important revenue-generating transactions. Two, the company's auditor, Arthur Andersen, had made a presentation to the company's board more than a year before Qwest collapsed that described a number of the company's accounting policies as "aggressive" or close to "unacceptable," and that portions of the company's financial statements were "maximum risk." And three, Qwest's chief financial officer had previously been a partner at Coopers & Lybrand with a significant role in three separate audits of companies that went bankrupt or were accused of fraud, including a notorious failed savings and loan.

Why tell you this now? Well, I think that Qwest investors could have learned most, if not all, of these things before roughly $50-billion in market value disappeared had the boilerplate annual auditor's reports found in public companies' financial statements been more thorough and meaningful. And there's an international movement to do exactly that, beefing up those auditor's reports for investors' benefit.

The issue, however, is that Canada is doesn't have a timetable for adopting the international standards. And the problem, as it often is, is the United States.

First, though, the situation: The auditor's report, essentially unchanged for 70 years, basically says the audit firm has found the financial statements fairly represent the financial health of the company. And, in most cases, not much else. That's changing, however: Britain's Financial Reporting Council has, for two years, mandated an auditor's letter that does many more things. Examples: It identifies "key audit matters" – the things of greatest concern to the auditors when performing their duties, and how they responded. It addresses how the audited company defines "materiality." And it requires the disclosure of the name of the audit firm's partner who led the audit of the company's books.

The International Auditing and Assurance Standards Board (IAASB) is following suit with similar rules that will go into effect for fiscal years ending in late December, 2016. And here is where we would normally say that Canadian companies will have to comply, as Canada's Auditing and Assurance Standards Board typically adopts international standards without tinkering.

"With most of [the IAASB's] stuff, it's been an easy thing to do," says Eric Turner, a principal with the Chartered Professional Accountants of Canada. "But this one has really met with a lot of resistance so far. A sort of apathy from investors, saying, 'It'll be boilerplate and add cost but no value.' And management saying it'll soak up a lot of time and result in arguments between auditors and management, and the audit committee will be stuck in the middle, not wanting anything to do with it."

Mr. Turner says the Canadian standards-setting board, at first resistant to the IAASB's plan, has come around, essentially saying, in Mr. Turner's characterization, "Yes, these standards are good standards, we should be adopting them in Canada, we believe they will be of benefit to investors and they will also demonstrate the value of an audit, which we think is important." (AASB chair Cathy MacGregor said in April that it intends to eventually adopt the standards, with limited amendments.) But, alas, the Americans are the thorn. The U.S. accounting governance group, the Public Company Accounting Oversight Board, issued a draft set of rules in August, 2013, just a month after the IAASB. Jack Ciesielski, president of an asset management firm in Baltimore and publisher of the Analyst's Accounting Observer, said in a recent opinion piece "the proposal [to align with IAASB standards] went nowhere. It was greeted with a resounding thud from the U.S. accounting and auditing establishment." The PCAOB is supposed to try again, with a new draft, later this year.

The PCAOB's delay is spilling over into Canada, as our country's standards-setters are waiting to see what the United States does, because of the cross-border ramifications. Says Mr. Turner of CPA Canada: "We could have everyone in the world moving to the international standards, but not the U.S. Because Canada is such a key player in the U.S. market – we have 300 companies listed in both Canada and the U.S. – they're going to be put in a difficult spot if there's a huge divergence in the two models."

To me, it's not that difficult: That spot is in between doing the right thing for investors and the wrong thing. And I can probably rustle up some Qwest investors who would agree with me.

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