Decision Summary – January 25-26, 2018

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 (CASs)

Auditor  Reporting

The Board discussed issues related to the CASs on auditor reporting, including:

  • results of a legal analysis of the implications of disclosing the engagement partner’s name in the Canadian auditor’s report
  • hurdles identified in developing a combined American and Canadian auditor’s report for 2018 due to requirements in Canadian standards:
    • to disclose the engagement partner’s name in the auditor’s report;
    • for more extensive disclosures about management’s and the auditor’s responsibilities, as well as the location of this information; 
    • for a new section dealing with reporting on other information;
    • for an affirmative statement that the auditor is independent; and
  • the tentative decision to require key audit matter reporting for TSX-listed entities for years ending on or after December 15, 2020, the date when most U.S.-listed entities will be required to apply the U.S. concept similar to key audit matter reporting.

The Board will continue to discuss these and other issues at future meetings.

Assurance and Related Services Standards (Other Than CASs)

Auditor’s  Consent to the Use of the Auditor’s Report in Connection with Designated Documents

The Board reviewed a preliminary draft of revised Section 7170, Auditor's Consent to the Use of the Auditor's Report Included in a Business Acquisition Report, which is being amended to include certain material from Section 7500, Auditor’s Consent to the Use of the Auditor’s Report in Connection with Designated Documents.

The Board directed the Securities Regulation Advisory Group working on this project to perform further research on whether interim review engagement reports and auditor’s consents should be required to be provided in writing in all cases. The Board will continue to discuss these and other issues at future meetings.

Compilation  Engagements

The Board discussed issues identified in developing a revised standard to replace Section 9200, Compilation Engagements, including:

  • the scope of the standard;
  • management’s responsibilities in the terms of the engagement; and
  • requirements dealing with the practitioner’s knowledge of the entity.

The Board anticipates approving the exposure draft of the revised standard in the spring of 2018.

Public  Sector Auditing Standards

The Board reviewed comments received from Canadian stakeholders on the Exposure Draft of AuG-49, Reporting on Compliance with Specified Authorities for Transactions Coming to the Auditor’s Notice during the Audit of Financial Statements. Key issues discussed included:

  • whether to make consequential amendments to CSRS 4460, Reports on Supplementary Matters Arising from an Audit or a Review Engagement, to address engagements under PS 5300, Auditing for Compliance with Legislative and Related Authorities in the Public Sector, paragraphs .17-.24; and
  • the effective date of AuG-49 and whether to allow for early application.

The Board reviewed changes made to AuG-49 in response to the comments received. The final Guideline is anticipated to be approved in the spring of 2018.

Reporting  on Controls at a Service Organization

The Board discussed the proposed project plan to revising CSAE 3416, Reporting on Controls at a Service Organization. The revisions to CSAE 3416 are required to align the standard to the American Institute of Certified Public Accountants’ attestation standard AT‐C Section 320, Reporting on an Examination of Controls at a Service Organization Relevant to User Entities’ Internal Control Over Financial Reporting, which came into effect in May 2017. The Board decided to create a Task Force to assist in revising the standard.

Other Matters

The Board discussed whether there is a need for guidance to assist practitioners in determining the applicable Handbook standard based on the engagement circumstances. The Research, Guidance and Support group of CPA Canada is considering the development of guidance with support from Board Staff. The Board will monitor the progress of the guidance and assess implications at a future meeting.

The Board discussed amendments required to AuG-18, Criteria for Reports Issued under Subsection 295(5) of "an Act Respecting Trust Companies and Savings Companies" in Québec. The amendments will change references to Section 5800, Special Reports – Introduction, and Section 5815, Special Reports – Audit Reports on Compliance with Agreements, Statutes and Regulations to Canadian Standard for Assurance Engagements (CSAE) 3001, Direct Engagements. The Board also reviewed a draft illustrative report in AuG-18 that complies with requirements of CSAE 3001. Staff will seek feedback from practitioners that report under AuG-18 and the user of that report regarding changes to the illustrative report.

AASB Planning

AASB Operating Plan 2018-2019

The Board reviewed the draft 2018-2019 operating plan. This plan includes continuing activities and new initiatives to contribute to the achievement of strategic plan objectives to:

  • maintain a globally respected Canadian standard-setting capacity;
  • achieve a high level of stakeholder engagement; and
  • assist practitioners in the successful implementation of standards and guidance in Canada.

The Auditing and Assurance Standards Oversight Council will review and provide feedback on the draft 2018-2019 operating plan. The Board is expected to approve the final operating plan at its March 2018 meeting.

Monitoring Group Consultation Paper

The Board discussed its draft response to the Monitoring Group’s Consultation Paper, “Strengthening the Governance and Oversight of the International Audit-Related Standard-Setting Boards in the Public Interest.” The Board reviewed the key messages to highlight in the response and discussed the format of the response.

The response will be submitted by February 9, 2018.

Other Matters

The Board received an update on its strategic plan initiative to conduct a post-implementation review. This review will be conducted on CSRS 4460. Staff will prepare a summary of the review process, including steps taken and considerations to date, along with a request for information, for the Board’s approval at a future meeting.

The Board also received a presentation on data analytics outlining common applications and some of the challenges practitioners face when implementing analytics during audits of financial statements.