Non-compliance with Laws and Regulations

OBJECTIVE AND SCOPE OF THIS PROJECT

The International Auditing and Assurance Standards Board (IAASB) is proposing limited amendments to international standards resulting from the proposed changes to the International Ethics Standards Board for Accountants (IESBA) Code of Ethics addressing non-compliance with laws or regulations.

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The proposed amendments would:

  • ensure that the international standards and the IESBA Code of Ethics would not conflict; and
  • clarify and emphasize key aspects of the IESBA Code proposals in the international standards.

The IESBA Code has not been adopted in Canada. Canadian public accountants follow rules of professional conduct/code of ethics issued by various professional accounting bodies. To the extent that they do not conflict, revisions that the IAASB makes to the international standards will be reflected in the equivalent Canadian standards with limited Canadian-specific amendments, if any are necessary.

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PROJECT NEWS

Basis for Conclusions – CAS 250, Consideration of Laws and Regulations in an Audit of Financial Statements
March 1, 2017. This document summarizes the process followed in developing revisions to this standard and the conclusions reached by the AASB.

AASB Decision Summary – October 17-18, 2016
The AASB approved revisions to CAS 250, Consideration of Laws and Regulations in an Audit of Financial Statements, and conforming amendments to other standards, related to adoption of the IAASB’s limited amendments to address non-compliance with laws or regulations. The AASB concluded that changes made in finalizing the standards were not significantly different from the proposals in the Exposure Draft and, therefore, no re-exposure is necessary.  The amendments will be effective for financial statement periods ending on or after December 15, 2018 and are expected to be included in a Handbook update in early 2017.

Final Standard – Consideration of Laws and Regulations in an Audit of Financial Statements
October 25, 2016. The IAASB has issued ISA 250 (Revised), which responds to the new requirements addressing non-compliance with laws and regulations in the IESBA Code of Ethics. The revised ISA is effective for audits of financial statements for periods beginning on or after December 15, 2017.

AASB Decision Summary – June 13-14, 2016
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.

AASB Exposure Draft – Responding to Non-compliance or Suspected Non-compliance with Laws and Regulations
August 21, 2015. The AASB has issued an Exposure Draft that proposes to adopt limited changes to international standards necessary to resolve actual or perceived inconsistencies or to clarify key aspects of proposed revisions to the IESBA Code of Ethics. Stakeholders are encouraged to submit their comments, on the form provided, by September 30, 2015.

IAASB Exposure Draft – Responding to Non-compliance or Suspected Non-compliance with Laws and Regulations
July 28, 2015 – The IAASB has issued an Exposure Draft that proposes changes to international standards necessary to resolve actual or perceived inconsistencies or to clarify key aspects of proposed revisions to the IESBA Code of Ethics. Canadian stakeholders are encouraged to provide their comments to the IAASB by October 21, 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 IAASB’s proposed limited revisions to various ISAs to avoid inconsistencies with the proposed revised International Ethics Standards Board for Accountants (IESBA) Code resulting from the IESBA’s Exposure Draft, “Responding to Non-compliance with Laws and Regulations.” The AASB did not identify particular Canadian issues with regard to the IAASB’s proposals.

The IAASB’s exposure draft is expected to be issued in early July 2015 and will likely have a 90-day comment period, which will limit the comment period on the AASB’s exposure draft. The AASB discussed alternative means of obtaining Canadian input on its exposure draft, given the shorter comment period.

 

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.