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AASB

AASB Annual Plan

Our Purpose

We operate as independent decision-makers with the authority and responsibility to set standards for quality management, audit, sustainability assurance, other assurance, and related services engagements and guidance in Canada.

Our Mission

We serve the public interest by setting high-quality standards and guidance and supporting their effective application to address the evolving needs of Canadian interested and affected parties.

Serving the Public Interest

The public interest is an overriding consideration for all the Auditing and Assurance Standards Board’s (AASB) activities.

In March 2023, the Independent Review Committee on Standard Setting (IRCSS) in Canada issued its recommendations regarding the governance and structure for establishing Canadian accounting, auditing, assurance and sustainability standards. We will be considering the IRCSS’ final recommendations and pivot to maintain our collaborative approach to standard setting in the public interest.

To guide the development of this Annual Plan, we monitor the environment and engage regularly with interested and affected parties. We serve a number of interested and affected parties, including:

  • members of the public;
  • assurance practitioners including:
    • professional accountants; and
    • other professional performing assurance engagements;
  • preparers;
  • users (e.g., investors, creditors, analysts and bond raters);
  • boards and audit committees;
  • governments (federal, provincial, municipal and Indigenous); and
  • regulators.

Our risk assessment process helps us to identify public interest considerations that pose the greatest risk to achieving our 2022-2025 Strategic Plan. Our planned activities address the public interest considerations and associated risks. See Appendix A for a table of the public interest considerations and the related risks.

Our Strategy

The 2022-2025 Strategic Plan outlines our five strategic goals and supporting objectives. Our Annual Plan includes specific activities that will support the achievement of these objectives.

This Annual Plan is effective April 1, 2023, to March 31, 2024. This will be the third Annual Plan under our 2022-2025 Strategic Plan.

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Strategic Goal #1: Monitor and understand emerging issues in the changing environment to better anticipate standard-setting needs

Activities

Monitor current trends and the evolving needs of interested and affected parties through our established emerging issues process, and semi-annually review the potential impact on standards and guidance. This will include considering:

  • inspection findings from the Canadian Public Accountability Board (CPAB) and the provincial Chartered Professional Accountant (CPA) bodies;
  • financial reporting in emerging industries and changing business practices;
  • sustainability and extended external reporting and assurance beyond the financial statements; and
  • the needs of interested and affected parties for new or different services.

Understand, track, and assess the impact of emerging technologies on assurance and related services engagements using our Technology Framework.

Monitor developments in sustainability disclosure standards, both in Canada with the Canadian Sustainability Standards Board (CSSB), and Internationally, and determine our next steps in relation to standards issued.

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Strategic Goal #2: Engage and collaborate with interested and affected parties to understand their needs and expectations

Activities

Seek input from interested and affected parties and semi-annually review the impact on standards and guidance. This may include specific outreach activities with different groups, such as:

Seek input from interested and affected parties on all documents for comment. For International projects, leverage the input received to inform response letters to the International Auditing and Assurance Standards Board (IAASB), by the comment deadline.

Anticipated document for comment to be issued by the AASB:

  • Compilations of Future-oriented Financial Information (FOFI) Exposure Draft.

Anticipated documents for comment to be issued by the IAASB include:

Monitor the pacing of all documents for comment, adapting timing, or our approach to outreach to ensure sufficient and timely feedback is obtained.

Finalize an engagement process template by the end of the year.

Use the engagement process template to analyze engagement on relevant projects at key due process stages to:

  • identify the interested and affected parties;
  • develop a tailored outreach strategy; and
  • evaluate the outcome of the outreach strategy and whether sufficient engagement was achieved. 

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Strategic Goal #3: Set high-quality standards and guidance that respond to the evolving needs and expectations of interested and affected parties

Activities

Participate in discussions with other National Standard Setters (NSSs) to strengthen relationships and identify opportunities for collaboration. This may include:

  • periodic interactions with other NSSs; and
  • attending the IAASB’s NSS meetings.

*Audit Evidence

  • Provide a Canadian perspective as project continues.
  • Respond to the IAASB Exposure Draft by comment deadline.

*Audits of Less Complex Entities (LCE)

  • Provide a Canadian perspective as project continues.
  • Respond to the IAASB Part 10 Exposure Draft by comment deadline.
  • Undertake activities to:
    • Support audits of LCE’s in Canada using the Canadian Auditing Standards (CASs). This may include:
      • considering whether there is a need for additional guidance on CAS 315, Identifying and Assessing the Risks of Material Misstatement; and
      • determining if the IAASB’s application of its Complexity, Understandability, Scalability, and Proportionality (CUSP) Drafting Principles effectively dealt with scalability and proportionality for an entity’s less-complex elements in its revising of International Standard on Auditing (ISA) 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements.
    • Provide direction on whether to adopt ISA for LCE in Canada. This may include researching other jurisdictions’ experiences with having two separate auditing standards.

Compilations of Future-oriented Financial Information (FOFI)

  • Approve Exposure Draft by the end of Q3.

*Fraud

  • Provide a Canadian perspective as project continues.
  • Approve Exposure Draft by the end of Q4.

*Going Concern

  • Provide a Canadian perspective as project continues.
  • Approve Exposure Draft by the end of Q1.
  • Respond to the IAASB Exposure Draft by comment deadline.

*Listed Entity and Public Interest Entity

  • Provide a Canadian perspective as project continues.
  • Approve final revisions to Track 1, which is focused on exploring amendments to enhance transparency about independence related to certain entities in the auditor’s report, by the end of Q2.
  • Participate in discussions with the Independence Standing Committee to discuss mutual issues.

*Sustainability Assurance

  • Provide a Canadian perspective as project continues.
  • Approve Exposure Draft by the end of Q3.
  • Respond to the IAASB Exposure Draft by comment deadline.

*IAASB Project

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Strategic Goal #4: Enhance our standard-setting processes and capabilities to develop more timely solutions

Activities

Develop an implementation plan for the relevant recommendations of the IRCSS by the end of Q4.

Monitor and understand the IAASB’s work to implement the recommendations in the Monitoring Group Paper and consider how it may impact our processes by the end of Q4.

Review our Terms of Reference, Statement of Operating Procedures, and Due Process Manual, and update if necessary. 

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Strategic Goal #5: Support the effective implementation and application of standards and guidance to enhance consistency and quality in engagement performance

Activities

Complete an implementation risk analysis on all standard-setting projects, which will include the nature, timing and extent of guidance needed to address potential challenges at the final approval stage.

Monitor and assist in the development of CPA Canada’s implementation guidance and other guidance in emerging areas, possibly in collaboration with other NSSs, and review progress quarterly. Topics may include:

  • Group Audits;
  • Public Interest Entity Track 1; and
  • Technology.

Increase transparency of our standards forward timeline to support effective implementation of our standards and revise our timeline, where appropriate.

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Monitoring for Success

We want to make sure we achieve what we set out to do. We actively monitor our progress toward achieving the activities described in our Annual Plan. AASOC oversees our activities and assesses our performance for the year to ensure we fulfill our public interest mandate.

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Appendix A

Public Interest Considerations and Related Risks

  Public Interest Considerations Strategic Risks
I  The Canadian and international standard-setting processes are under review with potential implications on the capability of the AASB to influence the international agenda and set standards that are responsive to Canadian needs. The IRCSS may identify changes to the AASB’s governance and structure, including due process, that impact the AASB’s capability to set high-quality standards. The IAASB’s review of its processes to address the Monitoring Group recommendations in the paper “Strengthening the International Audit and Ethics Standard Setting System,” may result in significant changes that affect the AASB’s current processes, including the AASB’s ability to influence international standard setting.
II  Assurance and related services standards should reflect emerging technologies used by entities and in the performance of engagements. The increased use of technology by entities, and in the performance of assurance and related services engagements, caused by the rapidly evolving and changing environment results in standards no longer being fit for purpose in the current environment.
III Assurance and related services standards should be scalable, understandable, and proportional to audits of less complex entities, to ensure the performance of consistent, high-quality engagements across entities of all natures and sizes. The increased complexity and length of recently issued standards, caused by an evolving business environment, may result in assurance and related services standards that are not fit for purpose in audits of less complex entities. This may result in the inconsistent and inefficient performance of engagements.
IV Assurance and related services standards should meet the evolving needs of interested and affected parties who are increasingly using information outside the financial statements for decision making (for example, sustainability disclosure standards). The increasing demand from interested and affected parties for assurance beyond the financial statements may result in a need for new or revised standards or guidance.
V Assurance and related services standards should remain fit for purpose in an evolving work environment, including remote work arrangements. The evolving work environment, including remote work arrangements, may result in practitioners being unable to implement current assurance and related services standards.
VI Timely implementation guidance is needed for revised assurance and related services standards to be implemented consistently across engagements. The untimely issuance of implementation guidance may result in assurance and related services standards being inconsistently applied.
VII Readers of practitioner reports should understand the level of assurance provided and the role of the practitioner in the engagement. Users are misinformed as to the role of a practitioner in the performance of an engagement, caused by a lack of understanding of assurance and related services standards. This may result in users incorrectly relying on a practitioner’s report in their decision making.
VIII The AASB’s due process allows it to respond to emerging issues in a timely manner.  The AASB is unable to respond to emerging issues in a timely manner caused by the time it takes to follow due process or the lack of formal processes to address rapidly emerging issues. This may result in standards not being fit for purpose in the current environment.

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