Canada's new audit watchdog said Wednesday a survey the country's four top accounting firms found no evidence of systemic problems with the quality of external audits, but also suggested “scope for further improvement” remains.

The Canadian Public Accountability Board — which reviewed the work of Deloitte & Touche LLP, Ernst & Young LLP, KPMG LLP and PricewaterhouseCoopers LLP — also made a number of recommendations aimed at helping the firms improve the quality of future work.

The CPAB's recommendations cover topics ranging from independence and ethics to human resources polices, monitoring of quality control, and how firms monitor and manage higher risk clients.

For example, the report noted each of the four firms has extensive independence policies and procedures that have been updated to reflect recent changes in the profession's standards.

“We have recommended some further enhancements or clarification to certain firms' policies — for example, the requirement to document on every audit any threats to independence and the safeguards employed to reduce such threats to an acceptable level,” the report said.

As well, the report recommended that the firms make available to partners and staff a list of clients with whom audit independence must be maintained.

“Such lists are an important safeguard against inadvertent independence violations arising from either investments or the provision of certain non-audit services,” the report said.

Some firms, the report added, have yet to adopt a “code of conduct” that partners and staff need to sign annually. Similarly, some have yet to establish a formal “whistleblower” policy that would let employees report what they feel is unethical conduct or poor professional judgment without fear of reprisal.