Meeting Minutes
The Auditing and Assurance Standards Oversight Council (AASOC) met on December 20, 2023, and was hosted virtually on Zoom.
Call to Order
An in-camera session for council members was held from 9:00 a.m. to 9:28 a.m. AASOC Chair Kevin Nye called the meeting to order at 9:28 a.m. (EST).
Approval of Minutes
The September 28, 2023, minutes were updated to include Ian Bandeen as present. AASOC approved the minutes from September 28, 2023, as amended.
Chair’s Opening Remarks
Mr. Nye shared a land acknowledgment to begin the meeting. The agenda information package included a report highlighting the Independence Standing Committee's activities, as well as observer reports from Mr. Tambosso for the Committee and from Stacy Hammet for the AASB.
At the September AASOC meeting, the council confirmed that AASB followed due process for Public Interest Entity Track 1. Mr. Nye updated members on a recent Public Interest Oversight Board (PIOB) certification for the International Auditing and Assurance Standards Board (IAASB) approval of the narrow-scope amendments to the International Standard on Auditing (ISA) 700 (Revised), Forming an Opinion and Reporting on Financial Statements, and ISA 260 (Revised), Communication with those Charged with Governance. With this certification, the AASB’s approval no longer has any conditions attached.
AASB Chair’s Report and Update
Bob Bosshard, Chair of the AASB, gave an update on the proposed Canadian Standard on Sustainability Assurance (CSSA) 5000, General Requirements for Sustainability Assurance Engagements, a new overarching standard for sustainability assurance engagements. It is based on the proposed International Standard on Sustainability Assurance 5000, General Requirements for Sustainability Assurance Engagements, from the IAASB. The proposed standard is both framework-neutral, meaning it can be used for assurance on sustainability information prepared using any criteria, and practitioner-agnostic, so that it can be used by all assurance practitioners.
The council asked if any interested and affected parties expressed concern regarding the pace or scope of the project. Mr. Bosshard shared that the concerns expressed related more to the fact that there is no required framework to be adopted in Canada, especially for capital markets, and, therefore, current reporting is voluntary.
The council also discussed CSSA 5000 being user-agnostic and that practitioners other than professional accountants are already conducting some assurance engagements. It was noted that determining who can determine performance engagements is outside of the AASB’s remit and is up to each jurisdiction to make such determinations through law or regulation.
The council asked how ethical requirements would apply to practitioners who are not professional accountants. Mr. Bosshard shared that the proposed Canadian amendment replace references to the International Ethics Standards Board for Accountants’ (IESBA) Code with the Canadian equivalent; and continued to indicate that other professional requirements or requirements in law or regulation that are at least as demanding may also apply. He noted that the IESBA is developing ethics and independence standards for sustainability reporting and assurance. Once the IESBA has finalized those standards, relevant parties will have to decide about their adoption in Canada.
The council asked how the implementation of the sustainability standard will be monitored, given that practitioners who are not professional accountants can use it. While inspections and other monitoring mechanisms exist for chartered professional accountants, they may not exist for other professionals. However, it is outside the remit of the AASB to determine who can perform such engagements related to inspection requirements.
Observers were reminded that only council members may ask questions during the meeting. Public members are welcome to observe the meeting and direct questions to the AASB.
Strategic Plan Direction
Mr. Bosshard outlined the emerging issues monitoring process, an exercise conducted twice a year to identify issues that could impact the AASB’s standard-setting activities. Top themes include the use of artificial intelligence, increased use of service organizations by entities, and the auditor’s responsibilities in applying Canadian Auditing Standard 402, Audit Considerations Relating to an Entity Using a Service Organization, growth in areas of sustainability and technology, including the increased use of subject matter experts in these areas and the implementation of recently effective auditing standards.
The current AASB strategic plan concludes in March 2025. The emerging issues monitoring process will inform the next strategic plan for 2026-2029. The council received a document on the development of the Board’s next strategic plan, including timelines and critical goals. Outreach is proposed to begin in spring 2024. The Board will focus on targeted and survey techniques for feedback on the plan.
The AASOC Performance Review Committee will receive an update on the AASB’s process in February 2024.
CSSB Update
Charles-Antoine St-Jean, Chair of the Canadian Sustainability Standards Board (CSSB), briefly updated key Board activities.
The CSSB focused on two work streams: The first was developing and establishing corporate governance documents. The second is the consultation for a Canadian adoption of a sustainability standard that would mirror the International Sustainability Standards Board Scope 1 and Scope 2. A consultation paper was drafted and approved in November 2023. Consultations with the Canadian Securities Administration (CSA), the Office of the Superintendent of Financial Institutions (OSFI), and other interested parties are anticipated to be completed in January 2024. The consultation papers will be published in March 2024, with a 90-day consultation period. The CSSB anticipates issuing a standard, general framework, and climate standard at the end of September 2024. However, this timeline is subject to change.
An extensive outreach program with interested and affected parties, including meetings with regulators and senior government officials, is in place. International connections are also being prioritized.
The council asked about the initial risks or challenges impacting the CSSB. Mr. St-Jean noted that the newness of the Board and the need to establish relationships and value as a standard setter is a challenge. Multiple groups are asking for new disclosures and want the CSSB to be seen as a solution to streamline reporting for the Canadian economy. Funding is secured for another 15 months, but there is a need for secured funding.
The council asked whether parties have expressed frustration at the pace of establishing the CSSB and sustainability standards. Mr. St-Jean emphasized the importance of establishing a value proposition for Indigenous Peoples of Canada in a timely manner. It is also important to show value internationally and with investors to influence sustainability.
International Activities
Eric Turner, a member of the IAASB, presented an update on the IAASB’s activities, including implementing the Monitoring Group reforms.
The PIOB is now responsible for the approval process of IAASB members. The most recent appointments are not practitioners but those from a broader range of roles. The PIOB provides input on public interest issues, and briefing memos are issued after each PIOB meeting.
The IAASB is focused on qualitative standard-setting characteristics from the Monitoring Group paper. The IAASB now addresses assurance on sustainability. A new process was developed to allow standard approvals in a condensed timeline. The pace of standard-setting work is measured and more efficient. There has been a reduction in the involvement of technical advisors due to the Monitoring Group’s concern about its influence at the Board table. Narrow-scope amendments allow the Board to focus on several public interest issues, move more quickly, and make changes faster.
Part of the Monitoring Group reforms is the IAASB becoming more strategic; therefore, there has been a shift to a staff-driven approach to projects with secondments to come.
Mr. Turner shared challenges faced by the IAASB, including addressing its staff workload and culture, evolving sustainability assurance globally, needing to coordinate with standard setters, managing issues that affect multiple standards (like technology), supporting first-time implementation, and maintaining the auditor reporting model.
Canadian nominations to the IAASB need to be broader and consider audit committee members, investors, and preparers that meet the skills matrix used by the IAASB. Reviewing the AASB composition and processes may be appropriate in the context of these changes and challenges. Technical advisor roles will be different. At the oversight level, AASOC should review PIOB memos to see some of the concerns raised internationally.
IN CAMERA: NGC Update
The Nominating and Governance Committee update was held in camera for members only.
The following resolutions were voted on and passed unanimously:
Be it resolved:
That the Auditing and Assurance Standards Oversight Council approves the appointment of Danielle Renaud, Chris Pittard, and Kane Porter for a three-year term beginning April 1, 2024.
Be it resolved:
That the Auditing and Assurance Standards Oversight Council approves the reappointment of Bob Bosshard as Chair of the AASB for a three-year term beginning April 1, 2024.
IN CAMERA: Regulator Update
Updates from the Office of the Superintendent of Financial Institutions (OSFI), the Canadian Securities Administration (CSA, and the Canadian Public Accountability Board (CPAB) were provided in camera.
IN CAMERA: Project Updates
Project updates were provided in camera.
Adjournment
The meeting concluded with an in-camera session for members only at 1:54 p.m.