Standards for Assurance Engagements

OBJECTIVE AND SCOPE OF THIS PROJECT

Significant gaps were identified in the Handbook compared to standards for audits of financial statements when the AASB was developing assurance engagement standards on specific topics, such as reporting on internal control over financial reporting and audits of service organizations.

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This project is expected to include revising or replacing the following Sections:

  • Section 5025, Standards for Assurance Engagements Other than Audits of Financial Statements and Other Historical Financial Information;
  • Section 5030, Quality Control Procedures for Assurance Engagements Other than Audits of Financial Statements and Other Historical Financial Information;
  • Section 5049, Use of Specialists in Assurance Engagements Other than Audits of Financial Statements and Other Historical Financial Information; and
  • Section 5050, Using the Work of Internal Audit in Assurance Engagements Other than Audits of Financial Statements and Other Historical Financial Information.

These standards for assurance engagements will be revised to:

  • reflect current practice;
  • address the needs expressed by the legislative auditing community and other Canadian stakeholders; and
  • establish a clear interrelationship between upper tier standards for assurance engagements and engagement-specific assurance standards.

Key issues that this project plans to address include:

  • adequacy of guidance;
  • required expertise in providing assurance;
  • references to existing GAAS; and
  • interrelationships between the various levels of assurance engagement standards.

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PROJECT NEWS

Basis for Conclusions – CSAEs 3000 and 3001, Attestation and Direct Engagements
July 2, 2015. This document summarizes the process followed in developing these standards and the conclusions reached by the AASB regarding significant comments received in response to its Exposure Draft.

AASB Decision Summary – March 9-10, 2015
The AASB unanimously approved CSAE 3000, Attestation Engagements Other than Audits or Reviews of Historical Financial Information, and CSAE 3001, Direct Engagements. The CSAEs will replace Section 5025, Standards for Assurance Engagements Other than Audits of Financial Statements and Other Historical Financial Information, and other umbrella assurance standards.

The AASB concluded that:

  • changes made in finalizing CSAE 3000 were not significantly different from the proposals in the Exposure Draft and, therefore, no re-exposure is necessary; and
  • there were significant changes made to CSAE 3001 in finalizing it, but these changes were made in response to comments raised on exposure and re-exposure would not likely provide significant new information; therefore the AASB decided not to re-expose CSAE 3001.

The final standards will be effective for attestation and direct engagements where the assurance report is dated on or after June 30, 2017 and are expected to be issued in June 2015.

AASB Decision Summary – January 19-20, 2015
The AASB reviewed comments received from Canadian stakeholders on the AASB’s Exposure Draft, “Attestation and Direct Engagements,” and discussed issues including:

  • whether the term “materiality” should be replaced by the term “significance” in CSAE 3001, Direct Engagements;
  • whether the definition of engagement risk should be revised to recognize that there could be situations in direct engagements where the risk of concluding that there is a significant deficiency, when in fact there is not, may be other than low;
  • whether there should be a requirement to set an audit objective and conclude against that objective, similar to requirements in existing standards;
  • whether the definition of engaging party should be revised to clarify who the engaging party may be in public sector performance audits;
  • whether there should be a requirement to confirm with management the respective roles and responsibilities of management and the practitioner and the suitability of criteria, and what to do in the case of disagreement;
  • what the practitioner’s responsibilities should be when, after the engagement has been accepted, criteria are discovered to be unsuitable;
  • whether certain requirements need to be clarified, including those related to:
    • the use of the work of external experts hired by management;
    • evaluating the design and implementation of internal controls relevant to the audit; and
    • reliance on internal controls;
  • whether reporting requirements are too detailed and prescriptive; and
  • whether the practitioner completing a direct engagement should be required to use the words “except for” when expressing a qualified conclusion.

The AASB will continue to discuss the remaining issues related to this project at its March 2015 meeting, with a goal of approving the final standards.

Exposure Draft – Attestation and Direct Engagements
June 23, 2014.  The AASB has issued an Exposure Draft of two proposed new standards for assurance engagements, which would replace existing standards. Stakeholders are encouraged to submit their comments, on the form provided, by November 3, 2014.

AASB Decision Summary – January 20-21, 2014
The AASB unanimously approved an exposure draft of proposed Canadian Standard on Assurance Engagements (CSAE) 3000, Attestation Engagements Other than Audits or Reviews of Historical Financial Information, and CSAE 3001, Direct Engagements. The proposed new standards would replace Section 5025, and other umbrella assurance standards.

The exposure draft is expected to be issued by mid-2014.

AASB Decision Summary – December 2-3, 2013
The AASB discussed issues related to developing a Canadian Standard on Assurance Engagements (CSAE) 3000, Attestation Engagements Other than Audits or Reviews of Historical Financial Information, and CSAE 3001, Direct Engagements, including:

  • amendments to ISAE 3000 in adopting it as CSAE 3000;
  • changes to CSAE 3000 in using it as the basis for developing CSAE 3001; and
  • the proposed effective date for the CSAEs.

The AASB plans to discuss a draft exposure draft of CSAE 3000 and CSAE 3001 at its January 2014 meeting, with a goal of issuing an exposure draft by mid-2014.

AASB Decision Summary – September 9-10, 2013
The AASB discussed issues related to the IAASB’s development of a revised International Standard on Assurance Engagements (ISAE) 3000, Assurance Engagements Other Than Audits or Reviews of Historical Financial Information, including:

  • proposed deletion of guidance regarding direct engagements and the continued applicability of the ISAE to direct engagements; and
  • whether ISAE 3000 should be re-exposed by the IAASB.

The AASB also discussed issues related to developing draft Canadian Standard on Assurance Engagements (CSAE) 3000, Attestation Engagements Other than Audits or Reviews of Historical Financial Information, and CSAE 3001, Direct Engagements. The AASB decided that CSAE 3000 will be adopted from ISAE 3000, when that standard is finalized. CSAE 3001 will be based on CSAE 3000 but would be revised, as necessary, to reflect the differences between attestation engagements and direct engagements.

The IAASB plans to approve ISAE 3000 as a final standard at its September 2013 meeting (subject to its decision regarding re-exposure).

The AASB plans to discuss a draft exposure draft of CSAE 3000 and CSAE 3001 at its December 2013 meeting.

AASB Decision Summary – June 17-18, 2013
The AASB discussed issues related to developing a draft Canadian Standard on Assurance Engagements (CSAE) 3001, Direct Engagements. This proposed standard would be self-standing. The AASB considered the extent to which this standard would be consistent with extant umbrella assurance standards and draft ISAE 3000, Assurance Engagements Other Than Audits or Reviews of Historical Financial Information.

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

AASB Decision Summary – April 8-9, 2013
The AASB discussed issues related to the IAASB’s development of a revised International Standard on Assurance Engagements (ISAE) 3000, Assurance Engagements Other Than Audits or Reviews of Historical Financial Information. The AASB also had preliminary discussions on:

  • whether to adopt revised ISAE 3000 or develop its own revised Canadian assurance standards; and
  • if the AASB were to decide to develop its own standards, whether it might be appropriate to have two separate standards: one for attestation engagements and one for direct engagements.

AASB Decision Summary – February 4-5, 2013
The AASB discussed issues related to the IAASB’s development of revised ISAE 3000, Assurance Engagements Other Than Audits or Reviews of Historical Financial Information, in particular, matters related to direct engagements. The AASB also discussed how the direction IAASB takes on its project may affect the AASB’s development of revised Canadian standards for assurance engagements.

AASB Decision Summary – December 3-4, 2012
The AASB discussed issues related to the IAASB’s development of revised ISAE 3000, Assurance Engagements Other Than Audits or Reviews of Historical Financial Information, including possible adoption of the revised ISAE to replace Section 5025, Standards for Assurance Engagements Other than Audits of Financial Statements and Other Historical Financial Information, and other umbrella assurance standards.

The AASB also discussed the meaning of “assurance” including whether and, if so how, the CICA Handbook – Assurance should be revised to:

  • more clearly distinguish between assurance and non-assurance engagements; and
  • help practitioners, when appropriate, to more clearly communicate to users of information when the practitioner intends to provide assurance versus when the practitioner does not intend to provide assurance.

AASB Decision Summary – September 10-11, 2012
The AASB discussed issues related to the IAASB’s development of revised ISAE 3000, Assurance Engagements Other Than Audits or Reviews of Historical Financial Information.

The AASB also discussed matters related to the possible adoption of a revised ISAE to replace Section 5025, Standards for Assurance Engagements Other than Audits of Financial Statements and Other Historical Financial Information, and other umbrella assurance standards. The AASB deferred any decision on this matter until the IAASB decides on how to address issues related to direct reporting engagements.

AASB Decision Summary – June 4-5, 2012
The AASB discussed issues related to revising Section 5025, Standards for Assurance Engagements Other than Audits of Financial Statements and Other Historical Financial Information, and other umbrella assurance standards.

AASB Decision Summary – March 5-6, 2012
The AASB discussed issues related to the IAASB’s project to revise ISAE 3000, Assurance Engagements Other than Audits or Reviews of Historical Financial Information, including that project’s relationship to the AASB’ project to revise Section 5025, Standards for Assurance Engagements Other than Audits of Financial Statements and Other Historical Financial Information. Possible next steps and priorities in Canada were discussed, taking into account the temporary deferral of work on this project by the IAASB while it focuses on its auditor reporting project.

AASB Decision Summary – January 16-17, 2012
The AASB discussed issues related to the IAASB’s project to revise ISAE 3000, Assurance Engagements Other than Audits or Reviews of Historical Financial Information, including that project’s relationship to the AASB’ project to revise Section 5025, Standards for Assurance Engagements Other than Audits of Financial Statements and Other Historical Financial Information. Possible next steps and priorities in Canada were discussed.

AASB Decision Summary – August 26, 2011
The AASB reviewed comments received from Canadian stakeholders on the Invitation to Comment on the IAASB’s Exposure Draft of proposed revisions to ISAE 3000, Assurance Engagements Other than Audits or Reviews of Historical Financial Information, and discussed a draft response letter to the IAASB’s Exposure Draft.

AASB Decision Summary – June 13-14, 2011
The AASB approved the issuance of an AASB Invitation to Comment on the IAASB’s Exposure Draft of revisions to ISAE 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information. The Invitation to Comment is expected to be issued by the end of June 2011 and will have a response deadline of August 12, 2011.

AASB Decision Summary – March 7-8, 2011
The AASB discussed matters related to the IAASB’s proposed exposure draft of revised ISAE 3000, Assurance Engagements Other than Audits or Reviews of Historical Financial Information, and the International Framework for Assurance Engagements.

 

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.