Auditor Reporting – Special Considerations

Current Status Next Steps

Final Handbook material approved.

June 2017 – Final Handbook material issued.

OBJECTIVE AND SCOPE OF THIS PROJECT

The IAASB is proposing amendments 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, resulting from significant revisions to its auditor reporting standards.

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The IAASB will address the voluntary communication of key audit matters and naming the engagement partner in the auditor’s report on a single financial statement or an element of a financial statement.

Revisions that the IAASB makes to these standards will be reflected in the equivalent CASs with limited Canadian-specific amendments, if any are necessary.

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PROJECT NEWS & DECISION SUMMARIES

AASB Decision Summary – June 26, 2017
The Board received an update from members of the Auditor Reporting Implications of the New Canadian Auditing Standards Task Force. This Task Force is developing illustrative combined auditor’s reports for dual listed entities incorporating the Canadian auditor reporting standards, and the recently approved U.S. Public Company Accounting Oversight Board’s (PCAOB) standard dealing with auditor reporting. These combined reports would illustrate how each of the existing and the recently approved new auditor reporting standards in Canada can be combined with the new PCAOB standards. The Task Force will also need to work with relevant U.S. authorities to confirm that such a combined report would be accepted by them.

The combined auditor’s reports being developed by the Task Force could be used for fiscal year-ends in 2017 and 2018. The Board was supportive of the Task Force’s work. The Board also discussed any implications on Canadian auditing standards in accommodating the combined auditor’s report. As the Task Force moves ahead on this initiative, it will keep the Board apprised of its progress.

Basis for Conclusions – New and Revised Auditor Reporting Standards
June 15, 2017. This document summarizes the process followed in developing new and revised auditor reporting standards and the conclusions reached by the AASB.

AASB Decision Summary – June 12-13, 2017
The Board discussed the implications for Canadian auditor reporting standards of the recently approved U.S. Public Company Accounting Oversight Board (PCAOB) standard dealing with auditor reporting. The Board discussed similarities and differences between the PCAOB standard and Canadian standards including the applicability of “key audit matter” reporting and the implications for auditor’s reports on the financial statements of dual-listed entities. The Board plans to discuss this topic further at its next meeting.

Message from the Chair – New Auditor Reporting and Other Standards Issued
May 17, 2017. The new auditor’s report represents a step change. It better describes what an audit is and what an auditor does. Read this message from the AASB Chair, Darrell Jensen, to learn what factors the AASB considered when approving these new standards, as well as how we’re supporting effective implementation.

AASB Decision Summary – April 11, 2017
The Board unanimously approved new and revised CASs relating to auditor reporting, and the auditor’s responsibilities relating to other information. The Board also unanimously approved related conforming amendments to other standards, and amendments to address disclosures in the audit of financial statements. The Board concluded that changes made in finalizing the standards were significantly different from the proposals in the Exposure Drafts and Invitations to Comment. The significant differences from the proposals are:

  • deferring the effective date for application by one year; and
  • amending the scope of reporting of key audit matters so that such matters are communicated in the auditor’s report only when required by law or regulation or the auditor decides to do so.  

Since these changes were made in response to feedback received, the Board unanimously decided not to re-expose the CASs.  The new and revised standards will be effective for audits of financial statements for periods ending on or after December 15, 2018 and are expected to be included in a Handbook update in mid-2017.

AASB Decision Summary – January 23-24, 2017
The AASB discussed the timeline for approving and issuing the auditor reporting standards in Canada.  The AASB anticipates releasing draft material to provincial institutes, for use in developing courses and training, in February 2017. The AASB continues to expect to approve the auditor reporting standards in the spring of 2017.

The AASB continues to monitor the progress of the U.S. Public Company Accounting Oversight Board’s auditor reporting proposals.

AASB Decision Summary – November 28-29, 2016
The AASB discussed draft basis for conclusion documents related to the adoption of auditor reporting standards in Canada.

The AASB also discussed risks associated with effective implementation of these standards and key messages to communicate with stakeholders.

Alert – International Standards on Auditing Not Adopted as Canadian Auditing Standards as at December 15, 2016
December 5, 2016.  Auditors performing audits of financial statements in accordance with CASs for periods ending on or after December 15, 2016 should not represent compliance with ISAs unless they have also complied with these ISAs issued by the IAASB.

Message from the Chair – Moving Forward on New Auditor Reporting and Other Standards
November 14, 2016. Our Chair, Darrell Jensen, provides an update on the progress towards adopting new international standards.

AASB Decision Summary – October 17-18, 2016
The AASB discussed issues related to the adoption of auditor reporting standards in Canada. The AASB considered the appropriate timing for approval of the standards in relation to the expected timing for the finalization of the U.S. Public Company Accounting Oversight Board’s auditor reporting proposals.  The AASB also discussed different options for the application of the new standards for entities listed with exchanges other than the Toronto Stock Exchange. 

The AASB reviewed a draft message from the Chair to update stakeholders on the progress of the project. This message is expected to be released in late 2016.

The AASB also discussed a proposed joint project with the Australian Auditing and Assurance Standards Board to conduct a review of the Australian experience in implementing new auditor reporting standards in the first year, with a particular focus on smaller listed entities.

AASB Decision Summary – September 12-13, 2016
The AASB discussed issues related to the adoption of ISAs on auditor reporting, as well as views raised by AASOC members at its July 2016 meeting, including:

  • the scoping, and effective dates for the implementation of key audit matters reporting;
  • whether early application should be allowed and, if so, the implications;
  • how to support successful implementation of the standards;
  • timelines for issuance of the standards and related materials to support their implementation; and
  • key messages to highlight in a message from the Chair.

The AASB will continue to discuss these and other issues at its October 2016 meeting. The AASB Chair intends to issue a message to update stakeholders with more details on the progress of this project in late 2016. 

AASB Decision Summary – June 27, 2016
The AASB discussed different approaches for reflecting the new auditor reporting standards in the Handbook, including during the transition period prior to their effective date.  The AASB deliberated whether to allow earlier application of the standards in Canada and possible application dates. The AASB plans to issue a Message from the Chair to update stakeholders on the key decisions reached and expects to approve the final standards at its next meeting in September 2016.

AASB Decision Summary – June 13-14, 2016
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.

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.

Final Revisions – Reporting on Audited Financial Statements: Special Considerations
March 17, 2016. The IAASB has issued revised ISA 800 and ISA 805 that clarify how the new and revised auditor reporting standards apply to these ISAs. The revised ISAs are effective for audits of financial statements for periods ending on or after December 15, 2016.

AASB Decision Summary – September 16-18, 2015 
The AASB provided input to the CPA Canada nominee 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 proposed conforming amendments as a result of issuing the ISAs dealing with auditor reporting. The IAASB is expected to approve revised ISA 800 and ISA 805 at its September 2015 meeting. The AASB will finalize the revisions to CAS 800 and CAS 805 at a future meeting.

AASB Decision Summary – June 8-9, 2015
The AASB provided input to the CPA Canada nominee 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 proposed conforming amendments as a result of issuing the ISAs dealing with auditor reporting. The AASB noted that the IAASB’s proposals substantively address concerns raised by the AASB in its response to the IAASB’s Exposure Draft.

AASB Decision Summary – April 14, 2015
The AASB discussed comments received on the AASB’s Exposure Draft, “Reporting on Audited Financial Statements: Special Considerations,” which proposes revisions to CAS 800, Special Considerations – Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks, and CAS 805, Special Considerations – Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement. The AASB also discussed a draft response letter to the IAASB’s Exposure Draft with the same title. A final draft of the response will be reviewed by the AASB Chair and Vice Chair prior to submission.

AASB Exposure Draft – Reporting on Audited Financial Statements: Special Considerations
March 2, 2015. The AASB has issued an Exposure Draft that proposes to adopt revisions to ISAs issued by the IAASB dealing with special considerations when reporting on audited financial statements. Stakeholders are encouraged to submit their comments, on the form provided, by March 31, 2015.

IAASB Exposure Draft – Reporting on Audited Financial Statements: Special Considerations
January 27, 2015. The IAASB has issued an Exposure Draft that proposes changes 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. Canadian stakeholders are encouraged to provide their comments to the IAASB by April 22, 2015.

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.

 

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.