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 (CASs)
Fraud and Going Concern
The AASB reviewed a draft response letter to the International Auditing and Assurance Standards Board’s Discussion Paper, “Fraud and Going Concern in an Audit of Financial Statements: Exploring the Differences Between Public Perceptions About the Role of the Auditor and the Auditor’s Responsibilities in a Financial Statement Audit.”
The response letter will be submitted by the comment deadline of February 1, 2021.
Quality Management
The AASB unanimously approved:
- Canadian Standard on Quality Management (CSQM) 1, Quality Managements for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements;
- CSQM 2, Engagement Quality Reviews;
- CAS 220, Quality Management for an Audit of Financial Statements; and
- related conforming amendments to other CASs.
CSQM 1 is effective as follows:
- Firms are required to design and implement their system of quality management for audits or reviews of financial statements or other assurance engagements by December 15, 2022. They are required to evaluate their system within one year following this date.
- Firms are required to design and implement their system of quality management for related services engagements by December 15, 2023. They are required to evaluate their system within one year following this date.
CSQM 2 is effective for:
- audits and reviews of financial statements and other assurance engagements for periods beginning on or after December 15, 2022; and
- related services engagements beginning on or after December 15, 2023.
CAS 220 is effective for audits of financial statements for periods beginning on or after December 15, 2022.
In approving CSQM 1 and CSQM 2, the AASB considered whether to re-expose new or revised Canadian amendments. The deferral of the effective dates of CSQM 1 and CSQM 2 for related services engagements responds to stakeholder concerns heard during consultation. The Board concluded that re-exposure would likely not result in any new information that would change its decision on this matter. Once the Auditing and Assurance Standards Oversight Council (AASOC) confirms that the AASB followed due process with proper regard for the public interest, CSQM 1, CSQM 2, CAS 220, and related conforming amendments to other CASs will be issued in the CPA Canada Handbook – Assurance (the Handbook) in May 2021.
Assurance and Related Services Standards (other than CASs)
Assurance and Related Services Guideline (AuG) 18, Criteria for Reports Issued Under Subsection 295(5) of “an Act Respecting Trust Companies and Savings Companies” in Québec
The AASB approved withdrawal of AuG-18, Criteria for Reports Issued Under Subsection 295(5) of “an Act Respecting Trust Companies and Savings Companies” in Québec, from the Handbook.
After discussion, the AASB concluded that exposure for public comment of the withdrawal of AuG-18 was not necessary because the Act that it supports no longer exists in Canada. It would not be in the public interest to retain AuG-18 due to the risk of it being inappropriately used.
Once AASOC confirms that the AASB followed due process with proper regard for the public interest, AuG-18 will be removed from the Handbook in April 2021.
Other
2020-2021 Annual Plan Performance Assessment
The AASB discussed the nine-month performance assessment of its 2020-2021 Annual Plan. The Board reviewed the achievements and challenges it has faced to date, including the impact of COVID-19 on planned activities and targets.
2016-2021 Strategic Plan Performance Assessment
The AASB discussed a draft performance assessment of its 2016-2021 Strategic Plan. The Board intends to conclude whether it has achieved the objectives in its Strategic Plan at a future meeting.