Terms of Reference

(Revised and approved by the Auditing and Assurance Standards Oversight Council on April 9, 2024.)

Introduction

1. These Terms of Reference establish the purpose and authority of the Auditing and Assurance Standards Board (AASB), setting out its mission, objectives, and responsibilities. These Terms lay the foundation for the AASB’s other governing documents:
1. The Statement of Operating Procedures, which describe the procedures that the AASB applies in carrying out its responsibilities; and
2. The Standard-setting Due Process Manual, which sets out the due process the AASB follows in setting standards for quality management, audit, sustainability assurance, other assurance and related services engagements, and Assurance and Related Services Guidelines (Guidelines).

Mission

2. The mission of the AASB is to serve the public interest by setting high-quality standards and supporting their effective application to address the evolving needs of interested and affected parties in Canada and the AASB’s community.

Objectives

3. The AASB has the following objectives:
   1. To establish standards for quality management, audit, sustainability assurance, other assurance, and related services engagements, and Guidelines (referred to as “assurance standards”) that are of high quality and that enable the profession to serve the public interest with due consideration for the relevant changes in the environment and the costs and the benefits to interested and affected parties, including:
      1. users of reports issued by practitioners in accordance with assurance standards, who rely on the assurance provided;
      2. the profession, whose members provide assurance services; and
      3. legislators and regulators, who have recognized the AASB’s assurance standards as the appropriate basis on which assurance services should be provided.
   2. To participate with other standard setters in the development of high-quality, internationally accepted assurance standards.
   3. To support the implementation of assurance standards and the resolution of emerging application issues.

4. In meeting its objectives, the AASB is committed to the following:
   1. Meeting the needs of interested and affected parties for assurance standards.
   2. Providing high-quality assurance standards that promote confidence in information reported on by practitioners.
   3. Respecting and encouraging input from all of interested and affected parties.
   4. Bringing objectivity to the consideration of issues.
   5. Respecting the ability of its interested and affected parties to exercise professional judgment.
   6. Responding to interested and affected parties needs in a timely manner.
   7. Seeking ongoing improvement to the process of standard setting.
   8. Acting as thought leaders on assurance issues.

Responsibilities

5. The AASB has the following responsibilities:
   1. To develop or adopt assurance standards on its own authority, when satisfied as to need, usefulness, and practicality, following a review of principles and practices and a process of consultation with interested and affected parties and debate (“due process”). This includes working to influence the development of assurance standards developed by the International Auditing and Assurance Standards Board (IAASB).
   2. To implement effective working processes for all projects and activities. The AASB may commission task forces, advisory groups, reference groups, standing committees, or other groups (“committees”), as appropriate, to aid in the development of assurance standards.
   3. To undertake research and encourage research by others in support of assurance standards.
   4. To be accountable by responding to interested and affected parties in a timely manner, and facilitating their participation and input into the development of assurance standards.
   5. To continue relationships with other Canadian and national standard setters by engaging on issues regarding the development of assurance standards and other mutual interests.
   6. To account to the Auditing and Assurance Standards Oversight Council  or its successor (the Oversight Council) for the effective and efficient fulfillment of its mission and objectives. The AASB submits plans and performance reports annually to the Oversight Council. The AASB gives due consideration to the input from, and recommendations of, the Oversight Council in carrying out its work.
   7. To advise the Oversight Council as to the human and financial resources needed to accomplish the AASB’s objectives.

Membership

6. The membership of the AASB is, except for temporary vacancies, as follows:
   1. A compensated Chair, appointed on either a full-time or part-time basis.
   2. Between 12 and 16 volunteer members. A Vice-Chair may be appointed from among the volunteer members to assist in carrying out the role of the Chair.
7. The following individuals are not members but have a right to attend and participate in AASB meetings and receive any meeting materials:
   1. The Vice-President, Standards, Financial Reporting & Assurance Standards Canada.
   2. The Director, Auditing and Assurance Standards.

8. Any IAASB member(s) from Canada (if applicable) may be invited to attend meetings where IAASB projects will be discussed. Such individuals may participate in AASB meetings and receive any relevant meeting materials.
9. Any Oversight Council member has the right to attend AASB meetings as an observer and receive any relevant meeting materials .
10. The AASB's members are appointed by the Oversight Council. Members of the AASB are selected and their terms of office set by the Oversight Council to ensure that the AASB has an appropriate balance of competencies and experiences to meet its objectives. The Oversight Council, with the assistance of the AASB, maintains and regularly reviews the competencies and experiences required of AASB members to ensure there is appropriate involvement of interested and affected parties.   
11. The Chair plays a crucial role in the standard-setting process. The Chair takes the lead role in ensuring the performance of the AASB’s responsibilities detailed in paragraph 5. This includes the following:
    1. Presiding over meetings of the AASB and communicating with members between meetings, as necessary, concerning the AASB’s activities.
    2. Presiding over or attending meetings of committees of the AASB, as appropriate.
    3. Attending meetings of the Oversight Council and its committees.
    4. Representing the AASB at meetings of national standard setters.
    5. Acting as Canada's leading spokesperson and contact on assurance standards matters for both the media and the public.
    6. Representing the AASB in meetings of other parties involved or interested in the AASB’s activities.
    7. Making presentations nationally and internationally on assurance matters.

The Chair may delegate these responsibilities to the Vice-Chair, if one has been appointed, or to the Director, Auditing and Assurance Standards, except that the responsibilities in subparagraph (c) may be delegated only with the agreement of the Chair of the Oversight Council.

12. The role of the Vice-Chair, if one has been appointed, is to act on behalf of the Chair in a temporary capacity, at the request of the Chair or in their absence, in:
    1. presiding over meetings of the AASB;
    2. presiding over or attending meetings of committees of the AASB that are normally presided over or attended by the Chair; and
    3. attending meetings of the Oversight Council or any of its committees, with the agreement of the Chair of the Oversight Council.

    The Vice-Chair presides over meetings of the AASB Steering Committee. The Vice-Chair also undertakes such other responsibilities as the Chair may delegate to them from time to time in accordance with paragraph 11. An appointee to the position of Vice-Chair is not thereby designated as a successor to the current Chair.

13. Any member of the AASB who either:
    1. fails to attend more than two meetings of the AASB in succession; or
    2. fails to attend, in any 12-month period, at least 50 per cent of all meetings of the AASB

    in the absence of extenuating circumstances, will cease to be a member of AASB as of the end of the meeting at which they were in default. The Chair makes a recommendation to the Nominating and Governance Committee of the Oversight Council concerning any extenuating circumstances and the Nominating and Governance Committee decides whether the defaulting member may continue as a member. A member is deemed to be absent from a meeting of the AASB unless they are in attendance for substantially all of it.

Reporting to the Oversight Council

14. The AASB reports annually to the Oversight Council on its activities, including its risk management process.
15. Each year, the AASB presents its proposed agenda and project priorities to the Oversight Council for comments and considers the views and comments of the Oversight Council in determining its priorities and agenda. If, for any reason, the AASB does not wish to incorporate specific views and comments of the Oversight Council into its priorities and agenda, the AASB advises the Oversight Council as to its reasons and provides the Oversight Council with an opportunity to respond. The AASB discusses with the Oversight Council any changes to the annual plan and advises the Oversight Council of significant decisions made in carrying out the plan.  
16. The AASB is accountable to the Oversight Council to demonstrate that it has used the resources allocated to it effectively and efficiently and that it has assessed how well it is meeting its mission.  
17. The AASB submits such reports as may be required by the Oversight Council from time to time, in addition to those otherwise specified in these Terms of Reference.  
18. The Oversight Council approves the Terms of Reference and Standard-setting Due Process Manual, including any amendments.

Operations

19. The AASB develops a statement which sets out the principal operating procedures it follows in fulfilling its responsibilities, and is referred to as a Statement of Operating Procedures.   
20. The AASB creates committees, including committees of its own members, as it deems necessary in carrying out its responsibilities.

Consultation and Communication

21. The AASB develops and publishes a Standard-Setting Due Process Manual, setting out its due process for the development and adoption of assurance standards, including communication and consultation with its interested and affected parties.   
22. The AASB reports annually to the public on its activities. In addition, the AASB disseminates information about standard-setting activities, together with invitations to interested and affected parties to provide input on those activities.    
23. The AASB supports the development of guidance to assist stakeholders in understanding and applying standards consistently.

Periodic Review

24. The AASB reviews its Terms of Reference, Statement of Operating Procedures, and Standard-setting Due Process Manual at least once every three years to ensure that they continue to be fit for purpose.