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
Audit Evidence
The AASB discussed issues related to the International Auditing and Assurance Standards Board’s (IAASB) proposed revisions to International Standard on Auditing (ISA) 500, Audit Evidence. Key issues discussed included:
- the new requirement for when the auditor uses automated tools and techniques for obtaining audit evidence;
- the conditional requirement related to accuracy and completeness; and
- the way forward for the project and its completion timeline.
Fraud
The AASB discussed issues related to the IAASB’s proposed revisions to ISA 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements. Key issues discussed included:
- the timing and duration of the IAASB exposure period;
- the interpretation of risks of management override of controls;
- the clarity of the examples where it may be appropriate to rebut the presumption that there are risks of material misstatement due to fraud in revenue recognition; and
- the Canadian exposure draft considerations, including Canadian amendments, outreach, and the Canadian wraparound.
Listed Entity/Public Interest Entity ̶ Track 2
The AASB discussed issues related to the IAASB’s possible approval of issuing an exposure draft on Listed Entity/Public Interest Entity ̶ Track 2 and the related issues that are prevalent in Canada. Key issues discussed included:
- the implications of the application of differential requirements in ISA 720 to listed entities;
- the exposure period of the IAASB’s exposure draft ; and
- the AASB’s approach to considering the IAASB’s revisions in Canada, considering expected activity of the Independence Standing Committee, and the resulting impact on the Canadian exposure draft.
The IAASB is expected to approve its potential exposure draft at its meeting in December 2023. The AASB is expected to approve the Canadian exposure draft at its meeting in January 2024.
Other
AASB Annual Plan and 2022-2025 Strategic Plan
The AASB discussed matters related to its annual planning and 2022-2025 Strategic Plan. Key matters addressed included reviewing:
- planned activities in its 2023-2024 Annual Plan; and
- its 2022-2025 Strategic Plan.
AASB Terms of Reference
The AASB discussed issues and proposed revisions to its Terms of Reference, Statement of Operating Procedures, and Due Process Manual. Key matters discussed included:
- the changes to language and proposed inclusion of a decision tree to help readers navigate the Due Process Manual;
- the changes to reflect how the AASB concludes that it followed due process in approving a new or revised standard, including when and how the AASB documents and communicates its due process followed;
- the revisions to reflect the qualitative factors the AASB considers when determining whether an exposure or re-exposure period is appropriate;
- whether revisions are necessary to reflect how the AASB interacts with and provides input to the IAASB; and
- whether revisions are necessary to reflect the AASB’s consideration of public interest issues throughout a project.
Canadian Public Accountability Board
The AASB received a presentation from the Canadian Public Accountability Board (CPAB). The presentation included comments around the interim findings from CPAB’s 2023 inspections.
CPA Canada Research, Guidance and Support
The AASB received an update from CPA Canada’s Director, Audit and Assurance in its Research, Guidance and Support (RGS) group. The update included RGS’s focus areas and projects for the upcoming year and the status of planned implementation resources under development.
Emerging Issues
The AASB discussed the findings from its monitoring of emerging technology and related proposed activities for the 2024-2025 Annual Plan.
The AASB also engaged in a brainstorming session to identify emerging issues that could impact its standards and standard-setting activities. All identified emerging issues were grouped into common themes and prioritized based on their potential impact on the AASB’s activities and the urgency of the issue. Top themes emerging from the discussion included:
- the use of artificial intelligence by entities and auditors and the impact on the audit;
- the increased use of service organizations by entities and the auditor’s responsibilities in applying CAS 402, Audit Considerations Relating to an Entity Using a Service Organization;
- the growth in the areas of sustainability and technology, including the increased use of subject matter experts in these areas; and
- the implementation of recently effective auditing standards, including Canadian Standard on Quality Management (CSQM) 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements, CSQM 2, Engagement Quality Reviews, CAS 220, Quality Management for an Audit of Financial Statements, and CAS 315, Identifying and Assessing Risks of Material Misstatement.
Top identified themes will be considered in the development of the 2024-2025 Annual Plan and the AASB’s next Strategic Plan.
IAASB Strategy and Work Plan
The AASB reviewed the IAASB’s final draft Strategy and Work Plan for 2024-2027. The AASB will consider the IAASB’s plans when developing its 2024-2025 Annual Plan and consultation on its next Strategic Plan.