AASB

AASB Decision Summary — January 24-25, 2019

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

During its December 14, 2018, conference call, the AASB unanimously approved amendments to the effective date of paragraph 46 of CAS 700, Forming an Opinion and Reporting on Financial Statements. Paragraph 46 requires disclosure of the engagement partner name in the auditor’s report on financial statements of listed entities. In light of further information obtained since the December conference call, the Board decided that the amendments to the effective date of paragraph 46 will apply for one year. Therefore, paragraph 46 will not apply to audits of financial statements for periods ending before December 15, 2019, of entities whose engagement partner name appears on Form AP, Auditor Reporting of Certain Audit Participants, to be filed with the U.S. Public Company Accounting Oversight Board for that engagement.

This amendment will allow time for stakeholders to evaluate issues relating to Canadian Generally Accepted Auditing Standards auditor’s reports that are required to be filed with the U.S. Securities and Exchange Commission.

Once the Auditing and Assurance Standards Oversight Council confirms that the Board followed due process with proper regard for the public interest, the amendments will be included in a March 2019 Handbook update.

Quality Management

The AASB unanimously approved the exposure draft of proposed 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; and CAS 220, Quality Management for an Audit of Financial Statements. The exposure draft is based on the International Auditing and Assurance Standards Board exposure draft of proposed International Standard on Quality Management (ISQM) 1, ISQM 2, and International Standard on Auditing (ISA) 220. The exposure draft for CSQM 1 proposes to adopt the same scope as ISQM 1. This would be a significant change in Canada because the current Canadian standard does not apply to related services engagements such as compilation and agreed-upon procedures engagements. The Board expects to issue the exposure draft in late March 2019, with a comment deadline of June 7, 2019.

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 AASB discussed various alternatives to clarify that the auditor’s consent is provided by the firm and not by the engagement partner. The Board requested that the Securities Regulations Advisory Group further consider ways to address this issue.

Compilation Engagements

The AASB discussed some of the key issues stakeholders raised on the Exposure Draft, Compilation Engagements, including:

  • scope of the standard;
  • engagement acceptance and continuance; and
  • disclosure of the basis of accounting.

The Board will continue to discuss these issues at a future meeting.

Public Sector Auditing Standards

The AASB discussed issues related to developing guidance for performance audits in the public sector. This will replace Section PS 5400, Value-for-Money Auditing in the Public Sector; Section PS 6410, Planning Value-for-Money Audits in the Public Sector; and Section PS 6420, Knowledge of the Audit Entity in Planning Value-for-Money Audits in the Public Sector. Issues discussed included:

  • distinction in the guidance between “practitioner” and “legislative auditor”;
  • adapting acceptance and continuance requirements for public sector circumstances;
  • guidance for identifying relevant internal controls;
  • considerations when using the work of experts and consultants; and
  • ·options for addressing subsequent events.

 The Board will discuss, and expects to approve, an exposure draft of an Assurance and Related Services Guideline at the March 2019 meeting.

Reporting on Controls at a Service Organization

The AASB discussed the approach to drafting guidance to assist practitioners who are required to report under both Canadian and U.S. standards. The guidance will address differences between each jurisdiction’s overarching attestation standards. The Board decided that the need for guidance for attestation engagements is limited to service and organization controls (SOC) engagements. Therefore, guidance should be developed that is targeted to SOC engagements.

 AASB Planning

Annual Plan

The AASB reviewed a second draft of its 2019-2020 Annual Plan. The Board expects to approve the final Annual Plan in the first quarter of 2019. The Board also reviewed a nine-month performance report of its activities to December 31, 2018. It concluded it is well-positioned to meet its targets by the end of 2020.

Other

Canadian Public Accountability Board

The AASB received a presentation from two representatives from the Canadian Public Accountability Board (CPAB) on:

  • standards implications arising from CPAB’s Fall 2018 Inspection Results report; and
  • ·observations of the auditing implications arising from cryptocurrency activities.

Public Trust Committee

The AASB received a presentation from the Chair and Secretary of the Public Trust Committee (PTC) of CPA Canada. The presentation increased the Board’s understanding of the PTC’s:

  • role and responsibility;
  • structure;
  • composition of representatives; and
  • ongoing projects of mutual interest.