Auditor Reporting

Current Status Next Steps

AASB is deliberating comments received on its Invitation to Comment.

To be determined.

OBJECTIVE AND SCOPE OF THIS PROJECT

Users of audited financial statements are asking auditors to provide more information in their reports about significant matters in the financial statements, as well as about the conduct of the audit.

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The International Auditing and Assurance Standards Board (IAASB) and the AASB believe that a quality audit should be accompanied by an informative auditor’s report that delivers value to the entity’s stakeholders. The IAASB has undertaken a project to revise the auditor reporting standard.

Revisions that the IAASB makes to its auditor reporting standard (i.e., ISA 700, Forming an Opinion and Reporting on Financial Statements) will be reflected in the equivalent CAS with limited Canadian-specific amendments, if any are necessary.

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PROJECT NEWS & DECISION SUMMARIES

AASB Decision Summary – May 5, 2016
The AASB discussed issues regarding the adoption of ISAs relating to auditor reporting, financial statement disclosures, and ISA 720 (Revised), The Auditor’s Responsibilities Relating to Other Information. The AASB will continue its discussions at its June 2016 meeting.

AASB Decision Summary – March 7- 8, 2016
The AASB discussed comments received from Canadian stakeholders on the AASB’s Invitation to Comment, “Implementation Considerations for New Auditor Reporting Standards.”  The AASB also discussed the way forward in Canada in response to input from stakeholders as well as the status of the U.S. Public Company Accounting Oversight Board’s planned issuance of the auditor reporting proposals.

The AASB decided on key areas requiring further exploration that will be discussed at the next meeting.

Message from the Chair – Extension of the Comment Deadline for the Auditor Reporting Invitation to Comment
November 5, 2015. The AASB’s Chair, Cathy MacGregor, explains why the AASB has extended the comment deadline for the Invitation to Comment, “Implementation Considerations for New Auditor Reporting Standards.” The new comment deadline is February 5, 2016.

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.

AASB Decision Summary – September 16-18, 2015 
The AASB agreed to extend the deadline for comments on its Invitation to Comment, “Implementation Considerations for New Auditor Reporting Standards,” to February 5, 2016. The extended deadline will allow sufficient time for respondents to also consider proposals related to proposed CAS 720, The Auditor’s Responsibilities Relating to Other Information. The AASB expects to approve an exposure draft of CAS 720 at its October 2015 meeting.

Webinar – Implementation Considerations for New Auditor Reporting Standards
September 11, 2015. Tune in to this webinar on October 6, 2015 (English) and October 7, 2015 (French) to learn about the AASB’s recently issued Invitation to Comment on the proposed effective dates and other considerations.

Invitation to Comment – Implementation Considerations for New Auditor Reporting Standards
June 15, 2015. The AASB has issued an Invitation to Comment that seeks input on proposed effective dates and other considerations. Stakeholders are encouraged to submit their comments, on the form provided, by October 30, 2015.

AASB Decision Summary – June 8-9, 2015
The AASB provided input to the CPA Canada nominee on the IAASB on issues related to the effective date of the ISAs dealing with auditor reporting, in particular, whether the IAASB should allow early adoption. The AASB agreed that it is in the public interest for the IAASB to allow early adoption of the new and revised ISAs dealing with auditor reporting.

Message from the Chair – Adoption of Auditor Reporting and Other Standards
April 15, 2015. The AASB’s Chair, Cathy MacGregor, explains why the AASB plans to issue an invitation to comment and an exposure draft addressing specific proposed Canadian amendments to the international standards.

AASB Decision Summary – April 14, 2015
The AASB unanimously approved an invitation to comment on implementation considerations related to adopting the ISAs on auditor reporting as CASs. The invitation to comment is expected to be issued in the summer of 2015.

AASB Decision Summary – March 9-10, 2015
The AASB discussed issues related to the adoption in Canada of revisions to the ISAs dealing with auditor reporting. The IAASB approved these revisions at its September 2014 meeting and final standards were released in January 2015. The AASB debated:

  • whether a phased-in approach for certain listed entities would be appropriate in order to promote good practice on initial adoption;
  • whether the Canadian effective date should be later than that for the ISAs;
  • how the approach to auditor reporting taken by other national standard setters, including the U.S. Public Company Accounting Oversight Board and the Australian Auditing and Assurance Standards Board, may affect the AASB’s decisions on the effective date of the standards; and
  • how the definition of “listed entity” would be applied in the Canadian business environment.

The AASB intends to adopt the revised ISAs but decided that it will issue an invitation to comment to ask questions of Canadian stakeholders related to the above issues. The invitation to comment is expected to be approved by April 2015 and issued in the summer of 2015. In light of the nature of the matters being considered in the invitation to comment as well as the time required to undertake the invitation to comment process, the AASB believes that the effective date of the standard when adopted by the AASB will be later than the date selected by the IAASB.

The AASB decided, due to the importance of the auditor reporting standards, to issue in the near-term a Message from the Chair outlining the above.

AASB Decision Summary – January 19-20, 2015
The AASB discussed issues related to the adoption in Canada of revisions to the ISAs dealing with auditor reporting, which the IAASB approved at its September 2014 meeting. The AASB debated whether:

  • the AASB should wait for decisions regarding the form and content of auditors’ reports to be made in other jurisdictions, such as the U.S. and Australia, before finalizing the adoption of the revised ISAs in Canada; and
  • the effective date of the standards should be deferred for some or all entities to allow more time for stakeholders to prepare to implement the standards.

At its March 2015 meeting, the AASB will discuss the remaining issues related to adopting the ISAs on auditor reporting as CASs, with a goal of approving the final standards.

Final Standards – Reporting on Audited Financial Statements
January 20, 2015 – The IAASB has issued its new and revised Auditor Reporting standards, which are designed to significantly enhance auditor’s reports for investors and other users of financial statements. The new and revised ISAs will be effective for audits of financial statements for periods ending on or after December 15, 2016.

AASB Decision Summary – November 24-25, 2014
The AASB provided input to the CPA Canada nominee and another Canadian member on the IAASB on:

  • issues related to the IAASB’s proposed revisions to ISA 800, Special Considerations — Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks, and ISA 805, Special Considerations — Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement, including naming the engagement partner and communicating key audit matters in the auditor’s report; and
  • the direction the IAASB may take with regard to potential revisions to ISA 810, Engagements to Report on Summary Financial Statements.

The AASB also discussed issues related to the adoption in Canada of revisions to the ISAs dealing with auditor reporting, which the IAASB approved at its September 2014 meeting. The AASB debated:

  • whether a phased-in approach for certain listed entities would be appropriate;
  • whether the Canadian effective date should be later than that for the ISAs;
  • how the approach to auditor reporting taken by other national standard setters, including the U.S. Public Company Accounting Oversight Board and the Australian Auditing and Assurance Standards Board may affect the AASB’s decisions; and
  • whether consultations dealing with specific important issues should be held with Canadian stakeholders to obtain views on how and when the revisions should be implemented in Canada.

The AASB will continue to discuss issues related to the adoption of the auditor reporting revisions in Canada at its January 2015 meeting.

AASB Decision Summary – September 8-9, 2014
The AASB provided input to the CPA Canada nominee and another Canadian member on the IAASB on issues related to the IAASB’s Auditor Reporting project, including:

  • the auditor’s responsibility when a matter determined to be a key audit matter is not communicated in the auditor’s report;
  • how to address a situation when the auditor is required to include an emphasis of matter or other matter paragraph and the matter being addressed is also a key audit matter;
  • whether requirements to report on key audit matters, going concern and other information should apply when the auditor expresses an adverse opinion or disclaims an opinion on the financial statements;
  • the extent of the auditor’s work effort in relation to management’s disclosures of events and conditions that may give rise to a material uncertainty;
  • revisions to requirements and application material that address situations when events or conditions that do not give rise to a material uncertainty have been identified (these situations are sometimes referred to as “close calls”);
  • proposed limited changes to ISAs 800, Special Considerations – Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks, 805, Special Considerations – Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement, and 810, Engagements to Report on Summary Financial Statements.

The AASB also discussed issues related to the adoption of the auditor reporting revisions in Canada, including whether a phased-in approach for certain listed entities would be appropriate. The IAASB is expected to approve final standards (with the exception of revisions to the 800 series of standards) at its September 2014 meeting. The AASB will discuss adoption of the final standards at its November 2014 meeting.

AASB Decision Summary – June 9-10, 2014
The AASB provided input to the CPA Canada nominee and another Canadian member on the IAASB on issues related to the IAASB’s Auditor Reporting project, including:

  • the statement of the auditor’s independence and other relevant ethical requirements;
  • disclosing the name of the engagement partner;
  • the structure and format of the auditor’s report, including mandating the placement of the opinion and basis for opinion sections;
  • the applicability of reporting requirements regarding key audit matters, going concern and other information when the auditor expresses an adverse opinion or disclaims an opinion on the financial statements;
  • the auditor’s consideration of disclosures made by management related to events and conditions that may give rise to material uncertainties about an entity’s ability to continue as a going concern;
  • voluntary application of proposed ISA 701, Communicating Key Audit Matters in the Independent Auditor’s Report, to entities other than listed entities;
  • circumstances in which a key audit matter is not communicated in the auditor’s report; and
  • proposed limited changes to ISA 800, Special Considerations – Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks, ISA 805, Special Considerations – Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement, and ISA 810, Engagements to Report on Summary Financial Statements, that arise from the auditor reporting project.

The IAASB’s goal is to approve the final Auditor Reporting standard and related consequential amendments to other standards in September 2014, with the exception of proposed revisions to ISAs 800, 805 and 810.  The IAASB’s goal regarding these revisions is to issue an exposure draft in late 2014.

AASB Decision Summary – March 10-11, 2014
The AASB provided input to the CPA Canada nominee and another Canadian member on the IAASB on issues related to the IAASB’s Auditor Reporting project, including proposed revisions to requirements to:

  • determine key audit matters, including how the proposed standard should address matters that are not disclosed in the financial statements;
  • communicate key audit matters in light of the mixed views about whether it is appropriate to allow flexibility for the auditor to communicate information about audit procedures and outcomes;
  • report on material uncertainties identified in respect of going concern;
  • identify the source of ethical requirements;
  • disclose the engagement partner’s name for audits of financial statements of listed entities;
  • describe the auditor’s responsibilities and key features of the audit; and
  • mandate the placement of the opinion and basis for opinion sections in the auditor’s report.

The IAASB will continue to discuss these issues at its upcoming meetings, with a goal of approving the final standards in September 2014.

AASB Response – Reporting on Audited Financial Statements: Proposed New and Revised International Standards on Auditing
November 28, 2013. The AASB has submitted a comment letter responding to the IAASB’s Exposure Draft.

AASB Decision Summary – November 15, 2013
The AASB discussed a draft response letter to the IAASB’s Exposure Draft, “Reporting on Audited Financial Statements: Proposed New and Revised International Standards on Auditing.” In developing its response, the AASB considered input received from Canadian stakeholders as a result of consultations. A final draft of the response will be reviewed by the AASB members prior to submission.

AASB Decision Summary – November 5, 2013
The AASB discussed comments received on the AASB’s Exposure Draft, “Reporting on Audited Financial Statements,” including input received from Canadian stakeholders as a result of consultations.

The AASB also had a preliminary discussion of matters that the AASB may include in its response to the IAASB’s Exposure Draft, “Reporting on Audited Financial Statements: Proposed New and Revised International Standards on Auditing.” The AASB will review a draft response to the IAASB’s Exposure Draft at its November 15, 2013 conference call. The deadline for responses to the IAASB is November 22, 2013.

Exposure Draft – Reporting on Audited Financial Statements
September 30, 2013. The AASB has issued an Exposure Draft that proposes new and revised standards dealing with auditor reporting on financial statements. Stakeholders are encouraged to submit their comments, on the form provided, by November 1, 2013.

Roundtable Discussions – Stakeholders’ Views Sought on Three Exposure Drafts
August 22, 2013. Register to attend a roundtable discussion in September and October 2013 to share your views. The various proposals may result in changes to work effort, the form of reporting or both, and will affect a wide range of users.

IAASB Exposure Draft – Reporting on Audited Financial Statements: Proposed New and Revised International Standards on Auditing (ISAs)
August 7, 2013. The IAASB has issued an Exposure Draft that contains proposals intended to enhance the future auditor’s report. Canadian stakeholders are encouraged to provide their comments to the IAASB by November 22, 2013.

AASB Decision Summary – July 30, 2013
The IAASB issued an Exposure Draft, “Reporting on Audited Financial Statements: Proposed New and Revised International Standard on Auditing (ISAs),” in July 2013. The IAASB’s Exposure Draft proposes a new ISA 701, Communicating Key Audit Matters in the Independent Auditor’s Report, and related revisions to other International Standards on Auditing.

The AASB unanimously approved an exposure draft that proposes no Canadian amendments to the IAASB Exposure Draft.

The AASB’s exposure draft is now expected to be issued in September 2013.

AASB Decision Summary – June 17-18, 2013
The AASB discussed issues related to the IAASB’s project on auditor reporting including revisions to ISA 700, Forming an Opinion and Reporting on Financial Statements, and proposed new ISA 701, Communicating Key Audit Matters in the Independent Auditor’s Report.

The AASB also discussed a draft Canadian exposure draft on auditor reporting, including whether the exposure draft should include proposed Canadian amendments to the various ISAs.

The IAASB is expected to issue its exposure draft in late July 2013. The AASB will issue its exposure draft in August 2013, and consult with stakeholders in the fall of 2013.

AASB Decision Summary – April 8-9, 2013
The AASB discussed issues related to the IAASB’s project on auditor reporting including:

  • communicating key audit matters in the auditor’s report;
  • achieving consistency, clarity and transparency in the auditor’s report; and
  • auditor reporting on going concern, including the effect on ISA 570, Going Concern.

The AASB also discussed a draft of a proposed ISA 701, Communicating Key Audit Matters in the Independent Auditor’s Report, and revisions to ISA 260, Communication with Those Charged with Governance, and ISA 700, Forming an Opinion and Reporting on Financial Statements.

The IAASB is expected to issue its exposure draft on auditor reporting in the summer of 2013. The AASB will issue its own exposure draft shortly thereafter, and consult with stakeholders in the fall of 2013.

AASB Decision Summary – February 4-5, 2013
The AASB discussed issues related to the IAASB’s project on auditor reporting, specifically key issues relating to the areas of:

  • auditor commentary;
  • other improvements, including those addressing increased transparency in audit reporting; and
  • proposed revisions to ISA 700, Forming an Opinion and Reporting on Financial Statements.

An exposure draft is expected to be issued by the IAASB in the summer of 2013. The AASB will issue its own exposure draft shortly thereafter.

AASB Decision Summary – December 3-4, 2012
The AASB discussed issues related to the IAASB’s project on auditor reporting, specifically key issues relating to the areas of:

  • auditor commentary;
  • going concern; and
  • the application of the building blocks approach.

An exposure draft is expected to be issued in the summer of 2013.

AASB Decision Summary – September 28, 2012
The AASB reviewed a draft response to the IAASB’s Invitation to Comment, “Improving the Auditor’s Report,” which proposes significant changes to the form and content of auditor’s report.  In developing its response, the AASB considered input received from Canadian stakeholders as a result of consultations held to date.  The response will reflect comments made at the meeting.

AASB Decision Summary – September 10-11, 2012
The AASB had a preliminary discussion of matters to be included in its response to the IAASB’s Invitation to Comment, “Improving the Auditor’s Report.” The IAASB is proposing significant changes to the form and content of auditor’s reports. In developing its response, the AASB is considering input received from Canadian stakeholders as a result of consultations held to date. More consultations are planned and the AASB will have a conference call in late September 2012 to further develop its response. The deadline for responses to the IAASB on its Invitation to Comment is October 8, 2012.

Invitation to Comment – Improving the Auditor’s Report
July 31, 2012. The AASB urges Canadian stakeholders to provide input to the IAASB's Invitation to Comment. Comments to the AASB are requested by August 31, 2012.

AASB Decision Summary – July 10, 2012
The AASB approved the issuance of an AASB invitation to comment on the IAASB’s Invitation to Comment, “Improving the Auditor’s Report,” which sets out the IAASB’s proposed direction for the future auditor’s report.

AASB Decision Summary – June 4-5, 2012
The AASB discussed issues related to the IAASB’s project on auditor reporting. The AASB expects to issue a Canadian invitation to comment on the IAASB’s Invitation to Comment in July 2012.

AASB Decision Summary – March 5-6, 2012
The AASB discussed issues related to the IAASB’s high-priority project to revise auditor reporting standards. Some of the issues discussed related to:

  • possible core required elements of auditor’s reports (versus optional elements);
  • how auditor’s reports might better convey matters relevant to an entity’s ability to continue as a going concern;
  • the nature and extent of insights the auditor’s report might provide on both a company’s activities and the audit; and
  • whether auditor’s reports might explain and clarify technical terms and concepts associated with audits.

 

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.