AASB

AASB Decision Summary – September 9, 2026

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 Standards on Quality Management

Technology Quality Management Workstream

The AASB discussed issues related to the International Auditing and Assurance Standards Board (IAASB)’s Technology Quality Management Workstream. Key issues discussed included:

the IAASB’s Guide 1 – Common Conceptual Foundation, including whether the guide would be a useful resource for Canadian firms of varying sizes and at different stages of artificial intelligence adoption, and whether the Board supports its use in Canada;
when to determine whether supplemental Canadian-specific guidance may be needed to support the IAASB guide series in Canada; and
the proposed Canadian wraparound communication for supporting the use of the guides in Canada.

The IAASB is expected to develop and publish its guides on a staggered timeline throughout the remainder of 2026 into June 2027. To promote the use of the guides in Canada, the AASB will publish a Canadian wraparound communication on its website shortly after the first guide is issued.

Canadian Auditing Standards

ISA 540 (Revised) Post-implementation Review

The AASB discussed issues related to the IAASB’s post-implementation review of International Standard on Auditing (ISA) 540 (Revised), Auditing Accounting Estimates and Related Disclosures. Key issues discussed included:

the IAASB project team’s analysis and summary of feedback received in response to the IAASB’s public consultation survey; and
initial views about the IAASB project team’s planned way forward based on the feedback received, including concerns about the proposed approach to addressing implementation challenges through the development of non-authoritative guidance, rather than through future narrow-scope amendments.

In December 2026, the IAASB project team plans to present its final recommendations for further action, along with a draft Feedback Statement, for discussion.

Targeted Standards in the ISA 500 Series

The AASB discussed issues related to the Targeted Standards in the ISA 500 Series project, which covers revisions to ISA 501, Audit Evidence – Specific Considerations for Selected Items (with a focus on inventory), and ISA 505, External Confirmations, and related conforming and consequential amendments.

Regarding proposed ISA 501, key issues discussed included:

the proposed restructuring of ISA 501 to have the audit response driven by the different methods entities use to verify the existence and condition of inventory; and
adding requirements and application material for circumstances when the auditor is unable to attend the entity’s full inventory count due to unforeseen circumstances to address the work effort on inventory movements between the entity’s inventory count date and the auditor’s alternative count date.

Regarding proposed ISA 505, key issues discussed included:

when using negative confirmations, removing the ambiguity created by the location of the word “only” and restructuring the preconditions as a single set of conditions rather than nested conditional requirements; and
clarifying the meaning of “analytical procedures that are not substantive analytical procedures” in application material, which describes other substantive procedures that auditors may perform in combination with negative confirmation requests.

Regarding proposed conforming and consequential amendments to ISA 330, The Auditor’s Responses to Assessed Risks, key issues discussed included:

reordering proposed paragraphs 11 and 11A of ISA 330 for the auditor to determine whether to perform external confirmations on cash and cash equivalents before considering whether to perform external confirmations for other balances; and
adding conditionality to paragraph 11 to consider whether to perform external confirmation procedures in circumstances other than those in paragraph 11A.

In December 2026, the IAASB plans to approve the exposure draft with the AASB’s planned approval in January 2027.

Other Canadian Standards

Other Assurance Engagements

The AASB discussed issues related to the IAASB’s information gathering on other subject matter-specific assurance engagements. Key issues discussed included:

the findings from the information-gathering activities undertaken by the IAASB; and
the IAASB’s potential prioritization of topics related to subject matter-specific assurance engagements, including the relevance and urgency in Canada of the four themes identified by the IAASB (shown below in no specific order):
- Assurance Engagements on Systems and Controls,
- Assurance Engagements on Controls at a Service Organization,
- Assurance Engagements to Provide a One-to-Many Report, and
Assurance Engagements on Various Types of Other Subject Matters Under International Standard on Assurance Engagements 3000 (Revised), Assurance Engagements Other Than Audits or Reviews of Historical Financial Information.

The AASB will continue to contribute to the IAASB’s further information-gathering activities as the IAASB prepares its final report with recommendations for December 2026.