KPMG Auditor Fined for Misconduct in Laurentian Pre-Insolvency Audit

The Chartered Professional Accountants of Ontario (CPA Ontario) has imposed a fine on Laurie Bissonette, a former auditor from KPMG, for professional misconduct associated with the audit of Laurentian University. This audit preceded the university’s unexpected insolvency declaration in February 2021, a crisis that resulted in the termination of 195 staff members and the closure of numerous academic programs.

KPMG Auditor Fined for Misconduct in Laurentian Pre-Insolvency Audit

Bissonette admitted to failing to uphold professional standards during her involvement in the 2020 audit of Laurentian University, which concluded in April of that year. Consequently, she has been fined $50,000 and is responsible for two-thirds of the investigation costs. Furthermore, Bissonette lost her status with CPA Ontario as she had retired in September 2020.

Background of the Audit

The audit period under scrutiny spanned from March to September 2020. During this time, Bissonette was tasked with overseeing the audit planning and implementation, managing the audit team, and evaluating high-risk aspects of the financial file. CPA Ontario’s Professional Conduct Committee (PCC) alleged that she did not adequately evaluate management’s assessment of Laurentian’s financial viability, commonly referred to as “going concern.”

• Financial Viability: Bissonette failed to document crucial discussions regarding the university’s capability to sustain operations.
• Management Assessments: Although she requested evaluations, none were prepared by management.
• Excessive Dependence: Bissonette relied heavily on the management’s cash flow forecasts without sufficient verification.

Key Incidents During the Audit

In June 2020, Bissonette was informed via text that Laurentian was engaging TGF, a Toronto law firm specialized in insolvency matters. However, she did not inquire about the nature of this engagement, which could have been critical information. On August 24, she was asked to present at a special finance committee meeting, unaware that discussions regarding creditor protection were taking place in an in-camera session. She only learned of Laurentian’s intention to file for creditor protection on February 1, 2021, when the announcement was made public.

Aftermath of the Investigation

The findings by the CPA Ontario were echoed in a November 2022 report by Ontario’s Auditor General, Bonnie Lysyk. This report indicated that Laurentian’s administration had strategically planned to file for creditor protection under the Companies’ Creditors Arrangement Act (CCAA) but had failed to communicate their plans to KPMG.

• Impact of Insolvency: Laurentian University emerged from creditor protection in November 2022 but is still dealing with the consequences, including the sale of key campus buildings.
• Legislative Changes: In June 2024, legislation was updated to prevent public post-secondary institutions from using CCAA to address financial crises.

Tom Fenske, president of Laurentian University’s Student Union (LUSU), noted that the findings of Bissonette’s investigation were consistent with previous reports and highlighted the necessity for accountability in the financial auditing process. The CPA Ontario aims to send a clear message through this case, emphasizing the importance of maintaining ethical standards in the profession.