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 reviewed stakeholder feedback on its Exposure Draft, “Quality Management – Conforming Amendments to Other Canadian Standards,” including the results of consultation activities. Key issues discussed included:
- the requirement to disclose that the firm applies Canadian Standard on Quality Management 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements, in practitioners’ reports for related services engagements, including implications for those who are not professional accountants; and
- whether requirements for quality management in Canadian Standard on Assurance Engagements (CSAE) 3000, Attestation Engagements Other than Audits or Reviews of Historical Financial Information, and CSAE 3001, Direct Engagements, should be expanded to more closely align with requirements for quality management in Canadian Auditing Standard (CAS) 220, Quality Management for an Audit of Financial Statements.
The AASB will continue to discuss issues and will review an implementation risk matrix at its upcoming meetings.
Assurance and Related Services Standards (Other than CASs)
Evolution of Assurance
The AASB received an update on the development of extended external reporting (EER) reference materials to support the Board’s EER guidance issued in August 2021. The update discussed the nature of the content and where it would be best located for practitioners.
Future-oriented Financial Information (FOFI)
The AASB discussed issues related to the development of a new Canadian Standard on Related Services (CSRS) on compiling FOFI. Key issues discussed included:
- the scope of the new CSRS;
- the description of a FOFI compilation engagement;
- the practitioner’s knowledge of the entity and its environment; and
- the implications of the absence of a FOFI accounting framework.
Other
AASB Processes – Consideration of the International Auditing and Assurance Standards Board’s (IAASB) Framework for Activities
The AASB discussed the IAASB’s Framework for Activities and considered its impact on the AASB’s processes.
Complexity, Understandability, Scalability, and Proportionality
The AASB provided input to the IAASB members from Canada on a draft “Frequently Asked Questions on Audit Documentation” document prepared as part of the IAASB’s Complexity, Understandability, Scalability, and Proportionality initiative.
Emerging Issues
The AASB discussed emerging issues in the audit and assurance environment. The information gathering and the resulting Board discussion serve as the basis for considering whether the 2021-2022 Annual Plan remains appropriate and informs the risk assessment for the 2022-2023 Annual Plan. Key issues discussed included:
- a global study on standardization in sustainability assurance;
- a potential prototype climate-disclosure standard;
- guidance on accessing and verifying information or data in an audit;
- examples of new technology assisting with auditing remotely or more efficiently; and
- an upcoming Independence Standing Committee discussion paper on Provincial Independence Rules for agreed-upon procedures engagements
The AASB also identified and prioritized emerging issues Board members encounter in their day-to-day work that may have a public interest need or benefit, and that are within the Board’s remit. The Board also discussed possible actions to include in the 2022-2023 Annual Plan to address the priority topics.
International Ethics Standards Board for Accountants’ (IESBA) Public Interest Entity Definition
The AASB discussed issues related to the IESBA’s project to revise the definitions of “listed entity” and “public interest entity” in the IESBA Code of Ethics for Professional Accountants and provided input to the IAASB members from Canada. Key issues discussed included:
- the IESBA’s proposal for transparent public reporting when the firm applies the enhanced independence requirements for public interest entities;
- key aspects of the IAASB’s draft project proposal, including scope, objectives, and timeline; and
- the IAASB’s proposed case-by-case approach to determining whether current differential requirements for listed entities should be expanded to apply to all categories of public interest entities, and the impact of adopting the definition of “publicly traded entity” to replace “listed entity” in the IAASB’s standards.
Technology Framework
The AASB discussed its process for identifying emerging technology issues and their impact on standards and guidance. Key topics discussed included:
- the scope of what would be monitored related to emerging technologies;
- the process for monitoring the emerging technology landscape;
- considerations for assessing the impact of each issue;
- the possible actions the Board may take to resolve potential issues; and
- when and how issues will be reported to the Board.