A message from our Chair
In my first message as Chair, I am excited to highlight some of the Board’s achievements for 2021-2022.
Our 2022-2025 Strategic Plan is grounded in six strategic directions. In the first year of our plan, we took several key steps in responding to these strategic directions, including supporting the assurance needs of less-complex entities (LCE) and enhancing key Board processes for monitoring and responding to emerging issues.
In September, the Board issued a Discussion Paper to explore options for audits of less-complex entities in Canada. We were pleased with the high level of engagement on this topic and the valuable input we received from stakeholders. This input shaped the Board’s views in our response to the International Auditing and Assurance Standards Board’s (IAASB) Exposure Draft on its proposed LCE assurance solution.
The Board also developed an enhanced process for monitoring emerging issues and advances in technology. These frameworks will allow us to actively monitor the evolving business environment, technology landscape, and plan our projects and activities to appropriately respond to the needs of our diverse stakeholders. This is particularly relevant given the evolving nature of the reporting landscape in the area of sustainability and climate change.
A critical element of our standard-setting process is seeking input from stakeholders as we develop and revise auditing and assurance standards. This year, we continued to actively engage with our stakeholders on several projects by utilizing our standing advisory groups, task forces, and project consultations. We broadened our stakeholder engagement and introduced reference groups to provide a broader user focus.
Looking forward to 2022-2023, sustainability assurance will be in the spotlight. We are actively working to support this area. Today, we have assurance standards ready for use. However, we are committed to enhancing these standards to respond to the evolving needs of financial statement users and the broader community. We will also advance other important standard-setting projects, including fraud, going concern, and audit evidence. I look forward to the outcome of the Independent Review Committee on Standard Setting’s important work.
Finally, as my first year as Board Chair draws to a close, I want to take this opportunity to thank a number of individuals.
To start, I thank my fellow Board Members for their warm welcome and dedication to the AASB’s purpose and mission. While navigating the second year of the pandemic and the need to continue meeting virtually, their continued commitment and dedication allowed us to progress key projects and accomplish our annual work plan.
I also want to thank the AASB Staff for going above and beyond to deliver on the Board’s activities during a difficult year, while facing many challenges. Your dedication is truly appreciated, not only by myself, but the Board as a whole.
Lastly, my deepest thanks to Eric Turner, who retired at the end of December from his role as the Director of the AASB. Eric has been a valuable member of the AASB for over 27 years. More recently, during his seven-year tenure as Director, the Board saw transformative change that has primed us to effectively set auditing and assurance standards today and into the future. I look forward to continuing to work closely with Eric while he continues his role as a Canadian representative on the IAASB.
Bob Bosshard, CPA, CA, ICD.D
Chair, AASB
Highlights of AASB Performance
Now in its second year, the COVID-19 pandemic continued to disrupt businesses around the globe. During these uncertain times, the Auditing and Assurance Standards Board (AASB), also referred to as “the Board,” was committed to finalizing and publishing its 2022-2025 Strategic Plan, fulfilling the 2021-2022 Annual Plan and advancing its projects. The Board's dedication to standard-setting and serving the public interest was demonstrated through its robust performance and achievement of this year’s Annual Plan.
Strategic Goal #1 – Monitor and understand emerging issues in the changing environment to better anticipate standard setting issues
This year, the Board developed processes for monitoring and assessing the assurance implications of emerging areas. We achieved this by developing:
- an enhanced emerging issues process to identify issues, assess the impact, and determine an appropriate response, on an on-going basis; and
- a technology framework to monitor emerging technology impacting entities and practitioners. Being aware of how technological advances are implemented by entities and practitioners, we can determine whether our standards continue to be fit for purpose.
The Board collaborated with other stakeholders to keep informed of emerging issues. Outcomes of these discussions included:
The Board monitored the rapidly evolving environment related to sustainability assurance by:
- developing an External Extended Reporting Canadian Landscape document with input from the EER Advisory Group. This Landscape was substantiated with other relevant committees to obtain broad views and resulted in a robust document; and
- engaging in discussions with the key stakeholders who influence reporting in this space, including the CSA and CFA Institute. We also responded to the CSA’s consultation about climate related disclosures.
Strategic Goal #2 – Engage and collaborate with stakeholders to understand their needs and expectations
The Board held outreach sessions with various stakeholders to obtain input on the many projects underway during the year, including:
- Roundtable consultations on Audits of LCEs
- We held virtual roundtable consultations on our Discussion Paper on Audits of LCEs with practitioners, regulators, practice inspectors, software developers, developers of guidance, and methodology users. This input was used in developing our response letter to the IAASB.
- A joint publication on Fraud, Going Concern, and the Expectation Gap
- Established a Reference Group for the project on Future-oriented Financial Information
- We are piloting the use of a reference group to provide input on the development of the new standard. This group is comprised of mainly representatives from the user community.
Strategic Goal #3 – Set high-quality standards and guidance that respond to the evolving needs and expectations of stakeholders
International Standard-setting
The Board continued to support Canadian representatives on the IAASB by providing on-going input on projects. This input included performing outreach to contribute to the IAASB’s information gather activities, consulting on the IAASB’s ED and submitting a response letter, providing feedback on the IAASB’s project proposals, and responding to the IAASB’s on-line survey. The Board provided input on the following projects:
- Audits of LCEs
- Audit Evidence
- Complexity, Understandability, Scalability and Proportionality (CUSP)
- Fraud
- Going Concern
- Group audits
- Listed entity and public interest entity (PIE)
AASB Responses to Documents for Comment
The Board participated in activities to respond to documents for comment at both the international and Canadian level.
We engaged at the international level by:
- responding to the IAASB Exposure Draft on Audits of LCEs;
- responding to the IAASB Exposure Draft on conforming amendments resulting from the approval of International Quality Management (ISQM) 1;
- providing input on the IAASB post-implementation review for Auditor Reporting;
- completing the IAASB’s on-line survey on CUSP; and
- responding to questions on matters considered in relation to the IESBA Exposure Draft.
We engaged at the Canadian level by:
- providing a formal response to the Canadian Securities Administrators’ National Instrument 51-107 Disclosure of Climate-related Matters;
- engaging with the Certified Financial Analysts (CFA) on its consultation paper on Environmental, Social and Governance (ESG) Disclosure Standards for Investment Products;
- met with representatives of the CFA Societies Canada to discuss CFA alternative performance measures; and
- meeting with Office of the Superintendent of Financial Institutions (OSFI) on its Discussion Paper, Assurance on Capital, Leverage and Liquidity Returns.
Canadian Standards Projects
The Board focused its efforts this year on the following three Canadian projects:
The Board also focused on issuing comprehensive guidance related to EER and a companion set of FAQs on sustainability and other extended external reporting assurance engagements.
Strategic Goal #4 – Enhance our standard setting processes and capabilities to develop more timely solutions
The Board selected the FOFI project to pilot an innovative approach for accelerating the timeline to develop a new standard. Upon completion of the project, we look forward to assessing the success of this approach and considering what learnings can be leveraged for future projects.
In monitoring and understanding the IAASB’s Framework of Activities, AASB staff prepared an analysis to consider the impact each of the four components the IAASB Framework will have on AASB processes. This analysis was presented and discussed with the Board to proactively plan how the AASB’s processes can be enhanced.
During the year, we met with the Chair of the Independent Review Committee on Standard Setting (IRCSS) to discuss the review of the Canadian standard setting process. The Board provided information to assist the IRCSS in its review and offered its support for this initiative.
Strategic Goal #5 – Support the effective implementation and application of standards and guidance to enhance consistency and quality in engagement performance
A key component of our activities is to support the effective implementation of newly developed and revised standards.
The Board completes an implementation risk assessment as projects reach the Exposure Draft or finalization stage. This year, we completed assessments for our Group Audits and Conforming Amendments related to CSQM 1 projects. As projects neared completion, we supported the development of guidance by CPA Canada related to:
- an alert and webinar on sustainability assurance;
- an audit quality blog on preparing for and implementing CAS 315;
- a webinar on the auditor’s responsibilities related to fraud in the audit of financial statements; and
- a quality management tool to assist practitioners in implementing CSQM 1, CSQM 2, and Canadian Auditing Standard (CAS) 220.
AASB Staff assisted the provincial course writers in developing materials related to CAS 315 by responding to questions on the train-the-trainer course.
Due to the increasing role of technology in the audit, AASB Staff also published an Audit Quality Blog on relevant considerations in planning, performing, and documenting an audit when using automated tools and techniques.
The Board spent considerable effort in publishing guidance related to EER and Auditor Reporting this year. Key activities included:
- Issuing the following guidance related to EER:
- EER Guidance published in both French and English, with a wraparound document to explain the Canadian context;
- EER FAQs to create awareness and support the use of the EER guidance by less experienced and non-CPA practitioners.
- Issuing the following guidance related to Key Audit Matters:
In conjunction with the issuance of the above guidance, an Audit Quality Blog was published to promote the new materials with stakeholders.