Statement of Principal Operating Procedures

(Approved by the Auditing and Assurance Standards Oversight Council on March 29, 2022)

Introduction

1. This Statement of Principal Operating Procedures has been developed and adopted by the Auditing and Assurance Standards Oversight Council (AASOC) in accordance with its Terms of Reference. AASOC applies the procedures set out below in carrying out its responsibilities. In unusual circumstances, departures from these procedures are permitted, subject to formal agreement by AASOC that a departure is required and documentation of the supporting rationale.

Meetings

2. Meetings of AASOC are held as frequently as necessary to discharge its responsibilities, normally at least three times per year.
3. AASOC and its committees may hold meetings in person or by telephone, video-conference, or other similar means.
4. A quorum at any meeting of AASOC is a majority of the members of AASOC. A quorum at any meeting of a committee of AASOC is a majority of the members of the committee.
5. Meetings of AASOC are open to public observation, other than in camera discussions of human resources and other confidential matters. Meetings of AASOC committees are not open to the public.

Voting

6. Each member of AASOC, including the Chair, has one vote. The Chair has an additional vote if required to break a tie. The voting rights of members appointed under clause 17 of the AASOC Terms of Reference may be waived by that member, or by the appointing organization. 
7. The affirmative vote of a simple majority of all AASOC members voting on a particular matter is required for all decisions of AASOC. The affirmative vote of a simple majority of all members of a committee of AASOC voting on a particular matter is required for all decisions of the committee.
8. All votes taken in meetings of AASOC and the committees of AASOC are documented in the respective minutes of each group. The minutes constitute proper evidence of the decisions of AASOC and its committees.

Appointment of Members of AASOC, the AASB, and the Independence Standing Committee

9. The members of AASOC, the Auditing and Assurance Standards Board (AASB), and the Independence Standing Committee (ISC) are selected to ensure that each of those bodies has an appropriate balance of competencies and experiences to meet its objectives. AASOC appoints members to the Council, the AASB, and jointly with the Public Trust Committee (PTC), the Chair and the public members of the ISC. AASOC continues to prioritize diversity and inclusion and aims to maintain within the membership of each body a reasonable balance of geographic representation, as well as professional background both within the auditing profession and from other professions involved in financial reporting issues.
10. The initial determination of whether a member is a practitioner or non-practitioner will be based on the facts and circumstances prevailing at the beginning of the member’s first term. The Nominating and Governance Committee (NGC) will evaluate any ongoing changes to those facts and circumstance in a timely manner and determine whether the member’s status as a practitioner or non-practitioner has been affected and should be changed. A self-declaration by the member will determine their current status as a practitioner. The NGC will also consider the impact of such changes on the current composition and future requirements of AASOC and bring these impacts to AASOC’s attention as and when appropriate. 
11. To the extent possible, the terms of members should be staggered to facilitate the orderly turnover of membership of AASOC, the AASB, and the ISC.
12. Each of the members of AASOC, except for those appointed pursuant to clause 17 of the AASOC Terms of Reference, and the AASB is appointed for a term of three years or such term as AASOC may determine. As for the ISC, members are appointed for a term of three years or such term as AASOC and the PTC may jointly determine. Members are normally eligible for re-appointment. Normally members serve for two terms, but the number of terms can be extended beyond that limit with approval of the Council (and the PTC in the case of the ISC). 
13. The term of the Chair of the AASB is determined by agreement between the Board Chair and AASOC, being normally between three and five years. The term of the ISC Chair is determined in agreement between the ISC Chair, the PTC, and AASOC. The Chair is eligible for re-appointment.
14. The NGC of AASOC is responsible for identifying suitable candidates for membership on AASOC and the AASB and for making recommendations to AASOC on initial and renewed appointments. The NGC and the PTC are jointly responsible for identifying suitable candidates for the Chair and public members on the ISC and for making recommendations to AASOC on initial and renewed appointments.
15. The Chair of AASOC is appointed by AASOC members on the recommendation of the NGC. Prior to making its recommendation on the Chair, the NGC conducts a consultation on a confidential basis with the members of AASOC. In the absence of the Chair, the Chair will designate either the NGC Chair or the Performance Review Committee (PRC) Chair to chair meetings of AASOC.
16. The Chair of the AASB, in consultation with the Vice-President, Financial Reporting and Assurance Standards, and the Director, Auditing and Assurance Standards, provides input to the NGC regarding candidates for membership on the AASB. The Chair of the ISC, in consultation with the Vice-President, Regulatory Affairs of CPA Canada, and the Director, Regulatory Affairs and Independence Standards, provides input to the NGC regarding candidates for membership on the ISC. After receiving such input, the NGC makes its recommendations to AASOC concerning appointments to the AASB and the ISC.
17. The NGC continuously monitors AASOC member attendance. Where a member has failed to meet minimum attendance requirements in any twelve-month period, the NGC will consult with the AASOC Chair as part of its determination of whether any extenuating circumstances exist that would support waiving the requirement for the member to step down. The NGC will convey its view to AASOC in a timely manner.  

Committees of AASOC

18. AASOC is empowered to create such committees of its members as it deems appropriate in carrying out its activities. Committees are not authorized to make decisions on behalf of AASOC but may submit their findings and make recommendations to AASOC. AASOC approves the Terms of Reference for all committees of its members.
19. The appointment of the members of all of AASOC’s committees are made by the Chair of AASOC in consultation with the committee Chairs. The Chair of AASOC also appoints all committee Chairs. In the case of the NGC and PRC, appointments are made in consultation with the respective outgoing Chair.

Oversight Responsibilities

20. In carrying out its review of the annual performance of the AASB, AASOC determines whether, in its view, the AASB’s development of its annual plan and strategic plan have followed appropriate due process with due consideration of the public interest. AASOC’s assessment of the AASB’s performance is conducted directly and through the work of the Performance Review Committee.  
21. Direct assessment by AASOC takes place through considering quarterly reports from the AASB and engaging in dialogue with the AASB Chair and senior staff.  In addition, individual AASOC members attend AASB meetings as observers and in each instance provide AASOC with feedback on the quality of the Board’s due process including responsiveness to the public interest.
22. Through its PRC, AASOC assesses the performance of the AASB by reviewing its annual and strategic plans and evaluating performance against these plans. The PRC’s findings and recommendations are submitted to AASOC for consideration and determination as to whether the AASB’s annual performance and the development of its annual and strategic plans have followed appropriate due process.
23. AASOC has certain ISC oversight responsibilities that includes considering quarterly reports from the ISC and engaging in dialogue with the ISC Chair and senior staff. In addition, a designated member of AASOC observes ISC meetings and provides AASOC with feedback on the quality of the Committee’s due process, including responsiveness to the public interest.

Communications

24. AASOC informs stakeholders and the public concerning its activities. AASOC publishes its meeting dates and summaries of its deliberations, except those arising from meetings held in camera. AASOC also publishes an annual report of its activities. The principal means of communication is through the posting of information and documents on AASOC’s website.

Operations

25. AASOC’s operating year ends on March 31 in each calendar year.
26. AASOC’s working language is English but written communications with stakeholders are provided in both English and French.

Confidentiality

27. Members of AASOC must keep meeting materials and information confidential, unless AASOC decides to release a particular document or information to the public.

Relationships with Other Organizations

28. AASOC establishes relationships with the Accounting Standards Oversight Council, the Canadian Public Accountability Board, the Office of Superintendent of Financial Institutions, the Canadian Securities Administrators, the Public Interest Oversight Board, the Monitoring Group, and other bodies having an oversight responsibility for elements of the financial reporting system. The purpose of such relationships includes:
    • Discussing common issues, challenges, and agendas; and
    • Promoting appropriate liaison and communication among the operating bodies (the AASB, the Accounting Standards Board, the Public Sector Accounting Board, the ISC, the practice inspection and enforcement organizations, and the International Auditing and Assurance Standards Board).
29. Relationships with other organizations are normally established through discussions between the Chair and, where applicable, the Vice-Chair of AASOC and their counterparts in other organizations. Such discussions are held at least annually, if practicable.
30. AASOC reviews annually a proposed budget for the expenses for AASOC and the standard-setting activities, and reviews actual results and variances.

Self-assessment

31. AASOC carries out an annual self-assessment to identify needed improvements in its operating policies and practices, including reporting to the public.

Code of Conduct

32. All AASOC members adhere to a Code of Conduct signed annually.