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 Standards on Quality Management
Quality Management – Conforming Amendments
The AASB approved quality management conforming amendments to Other Canadian Standards (OCSs). Two members voted against the conforming amendments.
The AASB unanimously agreed that re-exposing the conforming amendments is not necessary because changes were made in response to comments raised on exposure.
The conforming amendments to the OCSs are effective as follows:
- For periods beginning on or after December 15, 2022:
- Canadian Standard on Assurance Engagements (CSAE) 3000, Attestation Engagements Other than Audits or Reviews of Historical Financial Information
- CSAE 3001, Direct Engagements
- CSAE 3410, Assurance Engagements on Greenhouse Gas Statements
- Canadian Standard on Review Engagements (CSRE) 2400, Engagements to Review Historical Financial Statements
- Canadian Standard on Association (CSOA) 5000, Use of the Practitioner’s Communication or Name
- Section 5925, An Audit of Internal Control over Financial Reporting That Is Integrated with an Audit Of Financial Statements
- Section 7060, Auditor Review of Interim Financial Statements
- For engagements beginning on or after December 15, 2022:
- CSAE 3416, Reporting on Controls at a Service Organization Relevant to User Entities’ Internal Control Over Financial Reporting
- CSAE 3530, Attestation Engagements to Report on Compliance
- CSAE 3531, Direct Engagements to Report on Compliance
- Canadian Standard on Related Services (CSRS) 4460, Reports on Supplementary Matters Arising from an Audit or a Review Engagement
- Section 7200, Auditor Assistance to Underwriters And Others
- Section 7600, Reports on the Application Of Accounting Principles
- Assurance and Related Services Guideline (AuG) 6, Examination of a Financial Forecast or Projection Included in a Prospectus or Other Public Offering Document
- AuG-50, Conducting a Performance Audit in the Public Sector in Accordance with CSAE 3001
- For auditor’s consent to the use of the auditor’s report on financial statements for periods beginning on or after December 15, 2022:
- Section 7150, Auditor’s Consent to the Use of a Report of the Auditor Included in an Offering Document
- Section 7170, Auditor’s Consent to the Use of the Auditor’s Report in Connection with a Designated Document
- For periods beginning on or after December 15, 2023:
- CSRS 4200, Compilation Engagements
- CSRS 4400, Agreed-upon Procedures Engagements
Once the Auditing and Assurance Standards Oversight Council (AASOC) confirms that the AASB followed due process with proper regard for the public interest, the conforming amendments to OCSs will be issued in the CPA Canada Handbook – Assurance in May 2022.
Canadian Auditing Standards (CASs)
Audit Evidence
The AASB provided input to the International Auditing and Assurance Standards Board (IAASB) members from Canada on issues related to the IAASB’s project to revise International Standard on Auditing (ISA) 500, Audit Evidence. Key issues discussed included:
- the first read of the proposed revised requirements;
- how technology is addressed in the proposed revisions; and
- potential conforming and consequential amendments as a result of revisions to ISA 500.
The AASB will review the proposed application material to the revised standard at a future meeting.
Fraud
The AASB provided input to the IAASB members from Canada on issues related to the IAASB’s project to revise ISA 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements. Key issues discussed included:
- identifying and assessing risks of material misstatement due to fraud;
- communication with those charged with governance;
- transparency in reporting on fraud; and
- developing non-authoritative guidance illustrating the relationship between and linkage of ISA 240 and other ISAs.
Going Concern
The AASB provided input to the IAASB members from Canada on issues related to the IAASB’s project to revise ISA 570 (Revised), Going Concern. Key issues discussed included:
- the time period for assessing going concern;
- enhancing transparency regarding the auditor’s work on going concern; and
- the exposure period.
The IAASB is expected to approve the project proposal at its March 2022 meeting.
Listed Entity and Public Interest Entity
The AASB provided input to the IAASB members from Canada on issues related to the IAASB’s narrow-scope maintenance of standards project on listed entity and public interest entity. Key issues discussed included:
- the scope of the project, including whether it should focus only on revisions to International Standards on Quality Management (ISQMs) and ISAs;
- proposed disclosure about when a firm has applied the independence requirements for public interest entities, including where this disclosure may be made; and
- proposed revisions to ISA 260 (Revised), Communication with Those Charged with Governance, regarding communications about independence with those charged with governance.
The IAASB is expected to approve the project proposal at its March 2022 meeting.
Group Audits
The AASB discussed an issue Canadian stakeholders raised about how the scope of revised CAS 600, Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors), applies to financial information of pension plans that are included in financial statements of public sector entities, such as provinces. The Board concluded that a Canadian amendment was not necessary.
CAS 600 contains one Canadian amendment to align the illustrative report in Appendix I of the standard to CAS 700, Forming an Opinion and Reporting on Financial Statements. The AASB unanimously agreed that re-exposure of CAS 600 was not necessary since of the Canadian amendment was contemplated in the Exposure Draft and stakeholders raised no concerns.
The AASB unanimously approved CAS 600 and the related conforming amendments to other CASs and OCSs, subject to the Public Interest Oversight Board’s due process approval of ISA 600 in April 2022.
CAS 600 will become effective for audits of group financial statements for periods beginning on or after December 15, 2023.
Once the AASOC confirms that the AASB followed due process with proper regard for the public interest, the final standard and the related conforming amendments will be issued in the Handbook in August 2022.
Other
AASB Annual Plan 2022-2023
The AASB unanimously approved its 2022-2023 Annual Plan and expects to publish it on April 1, 2022.
AASB Performance Plan 2021-2022
The AASB unanimously approved its 2021-2022 Annual Performance Assessment. It expects to publish the report on its website in July 2022, after the report is reviewed by AASOC.
Emerging Issues
The AASB discussed emerging issues in the audit and assurance environment. The research and the resulting Board discussion serve as the basis for confirming whether any additional activities that should be included in the 2022-2023 Annual Plan. Key issues discussed included:
- staff’s approach to evaluating the impact and urgency of items to report to the AASB;
- the themes of non-financial and environmental social and governance (ESG) reporting and assurance, and technology are similar to the themes identified in October 2021; and
- confirmation that all items reported were already contemplated in the planned activities for 2022-2023, and no changes were made to the planned activities or their timing for 2022-2023.
Sustainability/ESG Assurance
The AASB provided input to the IAASB members from Canada on issues related to the IAASB’s research on sustainability/ESG assurance. Key issues discussed included:
- scope of the IAASB’s actions on sustainability/ESG reporting;
- challenges in performing assurance on sustainability/ESG reporting, including urgency and priority; and
- actions the IAASB should take in addressing assurance on sustainability/ESG reporting.