March 2020 - PP News & Views
- New Compilation Engagements Standard Issued
- Client Briefing Available for CAS 540
- Exposure Draft for NPO Combinations Released
- Watch Accounting Standards Update Webinar
- Resources Addressing Crypto-assets
- Consumer Taxation Branch Information Update
The new Canadian Standard on Related Services (CSRS) 4200, Compilation Engagements was issued into the CPA Canada Handbook in February 2020. CSRS 4200 is effective for compiled financial information for periods ending on or after December 14, 2021. Earlier application is permitted but not required.
Practitioners who perform compilation engagements are encouraged to familiarize themselves with the new standard including the Basis for Conclusions as the final standard has changed from the exposure draft. You can find resources, including a video, to help you learn more about the new standards on the FRAS Canada website.
CPA Canada resources
In addition, CPA Canada has published several new resources on its dedicated New Compilation Standard: Guidance Resources page. They include:
- Practitioner Alert for practitioners to learn about the new standard and its effects on practice;
- Management Briefing to facilitate discussions between management and practitioners; and
- Third Party Briefing to support discussions between management, third parties, and practitioners.
Read the March/April 2020 issue of CPABC in Focus magazine for more details on the new CSRS 4200. We’ll publish in this column and the Public Practice News & Views Knowledge Base additional information or resources related to the new standard as they become available.
Furthermore, the CPABC PD department will soon offer two new seminars:
- Compilation Engagements: Overview of the New Standard (CSRS 4200) – a half-day in-person seminar, available starting May 2020; and
- Compilation Engagements: Application of CSRS 4200 offered in the Fall 2020 PD program.
We urge practitioners to plan now for a smooth implementation of the new compilation engagement standards.
Auditors should be aware that revised CAS 540 Auditing Accounting Estimates is effective for audits of financial statements for periods beginning on or after December 15, 2019. To help your clients better understand the auditing process under the revised standard, CPA Canada has developed Audit Client Briefing: Revised CAS 540, Auditing Estimates.
This briefing can be shared with your audit clients to help explain the requirements of revised CAS 540. It will also make management aware of matters to consider in preparing for and responding to the significant revisions in, and the auditor's requests pertaining to, CAS 540.
Practitioners will receive an overview of:
- management's responsibilities in determining when accounting estimates are needed;
- management's responsibilities regarding the main components of an estimate process; and
- the impact on management because of changes to the auditor's responsibilities, including broad questions auditors are likely to ask those involved in the detailed aspects of the estimation process.
Clients will learn about:
- specific considerations in controlling their process for deriving accounting estimates and related disclosures;
- considerations in documenting significant aspects of their process; and
- understanding simple versus complex estimates.
Practitioners serving the not-for-profit sector know that Part III of the CPA Canada Handbook does not provide any guidance for combination. This void has led to diversity in practice, including the use of different frameworks to account for transactions with similar characteristics. As a result, the Accounting Standard Board is proposing to introduce a new standard to account for combination of two or more not-for-profit organizations.
We encourage members working in this sector to review NPO Combinations – Initial Measurement and Related Disclosures exposure draft and submit comments by April 14, 2020.
Practitioners wanting to learn about current and future changes to Parts II and III of the CPA Canada Handbook – Accounting can watch this Domestic Accounting Standards Update webinar from the Accounting Standards Board.
Practitioners with clients holding crypto-assets might be interested to learn that both CPA Canada and the Canada Revenue Agency have developed resources on the topic.
CPA Canada has published Relevance and reliability of information from a blockchain for auditors to learn about factors concerning the relevance and reliability of information obtained from a public blockchain to be used as audit evidence. A second publication, Are tests of controls needed regarding the ownership assertion? discusses factors an auditor may consider when determining how to obtain sufficient appropriate audit evidence to support the ownership assertion for financial statements that contain material crypto-asset balances.
Now available on the CRA’s website is guidance on applying tax rules to cryptocurrencies, including a guide for cryptocurrency users and tax professionals.
Did you know that the Consumer Taxation Branch posts updates to sales tax information on the What's New in B.C. Sales Taxes page on the provincial government website?
The latest update advises that B.C.'s Tax Interpretation Manual (TIM) is now available online. The TIM describes how the Ministry of Finance interprets the provisions of the consumption taxation statutes in B.C. Tax interpretation information is available for:
- Provincial Sales Tax Act;
- Carbon Tax Act;
- Motor Fuel Tax Act;
- Tobacco Tax Act; and
- Consumption Tax Rebate & Transition Act.