Decision Summary June 12-13, 2017

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 the implications for Canadian auditor reporting standards of the recently approved U.S. Public Company Accounting Oversight Board (PCAOB) standard dealing with auditor reporting. The Board discussed similarities and differences between the PCAOB standard and Canadian standards including the applicability of “key audit matter” reporting and the implications for auditor’s reports on the financial statements of dual-listed entities. The Board plans to discuss this topic further at its next meeting.

Group Audits

The Board provided input to the CPA Canada nominee on the IAASB on issues related to the IAASB’s project to revise ISA 600, Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors). Issues discussed included the scope of ISA 600 and group audit issues that are dependent upon other IAASB projects currently in progress. The Board acknowledged the importance of the IAASB’s Group Audits Task Force interacting with other working groups as they revise related standards.

Quality Control

The Board provided input to the CPA Canada nominee on the IAASB on issues related to the IAASB’s project to revise ISQC 1, International Standard on Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements, and ISA 220, Quality Control for an Audit of Financial Statements. Key issues discussed relating to ISQC 1 included the:

  • need for further considerations for small and medium-sized practitioners in the proposed revisions;
  • potential challenge of setting out the public interest role of firms in the standard;
  • how the proposed components of quality management and, in particular, the quality management process, would be applied in practice; and
  • need for a more a principles-based approach in making revisions.

Key issues discussed relating to ISA 220 included the:

  • interaction of ISA 220 with ISQC 1 and other relevant ISAs;
  • objective of the auditor under ISA 220;
  • four-step approach proposed by the IAASB Task Force in addressing quality management at the engagement level; and
  • impact of a proposed requirement regarding information sharing and communication between the firm and the engagement team. 

Other IAASB Projects

The Board provided input to the CPA Canada nominee on the IAASB on issues related to the IAASB’s initiatives on professional skepticism and data analytics.

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 unanimously approved a project proposal to revise Section 7500, Auditor’s Consent to the Use of the Auditor’s Report in Connection with Designated Documents. The Board discussed the project scope and determined it should be limited to documents filed with securities regulators.

Compilation Engagements

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

  • what should be included in the scope of the standard;
  • whether quality control requirements should be applicable to compilation engagements; and
  • the conditions leading to acceptance of a compilation engagement.

Public Sector Auditing Standards

The Board approved a revised 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. The exposure draft was updated to align with revised CAS 700, Forming an Opinion and Reporting on Financial Statements, which the Board recently issued. The guideline would replace Auditing for Compliance with Legislative and Related Authorities in the Public Sector, paragraphs PS 5300.14-.16. The exposure draft is expected to be issued in July 2017 with a comment deadline of November 10, 2017.

AASB Planning

The AASB discussed recent activities undertaken by staff and the AASB Chair aimed at enhancing the relevance of the audit. The Board was supportive of engaging with stakeholders on this initiative as it relates to its strategic objectives. The Board discussed next steps to maintain engagement with key stakeholders on this topic.

The Board received progress updates on the strategic projects related to AASB processes and scalability. The Board will continue its work in these areas as it executes its five-year plan.

The Board also received presentations and discussed the impact of cybersecurity and blockchain technology on the audit profession. The Board discussed activities underway in Canada to address the use of data analytics in the audit. The Board will continue its discussions on these matters at future meetings.