Auditing and Assurance Standards Board
Decision Summary
March 6-7, 2017

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 provided 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:

  • the description of the nature of accounting estimates;
  • key concepts and terms defined in the standard;
  • scalability implications of the requirements; and
  • responses to the assessed risks of material misstatement.

The IAASB is expected to approve its exposure draft at its March 2017 meeting.  The AASB anticipates approval of its exposure draft in April 2017.

Identifying and Assessing the Risks of Material Misstatement

The AASB provided input to the CPA Canada nominee on the IAASB on issues related to the IAASB’s project to amend ISA 315 (Revised), Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment, including:

  • how to identify internal controls relevant to the audit;
  • whether there should be a separate or combined assessment of inherent and control risks; and
  • the working definition of significant risks.

Quality Control

The AASB provided input to the CPA Canada nominee on the IAASB on issues related to the IAASB’s project to revise ISQC 1, International Standard on Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements, and ISA 220, Quality Control for an Audit of Financial Statements. Key issues discussed included:

  • considerations for small and medium-sized practitioners;
  • overlap with topics addressed in the International Ethics Standards Board for Accountants’ Code of Ethics;
  • the authority and eligibility of the engagement quality control reviewer; and
  • the firm’s approach to selecting the engagement quality control reviewer.

Scalability and Proportionality in Standards

The AASB received a report on a January 2017 IAASB SMP conference focused on discussing scalability and proportionality in assurance standards. An AASB member and two AASB staff attended this conference. The AASB provided input to the CPA Canada nominee on the IAASB on issues related to a number of topics related to scalability and proportionality of standards.  

Assurance and Related Services Standards (other than CASs)

Agreed-upon Procedures

The AASB reviewed a draft response to the IAASB’s Discussion Paper, “Exploring the Demand for Agreedā€Upon Procedures Engagements and Other Services, and the Implications for the IAASB’s International Standards.”  In the response, the AASB highlighted its perspective regarding:

  • the role of professional judgment in an agreed-upon procedures engagement;
  • considerations related to the independence of the professional accountant;
  • how to restrict the distribution of the agreed-upon procedures report; and
  • whether there is a need to address multi-scope engagements as part of this project.

The AASB’s response will be submitted by March 29, 2017.

Compilation Engagements

The AASB received a report on the feedback collected during the roundtables held with stakeholders on the Consultation Paper, “Compilation Engagements: Exploring Options for Change.”  Issues discussed by the AASB included:

  • the scope of a compilation engagement; and
  • the compilation engagement report.

The AASB will continue to discuss issues at its June 2017 meeting. 

Public Sector Auditing Standards

The AASB reviewed the proposed AuG-49, Reporting on Compliance with Specified Authorities for Transactions Coming to the Auditor’s Notice during the Audit of Financial Statements, and discussed issues including:

  • the scope;
  • the wording of the compliance opinion; and
  • the form of the compliance report.

The AASB unanimously approved the exposure draft of proposed AuG-49.  This guideline would replace Auditing for Compliance with Legislative and Related Authorities in the Public Sector, paragraphs PS 5300.14-.16. The exposure draft is expected to be issued in May 2017 with a response date of August 28, 2017.

AASB Planning

The AASB received updates on the AASB’s strategic projects related to developing a process for post-implementation reviews and an approach for addressing scalability issues.  The AASB will continue its work in these areas as it executes its five-year strategic plan.

The AASB also reviewed its draft 2017-2018 operating plan. This operating plan is expected to be approved at the April 2017 AASB meeting, after considering input from the Auditing and Assurance Standards Oversight Council.

Stakeholder Outreach

The AASB received a report on a panel discussion with senior representatives of the Canadian investment community on the future of external audit. This event was held in association with the Canadian Public Accountability Board and hosted by the CFA Society Toronto.  The AASB Chair was a member of the panel and shared insights on the AASB’s role in enhancing the relevance of the audit.

The AASB also discussed potential stakeholder outreach initiatives to undertake during its October 2017 meeting in Vancouver.