This summary of the Auditing and Assurance Standards Board (AASB) decisions 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
Audit Evidence
The AASB reviewed feedback received on the Exposure Draft of the proposed CAS 500, Audit Evidence. Key matters discussed included:
- the outreach activities completed related to the Exposure Draft;
- the key issues identified by respondents to the proposed changes; and
- the proposed direction for responses to the International Auditing and Assurance Standards Board’s (IAASB) Exposure Draft questions.
The AASB will review and discuss a draft of its response letter at its April 2023 meeting.
Going Concern
The AASB discussed issues related to the IAASB’s proposed revisions to International Standard on Auditing (ISA) 570, Going Concern. Key issues discussed included:
- the IAASB’s proposed draft of ISA 570 (Revised), Going Concern;
- the conforming and consequential amendments;
- the exposure period;
- the effective date;
- the topics to be included in the IAASB’s explanatory memo; and
- the outreach plan to engage with interested and affected parties.
The IAASB expects to approve an exposure draft at its March 2023 meeting. The AASB would then approve a Canadian exposure draft shortly thereafter.
Listed Entity/Public Interest Entity
The AASB discussed issues related to the IAASB’s narrow-scope amendments project to revise the definitions of “listed entity” and “public interest entity,” including proposed revisions to ISA 700 (Revised), Forming an Opinion and Reporting on Financial Statements, and ISA 260 (Revised), Communication with Those Charged with Governance. Key issues discussed included:
- the proposed changes to ISA 700 (Revised) and ISA 260 (Revised); and
- how the IAASB addressed the feedback provided by the AASB in its response letter to the Exposure Draft.
Other Canadian Standards
Audits of LCEs
The AASB discussed issues related to the IAASB’s project to develop an International Standard on Auditing for Audits of Financial Statements of Less Complex Entities (ISA for LCE). Key issues discussed included:
- Part 6, including where changes to requirements or additional essential explanatory material (EEM) may be needed, including:
- the use of analytical procedures as risk assessment procedures;
- describing the components of the entity’s system of internal control;
- obtaining audit evidence when the entity uses service organizations;
- addressing the risks arising from the use of IT; and
- the requirement related to the presumption of fraud risk in revenue recognition;
- Part 2, including the proposed approach to documentation requirements and EEM;
- Part 4, including the content of the engagement letter and whether it should reference the auditor’s use of the ISA for LCE; and
- issues related to the IAASB’s Exposure Draft, Proposed Part 10, Audits of Group Financial Statements of the Proposed International Standard on Auditing for Audits of Financial Statements of Less Complex Entities (IAASB Part 10 ED) to inform the drafting of the AASB’s response letter to the IAASB.
The AASB will review and discuss a draft of its response letter to the IAASB Part 10 ED at its April 2023 meeting.
Sustainability
The AASB discussed issues related to the IAASB’s project to develop International Standard on Sustainability Assurance (ISSA) 5000, General Requirements for Sustainability Assurance Engagements. Key issues discussed included:
- the work performed by other practitioners related to the sustainability assurance engagement;
- the preconditions for the acceptance of the engagement including the suitability of criteria and meaningful level of assurance;
- the materiality considerations including qualitative considerations, performance materiality, and aggregation risk;
- the risks of material misstatement, the response to risks, and the difference between limited and reasonable assurance;
- other information; and
- the assurance report.
Other
AASB Annual Plan 2023-2024
The AASB reviewed and unanimously approved its:
- Annual Performance Assessment 2022-2023 (to be published in May 2023)
- Annual Plan 2023-2024 (to be published in April 2023).
Emerging Issues
The AASB discussed emerging issues in the changing assurance environment to better anticipate standard-setting issues. The information gathering and the resulting Board discussion serve as the basis for confirming whether there are any additional activities that should be included in the 2023-2024 Annual Plan. Key issues discussed included:
- the top two themes arising from monitoring, sustainability, other non-financial reporting, and technology, are similar to the themes identified in October 2022; and
- the confirmation that all items reported were already contemplated in the planned activities, and no change was made to the AASB’s planned activities for 2023-2024.
IAASB Strategy
The AASB reviewed the Canadian outreach results and a draft AASB response letter on the IAASB’s Proposed Strategy and Work Plan. Key issues discussed included:
- the overall response on the impact of the volume and pace of change on audit quality; and
- the priority of future standard-setting projects.
The AASB will review the updated response letter at its April 2023 meeting.