A message from our Chair
The Canadian auditing and assurance landscape is evolving, and as it continues to shift the AASB remains agile and adaptable. I am proud of the Board’s proactive response to the changing environment and its forward momentum toward achieving our strategic goals.
Our 2022-2025 Strategic Plan is grounded in six strategic directions with the goal of understanding, responding, and supporting Canadian interested and affected parties. In our second year of the strategic plan, we took several steps towards accomplishing what we set out. This past year, we had in-depth board discussions on 10 separate projects, strengthened our engagement with interested and affected parties, and rose to the challenge of setting the stage for sustainability assurance standards in Canada.
We continue to undertake activities to influence the development of the International Auditing and Assurance Standards Board’s (IAASB) standards, including its overarching sustainability assurance standard, International Standard on Sustainability Assurance (ISSA) 5000. We strongly believe that the global alignment of sustainability assurance standards is important. During the year we initiated our own project to concurrently adopt the IAASB’s ISSA 5000 in Canada. To support the Board in this growing area, we established a Sustainability Assurance Committee comprised of subject matter experts and are committed to continuing to engage in discussions with key parties who influence sustainability reporting and assurance.
Thanks to the hard work of our Joint Task Force, the Board issued an Exposure Draft of revisions to the Joint Policy Statement Concerning Communications between Actuaries Involved in the Preparation of Financial Statements and Auditors (JPS) in June 2022 and approved the revised JPS in November 2022. The final JPS was published in our Handbook in March 2023, an unprecedented timeline for project completion without compromising due process.
Communicating and engaging with our community is an essential element of our standard-setting process. This year, we continued to expand our outreach approach through social media outlets, surveys, webinars, presentations, meetings, and roundtable discussions. We worked closely with our Committees, including our advisory groups, reference groups, and task forces to obtain timely input to advance our technical standards projects. Our engagement activities and outreach plans are tailored for each project to identify and prioritize those affected by new and revised standards. We continue to innovate our engagement process to identify opportunities to further involve interested and affected parties at key stages of our projects.
Looking forward to the future, I believe we are well-positioned to meet new challenges head-on. A key focus will be our new bespoke sustainability assurance standard and advancing important standard-setting projects that reflect the needs of Canadian interested and affected parties, notably Fraud and Going Concern. The ever-essential step in standard setting is engaging with our community and we will amplify our outreach to ensure Canadian voices are heard. We will also continue working with the Auditing and Assurance Standards Oversight Council (AASOC), specifically in evaluating the recommendations outlined in the Independent Review Committee on Standard Setting in Canada’s (IRCSS) report. Together, AASOC and AASB, will determine the path forward.
As I reflect on this year, I feel honoured to work with the accomplished individuals on our Board, staff, and volunteers. Together, I am confident we will continue to thoughtfully respond to new challenges and achieve our goals.
Bob Bosshard, CPA, CA, ICD.D
Chair, AASB
Highlights of AASB Performance
Public Interest
Our standard-setting activities are predicated on serving the public interest. Our mission states that we serve the public interest by setting high-quality standards and guidance and supporting the effective application to address the evolving needs of Canadians.
We have built strong processes and procedures to assist in fulfilling our strategic goals and objectives. We carry out our activities through an independent and transparent due process that holds us accountable to the public.
We serve several 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.
In performing our 2022-2023 standard-setting activities, we served the public interest by:
- following our due process in developing standards, including having key public interest discussions on all projects;
- performing outreach activities and obtaining input from others on a variety of topics and issues, including published documents for comment; and
- being transparent as projects progress and standards are finalized.
Overview of the Year
We were steadfast in our commitment in fulfilling the 2022-2023 Annual Plan and progressing our projects. Our dedication to standard-setting and serving the public interest was demonstrated through our strong performance and achievement of the Annual Plan’s objectives.
We continued to provide feedback on the IAASB’s standards and projects by:
- engaging with the two Canadian members on the IAASB and other Canadians participating in the IAASB working groups and committees; and
- providing a staff member to the IAASB’s Sustainability Assurance Drafting Team.
In addition, we collaborated with other National Standard Setters on topics of interest including Fraud, Going Concern, the IAASB’s Proposed Strategy and Work Plan for 2024-2027, and assurance needs related to emerging technologies used by entities and practitioners.
Key highlights of our day-to-day operations included:
- launching a standard-setting project on Sustainability Assurance;
- approving three Exposure Drafts and finalizing revisions to one standard;
- engaging with interested and affected parties through 137 outreach sessions, webinars, presentations, meetings, surveys, and roundtable discussions;
- completing post-implementation research on the Canadian Key Audit Matter (KAM) reporting experience; and
- authoring or supporting the development of 16 articles of guidance or communication, and two webinars on emerging issues and assurance standards to meet the needs of practitioners and provide thought leadership.
Finally, our newly implemented enhanced emerging issues process enabled us to keep abreast of changes in the business environment and be proactive in considering the impact of these emerging issues on audit and assurance standards.
Strategic Goal #1 – Monitor and understand emerging issues in the changing environment to better anticipate standard-setting issues
This year, we executed our emerging issues process for identifying and assessing the impact of emerging issues on audit and assurance standards, which included a separate framework to monitoring emerging technology and its impact on entities and practitioners.
Our activities responded to the rapidly evolving sustainability assurance environment, by:
- approving a project proposal to concurrently adopt the IAASB’s ISSA 5000 in Canada;
- establishing a Sustainability Assurance Committee with subject matter experts in Sustainability Assurance;
- providing feedback to Chartered Professional Accountants (CPA) Canada on its paper, “Navigating the sustainable debt market – Global Research Study”;
- updating our Extended External Reporting Canadian Landscape document; and
- engaging in discussions with the key parties who influence reporting in this area.
Our activities in responding to other emerging areas included:
- supporting and/or creating guidance resources to help with challenges faced when implementing standards. Key communications issued during the year were:
- responding to challenges faced by practitioners in the current environment resulting from staffing shortages and the implementation of significant standards revisions by developing an innovative approach to:
- gathering input on standard-setting activities; and
- engaging with the IAASB to influence their work and timelines;
- monitoring the technology environment for emerging technology impacting entities and practitioners to determine whether our standards continue to be fit for purpose.
Strategic Goal #2 – Engage and collaborate with interested and affected parties to understand their needs and expectations
During the year, we continued to seek out new and improved ways to engage interested and affected parties in our standard-setting process and this included undertaking work to develop an enhanced engagement process to:
- identify key projects and all relevant interested and affected parties;
- develop strategic outreach plans, by party; and
- conclude whether meaningful outreach was achieved, both by party and overall, for the project.
Additionally, we supported the Market Research project led by Financial Reporting and Standards Canada (FRAS Canada). The three-phase project had two objectives:
- to establish a benchmark and articulate how the Board’s diverse community perceives our current outreach approach and make recommendations for improvement; and
- to inform how to increase engagement in our standard setting process.
We engaged in outreach on standard-setting projects through the year, including all published documents for comment. This included activities such as hosting webinars, roundtables, targeted meetings, and gathering written responses from interested and affected parties.
Input received through our outreach was used in:
- developing our response letters to the IAASB for:
- finalizing the JPS.
We undertook targeted and innovative outreach activities in other areas, including:
- Sustainability Assurance;
- Canadian KAM implementation;
- IAASB’s Part 10 LCE Exposure Draft; and
- IAASB’s Proposed Strategy and Work Plan for 2024-2027 Consultation.
Additionally, Bob Bosshard, the Board’s Chair, was interviewed by CPA Canada for its blog article, “Getting ready for the new quality management standard CSQM1", and for their November/December 2022 issue of Pivot Magazine article, “The ISSB will end the ‘Wild West’ of sustainability reporting”. Board members also participated in various external events, including:
Strategic Goal #3 – Set high-quality standards and guidance that respond to the evolving needs and expectations of interested and affected parties
International Standard-setting
We support Canadian members on the IAASB by providing on-going input on its projects. This input includes:
- providing feedback on board meeting materials;
- performing outreach to inform information gathering activities; and
- consulting on Exposure Drafts and submitting response letters.
We provided input on the following projects:
Canadian Standards Projects
This year, we focused our efforts on the following Canadian projects:
Strategic Goal #4 – Enhance our standard setting processes and capabilities to develop more timely solutions
We continued to engage with the Chair of the IRCSS to discuss and provide information to support its review of the Canadian standard setting process.
Additionally, to assist the IAASB in implementing a timely solution to develop a new sustainability assurance standard, we provided a staff resource to their Sustainability Standards Drafting Team.
Finally, we demonstrated a willingness to enhance our own standard-setting processes and capabilities by considering new and innovative processes, including:
- an enhanced engagement process, as discussed earlier; and
- a collaboration with external researchers from the University of Guelph and York University to conduct an independent research study on KAM reporting as a post-implementation review of the Canadian KAM reporting experience.
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.
As each project reaches its finalization stage, we develop an implementation risk assessment. This year, we completed assessments for CAS 600, Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors) and JPS.
- the tool to assist practitioners in implementing CAS 600, Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors);
- the webinar on key revisions and enhancements to CAS 315, Identifying and Assessing the Risks of Material Misstatement, including implementation tips;
- the audit and assurance blog to build awareness about the quality management standards;
- the suitable criteria guidance and the audit quality blog on sustainability standards developments and the implications for CPAs;
- the publication on auditing mining revenue of entities engaged in crypto asset mining;
- the publications related to IT Audit Expertise covering risks that auditors should be aware of and how technology is changing the way audits are done; and
- the updates to the guide, Audits of Financial Statements That Contain Amounts That Have Been Determined Using Actuarial Calculations, and templates and forms for CAS 315, Identifying and Assessing the Risks of Material Misstatement, in the Professional Engagement Guide.
We also authored our own communications related to Compilations, Quality Management, Group Audits and Auditor Reporting, including:
- the blog article, “The New Compilation Engagements Standard - How are you managing?”;
- the guidance related to Quality Management, such as:
- a webinar to share practitioner experiences in developing a system of quality management and applying the requirements of the new quality management standards; and
- an Audit Quality Blog to prepare practitioners for the new Quality Management System;
- the Audit & Assurance Alert on revisions to CAS 600, Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors), and the Audit Quality blog to create awareness of the changes coming into effect; and
- the lessons learned resource from the KAM research project to better understand the Canadian KAM reporting experience and share relevant insights to assist in future communications.