Auditing and Assurance Standards Board
June 13-14, 2016
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 Auditing Standards (CASs)
Auditing Accounting Estimates
The AASB considered the views of its Auditing Accounting Estimates Advisory Group in providing input to the CPA Canada nominee on the IAASB on issues related to the IAASB’s project to revise ISA 540, Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures, including:
- scalability of the standard to both low and high risk estimates;
- definition of key terms used;
- risk assessment procedures;
- identifying and assessing risks of material misstatement; and
- work effort requirements in response to the assessed risks.
The Advisory Group concluded that issues identified in Canada are consistent with the issues identified by the IAASB. The AASB agreed with this conclusion.
The AASB discussed issues related to the adoption of ISAs regarding auditor reporting including:
- the impact of the U.S. PCAOB’s auditor reporting reproposal;
- the scope of requirements dealing with reporting of key audit matters;
- what effective date should be established for the new standards including whether there should be a staged implementation of reporting on key audit matters; and
- whether to permit early application of the CASs.
The AASB agreed to issue at an appropriate time a Message from the Chair designed to update stakeholders on the project.
The AASB will continue discussion of the project issues at its June 2016 conference call.
The AASB discussed how the IAASB’s proposed publication, “The IAASB’s Work to Explore the Growing Use of Technology in the Audit, including Data Analytics,” will be shared in Canada and feedback solicited from Canadian stakeholders. When the IAASB publication is available, the AASB will include a link on its website so that Canadian stakeholders can respond to the IAASB.
Identifying and Assessing the Risks of Material Misstatement
The AASB provided input to the CPA Canada nominee on the IAASB regarding issues related to the IAASB’s early-stage initiative to consider revisions to ISA 315 (Revised), Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and its Environment, including:
- the possible objectives to be set out in the project proposal;
- considering what drives risk;
- identification of controls relevant to the audit;
- how a walkthrough might be considered within the standard; and
- the relationship between ISA 240, The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements, and ISA 330, The Auditor’s Responses to Assessed Risks, with the proposed project.
The AASB strongly supports the IAASB commencing a project to revise ISA 315 (Revised). Reflecting the importance of the project to a broad range of Canadian practitioners, the AASB decided that an advisory group would be established to assist staff and the AASB by providing Canadian insights on issues raised during the project.
Non-compliance with Laws and Regulations
The AASB discussed issues related to the IAASB’s project proposing limited amendments to international standards resulting from the proposed changes to the IESBA Code of Ethics addressing non-compliance with laws or regulations. The AASB will consider the best means of adopting the final ISA amendments at a future meeting.
Assurance and Related Services Standards (other than CASs)
The AASB reviewed issues discussed by a group of AASB members and staff with the IAASB’s Agreed-Upon Procedures Working Group in May 2016. The AASB also provided input to the CPA Canada nominee on the IAASB regarding issues related to the IAASB’s project to revise ISRS 4400, Engagements to Perform Agreed-upon Procedures Regarding Financial Information, including:
- key features and benefits of agreed-upon procedures engagements;
- issues raised in the IAASB discussion paper; and
- other activities that the project may consider.
The AASB reviewed comments received from Canadian stakeholders on the AASB’s Re-exposure Draft of proposed CSOA 5000, Use of the Practitioner’s Communication or Name. The AASB discussed changes to draft CSOA 5000 to address concerns raised regarding:
- the scope of the standard;
- intervening period events; and
- guidance on content of the written consent.
The AASB will discuss and conclude on revisions to the Re-exposure Draft in response to comments received at its June 2016 conference call, with a goal of approving the final standard.
The AASB discussed issues related to its project to revise Section 9200, Compilation Engagements, including:
- the definition of a compilation engagement;
- the intended scope of the standard;
- whether there is a need for requirements dealing with quality control;
- work effort; and
- reporting requirements.
The AASB also considered a preliminary plan to consult with stakeholders as the project develops, emphasizing the need for focused discussions with affected practitioners as the AASB develops an exposure draft.
Other AASB Matters
The AASB discussed whether there is a need to enhance the role and responsibilities of the AASB Chair as a key element to assist the AASB in achieving its strategic objectives. The AASB will continue to investigate options for further consideration, including the implications for its structure and operations and the required staff resources.
Joy Thomas, President and CEO of CPA Canada outlined CPA Canada initiatives for the profession and reinforced CPA Canada’s continuing strong support for independent standard-setting in Canada.