Auditing and Assurance Standards Update

By CPABC; published in CPABC in Focus
Published: January/February 2016

On November 13, 2015, more than 200 members attended a complimentary PD session on assurance and auditing standards at the Vancouver Convention Centre. Session presenters Eric Turner, CPA, CA, and Jacqui Kuypers, CPA, CA, both with the Auditing and Assurance Standards Board (AASB), updated members about a number of recently issued and/or approved standards. Following the free PD session, CPABC hosted a roundtable discussion between interested members and AASB staff during which several major AASB projects were discussed.

Some highlights from the day are provided here.

Recently issued and/or approved standards

CSRS 4460

Issued in June 2014, this approved standard deals with engagements wherein a practitioner is asked to report on supplementary matters outside of the audit or review of the historical financial statements that have come to their attention. The report is typically issued to a third party, such as a regulator or funder. CSRS 4460 will be in effect for reports dated on or after April 1, 2016, although early adoption will be possible.

AASB/CBA joint policy statement

In October 2015, the AASB approved an updated AASB/CBA joint policy statement that provides guidance on the communication between an auditor, a law firm, and management regarding claims and possible claims in connection with the presentation and audit of financial statements. At the time of this writing, approval is pending from the Canadian Bar Association (CBA).

This joint policy will apply to any inquiry letters dated on or after December 1, 2016, and is expected to be included in the April 2016 CPA Handbook update.

Projects in progress (subject to final approval by the AASB)

Auditor reporting

The AASB intends to adopt the international standard on auditing (ISA) pertaining to auditor reporting as a Canadian auditing standard (CAS), with limited amendments. The international standard, which was issued in January 2015, is intended to provide financial statement users with more relevant information while also enhancing the transparency of the audit process. The proposed Canadian standard will be of interest to many financial statement preparers and users, as well as to auditors and those charged with governance.

Under the proposed Canadian auditing standard, the current Auditor’s Report will be changed dramatically in the following ways:

  • The audit opinion will be presented first;
  • A new section will be required for listed entities that discusses key audit matters (defined as matters of most significance in the audit);
  • There will be an additional focus on the going concern of the entity;
  • A new section will be added for “Other Information” (more on this below); and
  • Commentary on auditor responsibilities for the audit will be expanded to include an explicit statement about independence and ethical requirements, and the engagement partner’s name (for audits of listed entities).

The AASB has issued an invitation to comment (ITC) to seek input on the challenges that may affect the implementation of this standard in Canada. The AASB is particularly interested in the proposed effective date for the CAS and the proposed staged implementation approach for TSX and non-TSX listed entities. Comments on the ITC are requested by February 5, 2016.

Reporting on other information

The AASB is seeking stakeholders’ views on its proposed amendments for CAS 720 – Reporting on Other Information, and thoughts on how certain aspects of the reporting requirements in ISA 720 should be dealt with in the Canadian environment.

The proposed amendments to CAS 720 would enhance the work effort on “Other Information,” such as the annual report and management discussion and analysis. An exposure draft has been issued, and comments are requested by February 12, 2016.

Reporting on compliance with agreements, statutes, and regulations

The AASB has issued an exposure draft that proposes a new Canadian standard on assurance engagements, CSAE 3530, which would replace existing standards dealing with audits and reviews of compliance with agreements, statutes, and regulations. The comment period has closed for this exposure draft, but stay tuned for further developments.

Review engagements

It’s expected that there will be a new Canadian standard on review engagements (CSRE 2400) coming for periods ending on or after December 14, 2017. The proposed new standard will affect the nature and extent of review engagement procedures and the form and content of the practitioner’s report; it will also provide a set of comprehensive review engagement guidelines that “stand alone” (i.e., the standard is intended to contain complete guidance so that users will not need to refer to other standards in the CPA Handbook for guidance). The AASB is deliberating comments received on its re-exposure draft. 

What to watch for in the future

Also discussed during the roundtable was the AASB’s draft strategic plan, which will guide its operations and activities from 2016 to 2021. The AASB plans to continue focusing on ensuring that high-quality standards and implementation material meet the needs of Canadian stakeholders, while also maintaining Canada’s standard-setting capability. To that end, the AASB intends to achieve a high level of engagement with stakeholders to support the development of standards and guidance. The AASB is seeking comments about its strategic plan by February 19, 2016.

How you can contribute to the standard-setting process

Make your voice heard by providing input to the AASB on the various major projects currently in the exposure draft and ITC stages. You can do so by visiting Financial Reporting and Assurance Standards Canada’s website at frascanada.ca and looking up active projects in assurance and related services.

You can also participate at future events. To receive invitations to future roundtable meetings, please join one of our CPABC member forums. These forums bring members with common interests and areas of practice together to discuss topical issues.
More information about member forums can be found at bccpa.ca/members/connect/member-forums.

Get more info
Alerts, guidance materials, and much more about these and other standards are available for download using the following links: