This summary of decisions of the Auditing and Assurance Standards Board (AASB) has been prepared for information purposes only. Decisions reported are tentative and reflect only the current status of discussions on projects and other matters, which might change after further deliberations by the AASB. Decisions to publish exposure draft and Handbook material are final only after a formal voting process.
Canadian Auditing Standards
Fraud
The AASB discussed issues related to the International Auditing and Assurance Standards Board’s (IAASB) proposed revisions to International Standard on Auditing (ISA) 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements. Key issues discussed included:
- professional skepticism;
- scalability;
- unpredictability in the selection of audit procedures;
- management override of controls;
- conforming and consequential amendments; and
- effective date.
Going Concern
The AASB discussed issues related to the IAASB’s proposed revisions to ISA 570, Going Concern. Key issues discussed included:
- adequacy of disclosures when significant judgments are made by management in concluding that there is no material uncertainty;
- evaluation of the audit evidence obtained and concluding illustrations of independent auditors’ reports related to going concern; and
- conforming and consequential amendments.
The IAASB is expected to approve the proposed ISA 570 at its December meeting. The AASB anticipates approving CAS 570 at its March 2025 meeting.
Integrated Project
The AASB discussed the draft project proposal developed by the IAASB for revisions to ISA 500, Audit Evidence, ISA 330, The Auditor’s Responses to Assessed Risks, and ISA 520, Analytical Procedures – to be known as the Integrated Project. Key issues discussed included:
- intersection of the Technology Gap Analysis with this project;
- consideration of activities to address issues identified under this project; and
- the timeline for the project.
The IAASB is expected to approve the project proposal at its December meeting.
The AASB also discussed and was supportive of establishing an advisory group to inform the work on this project. The Board considered the composition of the advisory group, the skill sets needed among members, and the timeline for recruitment.
Listed Entity/Public Interest Entity Track-2
The AASB discussed issues related to the IAASB’s narrow-scope amendments project to consider revising the definition of “listed entity” to “public interest entity”. Key issues discussed included:
The IAASB is expected to approve the final narrow-scope amendments at its December meeting.
The AASB is waiting for the Public Trust Committee’s Independence Standing Committee to finalize its definition of “public interest entity” for the Canadian Independence Standards. Once finalized, the AASB will consider the appropriateness of similar narrow-scope amendments to Canadian Standards on Quality Management and Canadian Auditing Standards.
Technology Gap Analysis
The AASB discussed issues related to the IAASB’s Technology Gap Analysis. Key issues discussed included:
- possible impact of the growing use of technology-enabled procedures on expectations about the sufficiency and appropriateness of audit evidence;
- firm-level and engagement-level approval of technological resources used in engagements;
- whether the IAASB has a role in promoting best practices;
- identifying, assessing, and responding to risks arising from the use of information technology by entities;
- impact on the audit when entities use service organizations that use emerging technologies; and
- the relevance of continuous auditing in the current environment.
Other Canadian Standards
Sustainability Assurance
The AASB discussed the revised Canadian amendments to the International Standard on Sustainability Assurance (ISSA) 5000, General Requirements for Sustainability Assurance Engagements. Key items discussed included:
- the final changes to ISSA 5000 before IAASB approval and whether it would necessitate any new or revised Canadian amendments;
- proposed revisions to the Canadian amendment for relevant ethical requirements to:
- replace references to the IESBA Code for Sustainability Assurance with references to “a Canadian Code”;
- remove the reference to “an appropriate authority” determining that the professional requirements or the requirements in law or regulation applied are at least as demanding as a Canadian Code. However, practitioners applying alternative ethical requirements would be required to identify those requirements in the assurance report and state that they have determined those requirements to be at least as demanding as a Canadian Code; and
- proposed revisions to the Canadian amendment for Indigenous matters to improve clarity and flow in the drafting.
After reviewing the proposed revisions to the Canadian amendments, the AASB voted unanimously:
- not to re-expose the revised Canadian amendments for ethics due the limited nature of the revisions as compared to ED-CSSA 5000 and the low likelihood of obtaining new insights; and
- to re-expose the revised Canadian amendments for Indigenous matters given its desire to undertake further outreach and obtain additional input and insights on the progress made since ED-CSSA 5000.
As a result of the AASB’s decision to re-expose its Canadian amendments for Indigenous matters, the Board agreed to delay its previously planned approval of CSSA 5000 until after the re-exposure process is completed.
In March 2025, the AASB is expected to review the final drafting of the Canadian amendments for Indigenous matters and approve its re-exposure draft. The re-exposure draft is expected to be posted publicly for input in Spring 2025.
Other Topics
CPA Canada
The AASB received an update from CPA Canada’s Director, Audit and Assurance in its Member Experience group (formerly, Research Guidance and Support). The update included planned focus areas and projects for the upcoming year and the status of planned implementation resources under development.
Canadian Public Accountability Board
The AASB received a presentation from the Canadian Public Accountability Board (CPAB). The presentation included comments around the interim findings from CPAB’s 2024 Inspections.
Emerging Issues
The AASB discussed the findings from its monitoring of emerging issues and whether the identified emerging issues may impact the Board’s planned current or future activities.
The AASB also engaged in a brainstorming session to identify any additional emerging issues that could impact its standards and standard-setting activities. All identified emerging issues were grouped into common themes and prioritized based on their potential impact on the Board’s activities and the urgency of the issue. Top high-priority themes emerging from the discussion included:
- the evolution in technology and its impact on the audit;
- the growth in sustainability reporting and assurance; and
- the auditor’s responsibilities as it relates to fraud and going concern.
These themes will be considered in the development of the 2025-2026 Annual Plan and finalization of the AASB’s 2026-2029 Strategic Plan.