Terms of Reference

(Revised and approved by the Auditing and Assurance Standards Oversight Council on December 20, 2018.)

Mission

1. The mission of the Auditing and Assurance Standards Board (AASB) is to serve the public interest by setting high-quality standards and guidance and supporting their effective application to address the evolving needs of Canadian stakeholders.

Objectives

2. The AASB has the following objectives:
   1. To establish standards for quality management, audit, other assurance and related services, and Guidelines and Practice Notes (referred to as “assurance standards”) that are of high-quality and that enable the profession to serve the public interest with due consideration for the relevant changes in the environment and the costs and the benefits to stakeholders, including:
      1. users of reports issued by practitioners in accordance with assurance standards, who rely on the assurance provided;
      2. the profession, whose members provide assurance services; and
      3. legislators and regulators, who have recognized the AASB’s assurance standards as the appropriate basis on which assurance services should be provided.
   2. To participate with other standard setters in the development of high-quality, internationally accepted assurance standards.
   3. To support the implementation of assurance standards and the resolution of emerging application issues.

3. In meeting its objectives, the AASB is committed to the following:
   1. Meeting the needs of its stakeholders for assurance standards.
   2. Providing high-quality assurance standards that promote confidence in information reported on by practitioners.
   3. Respecting and encouraging input from all of its stakeholders.
   4. Bringing objectivity to the consideration of issues.
   5. Respecting the ability of its stakeholders to exercise professional judgment.
   6. Responding to stakeholder needs in a timely manner.
   7. Seeking ongoing improvement to the process of standard setting.
   8. Acting as thought leaders on assurance issues.

Responsibilities

4. The AASB has the following responsibilities:
   1. To develop or adopt assurance standards on its own authority, when satisfied as to need, usefulness, and practicality, following a review of principles and practices and a process of consultation with affected parties and debate (“due process”). This includes working to influence the development of assurance standards developed by the International Auditing and Assurance Standards Board (IAASB).
   2. To implement effective working processes for all projects and activities. The AASB may commission task forces, advisory groups, or other groups (“committees”), as appropriate, to aid in the development of assurance standards.
   3. To undertake research and encourage research by others in support of assurance standards.
   4. To be accountable by responding to stakeholders in a timely manner, and facilitating their participation and input into the development of assurance standards that affect them.
   5. To account to the Auditing and Assurance Standards Oversight Council (AASOC) for the effective and efficient fulfillment of its mission and objectives. The AASB submits plans and performance reports annually to AASOC, and submits a report on its due process for each approved assurance standard to demonstrate how it is meeting its responsibilities. The AASB gives due consideration to the input from, and recommendations of, AASOC in carrying out its work.
   6. To advise AASOC as to the human and financial resources needed to accomplish the AASB’s objectives.

Membership

5. The membership of the AASB is, except for temporary vacancies, as follows:
   1. A compensated Chair, appointed on either a full-time or part-time basis.
   2. Between 11 and 13 volunteer members. A Vice-Chair may be appointed from among the volunteer members to assist in carrying out the role of the Chair.
6. The following individuals are not members but have a right to attend and participate in AASB meetings and receive any meeting materials:
   1. The Vice-President, Standards, Chartered Professional Accountants of Canada (CPA Canada).
   2. The Director, Auditing and Assurance Standards Board.
   3. The IAASB member(s) from Canada (if applicable).

In addition, any AASOC member has the right to attend AASB meetings as an observer and receive any meeting material.

7. The AASB's members are appointed by AASOC. Members of the AASB are selected and their terms of office set by AASOC to ensure that the AASB has an appropriate balance of competencies and experiences to meet its objectives. AASOC, with the assistance of the AASB, maintains and regularly reviews the competencies and experiences required of AASB members to ensure there is appropriate involvement of key stakeholders.   
8. The Chair plays a crucial role in the standard-setting process. The Chair takes the lead role in ensuring the performance of the AASB’s responsibilities detailed in paragraph 4. This includes the following:
   1. Presiding over meetings of the AASB and communicating with members between meetings, as necessary, concerning the AASB’s activities.
   2. Presiding over or attending meetings of committees of the AASB, as appropriate.
   3. Attending meetings of AASOC and its committees.
   4. Representing the AASB at meetings of national standard setters.
   5. Acting as Canada's leading spokesperson and contact on assurance standards matters for both the media and the public.
   6. Representing the AASB in meetings of other parties involved or interested in the AASB’s activities.
   7. Making presentations nationally and internationally on assurance matters.

The Chair may delegate these responsibilities to the Vice-Chair, if one has been appointed, or to the Director, Auditing and Assurance Standards Board, except that the responsibilities in subparagraph (c) may be delegated only with the agreement of the AASOC Chair.

9. The role of the Vice-Chair, if one has been appointed, is to act on behalf of the Chair in a temporary capacity, at the request of the Chair or in his or her absence, in:
   1. presiding over meetings of the AASB;
   2. presiding over or attending meetings of committees of the AASB that are normally presided over or attended by the Chair; and
   3. attending meetings of AASOC or any of its committees, with the agreement of the Chair of AASOC.

   The Vice-Chair also undertakes such other responsibilities as the Chair may delegate to him or her from time to time in accordance with paragraph 8. An appointee to the position of Vice-Chair is not thereby designated as a successor to the current Chair.

10. Any member of the AASB who either:
    1. fails to attend more than two meetings of the AASB in succession; or
    2. fails to attend, in any 12-month period, at least 50 per cent of all meetings of AASB

    in the absence of extenuating circumstances, will cease to be a member of AASB as of the end of the meeting at which he or she was in default. The Chair makes a recommendation to the Nominating and Governance Committee of AASOC concerning any extenuating circumstances and the Nominating and Governance Committee decides whether the defaulting member may continue as a member. A member is deemed to be absent from a meeting of the AASB unless he or she is in attendance for substantially all of it.

Reporting to AASOC

11. The AASB reports annually to AASOC on its activities, including its risk management process.

12. Each year, the AASB presents its proposed agenda and project priorities to AASOC for comments and considers the views and comments of AASOC in determining its priorities and agenda. If, for any reason, the AASB does not wish to incorporate specific views and comments of AASOC into its priorities and agenda, the AASB advises AASOC as to its reasons and provides AASOC with an opportunity to respond. The AASB discusses with AASOC any changes to the annual plan and advises AASOC of significant decisions made in carrying out the plan.  
13. The AASB is accountable to AASOC to demonstrate that it has used the resources allocated to it effectively and efficiently and that it has assessed how well it is meeting its mission.  
14. The AASB submits such reports as may be required by AASOC from time to time, in addition to those otherwise specified in these Terms of Reference.  
15. The AASB reviews its Terms of Reference at least once every three years to ensure that they continue to meet the needs of the AASB and the public. AASOC approves the Terms of Reference and any amendments.

Decision Making

16. The AASB develops a statement setting out the principal operating procedures it follows in fulfilling its responsibilities. The application of those procedures is subject to such direction as AASOC may provide.   
17. The AASB creates committees, including committees of its own members, as it deems necessary in carrying out its responsibilities.

Consultation and Communication

18. The AASB develops and publishes a Due Process Manual, setting out its due process for the development and adoption of assurance standards, including communication and consultation with its stakeholders.   
19. The AASB reports annually to the public on its activities. In addition, the AASB disseminates information about standard-setting activities, together with invitations to stakeholders to provide input on those activities.    
20. The AASB supports the development of guidance to assist stakeholders in understanding and applying standards consistently.