Special Reports – Assurance on Compliance with Agreements, Statutes and Regulations

Current Status Next Steps

Re-exposure draft approved.

Second quarter of 2017 – Re-exposure draft to be issued.

OBJECTIVE AND SCOPE OF THIS PROJECT

Public accountants are often asked to provide assurance on an entity’s compliance with statutes, regulations and agreements.

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Section 5800, Special Reports — Introduction, Section 5815, Special Reports — Audit Reports on Compliance with Agreements, Statutes and Regulations, and Section 8600, Reviews of Compliance with Agreements and Regulations, were written several years ago. They need to be updated and drafted in the clarity format.

This project is also related to the Other Reporting Where No Assurance Is Provided project, which involves developing a new Related Services Standard to address requests from third parties where no assurance is provided by the practitioner.

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PROJECT NEWS & DECISION SUMMARIES

AASB Decision Summary – February 9, 2017
The AASB unanimously approved a re-exposure draft of proposed CSAE 3530, Special Considerations — Attestation Engagements to Report on Compliance, and CSAE 3531, Special Considerations — Direct Engagements to Report on Compliance. CSAE 3530 and CSAE 3531 would replace Sections 5800, Special Reports — Introduction, 5815, Special Reports — Audit Reports on Compliance with Agreements, Statutes and Regulations, and 8600, Reviews of Compliance with Agreements and Regulations. The re-exposure draft is expected to be issued in April 2017 and will have a response date of July 28, 2017.

AASB Decision Summary – January 23-24, 2017
The AASB deliberated issues related to its project to revise compliance reporting standards, including:

  • clarifying the difference between reporting on compliance and reporting on historical financial information;
  • whether the standard should require management to make an explicit statement, or if an implicit statement could be accepted;
  • clarifying the requirements for how the practitioner obtains sufficient appropriate evidence in a limited assurance versus a reasonable assurance compliance engagement; and
  • amendments to the illustrative reports to alert users of the special purpose of the engagement.

The AASB reviewed a draft of proposed CSAE 3530, Special Considerations — Attestation Engagements to Report on Compliance, and CSAE 3531, Special Considerations — Direct Engagements to Report on Compliance. The AASB expects to approve a re-exposure draft at its February 2017 meeting.

AASB Decision Summary – November 28-29, 2016
The AASB discussed issues relating to the development of CSAE 3530, Reports on Compliance with Agreements, Statutes and Regulations, including:

  • the scope;
  • definitions for key terms;
  • how practitioners apply materiality in a compliance engagement and the nature of guidance;
  • whether risk assessment should be addressed; and
  • the wording of the practitioner’s conclusion.

The AASB will continue to discuss these issues at a future meeting.

AASB Decision Summary – September 12-13, 2016
The AASB reviewed revisions resulting from comments received on exposure of its proposed standard CSAE 3530, Reports on Compliance with Agreements, Statutes and Regulations, and discussed issues including:

  • a revised title for the new standard;
  • the scope of the standard, including material on engagements that have aspects of reporting on financial information as well as reporting on compliance;
  • terminology used to describe the entity’s responsibility regarding compliance; and
  • the wording of the practitioner’s conclusion.

The AASB will continue to discuss these and other issues, including a proposed standard on direct compliance engagements, at its next meeting.

AASB Decision Summary – April 27, 2016
The AASB reviewed comments received from Canadian respondents on its Exposure Draft, “Reports on Compliance with Agreements, Statutes and Regulations.” The AASB decided to explore splitting the proposed standard into two standards that would separately address attest and direct engagements. The AASB also decided to explore how aspects of Section PS 5300, Auditing for Compliance with Legislative and Related Authorities in the Public Sector, might be incorporated into the proposed standards.

AASB Decision Summary – March 7- 8, 2016
The AASB discussed matters relating to the relationship between proposed CSAE 3530, Reports on Compliance with Agreements, Statutes and Regulations, and public sector auditing standards dealing with compliance audits.

The AASB decided that its CSAE 3530 subgroup and the Public Sector Auditing Standards Review Task Force should consider the implications if CSAE 3530 were to include material related to audits of compliance with legislative and related authorities in the public sector. The AASB will discuss this issue in more depth at a future meeting.

AASB Decision Summary – January 18-19, 2016
The AASB discussed an overview of issues raised by respondents to the Exposure Draft of CSAE 3530, Reports on Compliance with Agreements, Statutes and Regulations.

The AASB decided that a subgroup of AASB members should be formed to review the issues raised and recommend revisions to the proposed CSAE 3530 at a future AASB meeting.

Roundtable Discussions – Stakeholders’ Views Sought on Auditor Reporting, Responsibilities Relating to Other Information, Compliance Reporting and the AASB’s Draft Strategic Plan for 2016-2021
October 6, 2015. Register to attend a roundtable discussion this fall to share your views on the AASB’s draft strategic plan and other AASB projects. The topics affect a wide range of stakeholders.

Webinar – AASB Exposure Draft: Reports on Compliance with Agreements, Statutes and Regulations
October 6, 2015. Tune in to this webinar on October 27, 2015 (English) and October 28, 2015 (French) to learn about the AASB’s recently issued Exposure Draft of a new standard on audits and reviews of compliance with agreements, statutes and regulations and how you can provide input to the AASB.

AASB Exposure Draft – Reports on Compliance with Agreements, Statutes and Regulations
September 1, 2015. The AASB has issued an Exposure Draft that proposes a new standard that would replace existing standards dealing with audits and reviews of compliance with agreements, statutes and regulations. Stakeholders are encouraged to submit their comments, on the form provided, by December 23, 2015.

AASB Decision Summary – July 7, 2015
The AASB unanimously approved an exposure draft of CSAE 3530, Reports on Compliance with Agreements, Statutes and Regulations. The proposed standard would replace Sections 5800, Special Reports — Introduction, 5815, Special Reports — Audit Reports on Compliance with Agreements, Statutes and Regulations, and 8600, Reviews of Compliance with Agreements and Regulations. The exposure draft is expected to be issued in the late summer of 2015 and will have a comment period of approximately 120 days.

AASB Decision Summary – June 8-9, 2015
The AASB reviewed a draft standard that would replace Sections 5800, Special Reports — Introduction, 5815, Special Reports — Audit Reports on Compliance with Agreements, Statutes and Regulations, and 8600, Reviews of Compliance with Agreements and Regulations. The AASB expects to approve an exposure draft of the proposed standard at its July 2015 meeting.

AASB Decision Summary – March 9-10, 2015
The AASB reviewed a draft standard that would replace Sections 5800, Special Reports — Introduction, 5815, Special Reports — Audit Reports on Compliance with Agreements, Statutes and Regulations, and 8600, Reviews of Compliance with Agreements and Regulations. The issues discussed included:

  • whether limited assurance (review) engagements should be dealt with in the same standard or in a separate standard;
  • how to deal with Section PS 5300, Auditing for Compliance with Legislative and Related Authorities in the Public Sector, which addresses situations similar to those addressed by the draft standard; and
  • whether the practitioner should be required to include in the report a statement alerting readers to the fact that the engagement has a specific purpose and that the report may not be suitable for another purpose.

The AASB will continue to discuss issues on this proposed standard, with a goal of approving an exposure draft in the second quarter of 2015.

AASB Decision Summary – February 5, 2015
The AASB reviewed a draft standard that would replace Sections 5800, Special Reports — Introduction, and 5815, Special Reports — Audit Reports on Compliance with Agreements, Statutes and Regulations, and discussed issues that included determining:

  • the effect on the engagement when specified provisions of an agreement, statute or regulation do not provide suitable criteria against which the practitioner would assess the entity’s compliance; and
  • whether there are any topics addressed in the proposed umbrella assurance standards, CSAE 3000, Attestation Engagements Other than Audits or Reviews of Historical Financial Information, and CSAE 3001, Direct Engagements, for which there are issues particular to compliance engagements on which the proposed compliance standard should elaborate.

The AASB will continue to discuss issues on this topic, with a goal of approving an exposure draft in the first half of 2015.

AASB Decision Summary – November 24-25, 2014
The AASB reviewed a draft standard that would replace Sections 5800, Special Reports — Introduction, and 5815, Special Reports — Audit Reports on Compliance with Agreements, Statutes and Regulations, and discussed issues including:

  • how the concept of materiality should be addressed in the revised standard; and
  • what the appropriate balance should be between the nature and extent of the guidance in the umbrella assurance standards and that in the subject-matter-specific standard.

The AASB will continue to discuss issues on this proposed standard, with a goal of approving an exposure draft in the first half of 2015.

AASB Decision Summary – September 8-9, 2014
The AASB reviewed a draft standard that would replace Sections 5800, Special Reports — Introduction, and 5815, Special Reports — Audit Reports on Compliance with Agreements, Statutes and Regulations, and discussed issues including:

  • how the standard would interact with umbrella assurance standards;
  • how material non-compliance with specified provisions of an agreement, statute or regulation should be defined and addressed in such engagements; and
  • how the practitioner would consider materiality when planning and performing the engagement (in particular, in situations when the matter being reported on is qualitative rather than quantitative in nature).

The AASB will continue to discuss issues on this topic, with a goal of approving an exposure draft in the first half of 2015.

AASB Decision Summary – June 9-10, 2014
The AASB discussed overarching issues related to revising and clarifying Sections 5800, Special Reports — Introduction, 5815, Special Reports — Audit Reports on Compliance with Agreements, Statutes and Regulations, and 8600, Reviews of Compliance with Agreements and Regulations, including:

  • whether a standard, an Assurance and Related Services Guideline or some form of non-authoritative guidance should be developed; and
  • if a standard is to be developed, the content of that standard and its relationship with the umbrella assurance standards.

The AASB will continue to discuss issues on this topic, with a goal of approving an exposure draft in early 2015.

AASB Decision Summary – March 10-11, 2014
The AASB discussed overarching issues related to revising and clarifying Sections 5800, Special Reports — Introduction, 5815, Special Reports — Audit Reports on Compliance with Agreements, Statutes and Regulations, and 8600, Reviews of Compliance with Agreements and Regulations, including:

  • matters that the AASB should consider in deciding on the nature of the guidance it should develop (i.e., a standard, an Assurance and Related Services Guideline or non-authoritative material); and
  • the relationship between subject-matter-specific standards and the umbrella assurance standards.

The AASB will continue to discuss issues on this topic, with a goal of issuing an exposure draft in late 2014.

AASB Decision Summary – January 20-21, 2014
The AASB discussed issues related to revising and clarifying Sections 5800, Special Reports — Introduction, 5815, Special Reports — Audit Reports on Compliance with Agreements, Statutes and Regulations, and 8600, Reviews of Compliance with Agreements and Regulations. The AASB focused on how engagement-level assurance standards, such as those that would result from this project, should interact with umbrella assurance standards. For example, a key issue considered is whether an engagement-level standard should include requirements so that the standard would stand alone, or simply refer to the umbrella standard and include only those requirements particular to the type of engagement being undertaken. The AASB will continue to discuss these issues at its March 2014 meeting.

AASB Decision Summary – December 2-3, 2013
The AASB discussed issues related to revising and clarifying Sections 5800, Special Reports — Introduction, 5815, Special Reports — Audit Reports on Compliance with Agreements, Statutes and Regulations, 8100, General Review Standards, and 8600, Reviews of Compliance with Agreements and Regulations, including:

  • clarifying the scope;
  • whether to address direct reporting; and
  • to what extent detailed requirements should be added versus simply referring readers to the extant umbrella assurance standards.

The AASB plans to discuss a draft exposure draft at its January 2014 meeting, with a goal of issuing an exposure draft by mid-2014.

AASB Decision Summary – October 16, 2013
The AASB discussed issues related to revising and clarifying Sections 5800, Special Reports — Introduction, 5815, Special Reports — Audit Reports on Compliance with Agreements, Statutes and Regulations, 8100, General Review Standards, and 8600, Reviews of Compliance with Agreements and Regulations. The AASB decided that two standards should be drafted; one will address compliance audit engagements, and the other will address compliance review engagements.

AASB Decision Summary – September 9-10, 2013
The AASB discussed issues related to revising and clarifying Sections 5800, Special Reports — Introduction, 5815, Special Reports — Audit Reports on Compliance with Agreements, Statutes and Regulations, 8100, General Review Standards, and 8600, Reviews of Compliance with Agreements and Regulations, including:

  • whether engagements to report on compliance with agreements are direct engagements or attestation engagements;
  • whether one or two standard(s) to address attestation engagements and direct engagements should be developed; and
  • the extent to which a practitioner performing a compliance engagement would need to refer to both the engagement level standard(s) and relevant umbrella assurance standards (for example, Section 5025, Standards for Assurance Engagements Other than Audits of Financial Statements and Other Historical Financial Information).

The AASB plans to discuss a draft exposure draft at its December 2013 meeting.

AASB Decision Summary – June 17-18, 2013
The AASB discussed issues related to revising and clarifying Sections 5800, Special Reports – Introduction, 5815, Special Reports – Auditor’s Reports on Compliance with Agreements, Statutes and Regulations, and 8600, Reviews of Compliance with Agreements and Regulations, including:

  • expanding the scope of the project to also address Section 8100, General Review Standards;
  • addressing reasonable assurance engagements (audits), limited assurance engagements (reviews), direct engagements and attestation engagements, all within the same standard; and
  • adding material to address concerns specific to the public sector.

The AASB will continue to discuss these and other issues at future meetings.

AASB Decision Summary – June 13-14, 2011
The AASB discussed issues related to the clarification of Sections 5800, Special Reports — Introduction, Section 5815, Auditor’s Reports on Compliance with Agreements, Statutes and Regulations, and Section 8600, Reviews of Compliance with Agreements and Regulations.

AASB Decision Summary – January 17-18, 2011
The AASB approved a project proposal to redraft in the clarity format and, if appropriate, revise Section 5800, Special Reports — Introduction, Section 5815, Special Reports — Auditor’s Reports on Compliance with Agreements, Statutes and Regulations, and Section 8600, Reviews of Compliance with Agreements and Regulations.

 

Disclaimer: This project summary has been prepared for information purposes only. Decisions reported are tentative and reflect only the current status of discussions on this project, which may change after further Board deliberations. Decisions to publish Handbook material are final only after a formal ballot process.