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 received a presentation from the International Auditing and Assurance Standards Board (IAASB) on its technology initiatives, including:
- the proposed roadmap for developing technology quality management non-authoritative materials, including the scope, structure, content elements, and sequencing of the guide series; and
- the proposed updates to its Technology Catalog.
The IAASB is expected to develop and publish its guides on a staggered timeline throughout the remainder of 2026 into June 2027.
Following the IAASB presentation, the AASB discussed:
- the relevance of the IAASB’s technology quality management non-authoritative materials in Canada; and
- how the AASB could support use of the guides in Canada, given their expected relevance.
Canadian Auditing Standards
Audit Evidence and Risk Response
The AASB discussed the IAASB’s project to revise International Standard on Auditing (ISA) 330, The Auditor’s Responses to Assessed Risks; ISA 500, Audit Evidence; and ISA 520, Analytical Procedures. Key issues discussed included:
- the circumstances in which tests of controls alone may be appropriate;
- the auditor’s assessment of accuracy and completeness when evaluating the reliability of information from sources internal to an entity;
- the procedures the auditor is required to perform when evaluating the reliability of the information intended to be used as audit evidence; and
- whether ISA 500 requires a specific documentation requirement.
The AASB also discussed issues related to the approval of the Canadian exposure draft of proposed amendments to Canadian Auditing Standard (CAS) 330, The Auditor’s Responses to Assessed Risks; CAS 500, Audit Evidence; and CAS 520, Analytical Procedures. Key issues discussed included:
- identifying the proposed Canadian amendments to the three standards;
- determining the exposure period and timing in Canada;
- developing potential content and questions for this exposure draft;
- developing the AASB’s engagement plan; and
- reviewing key steps to ensure compliance with the AASB’s due process.
The IAASB expects to approve its exposure draft of the three standards at its June 2026 meeting. The AASB expects to approve its Canadian exposure draft in late July and issue it in late August. Outreach activities are planned for September and October 2026.
Audits of Less Complex Entities
The AASB discussed the activities of its Audits of Less Complex Entities (LCE) Working Group, including:
- developing non-authoritative guidance on testing journal entries in audits of LCEs, expected to be published in fall 2026, including consideration of the process followed and feedback from targeted outreach with groups within the LCE audit ecosystem;
- influencing the scalability of CASs by providing input on post-implementation reviews and exposure drafts, including the upcoming audit evidence and risk response exposure draft; and
- monitoring emerging LCE audit issues and informing the AASB of significant developments in the LCE audit ecosystem.
The AASB will continue engaging with the Working Group to identify activities that best advance the Working Group’s mandate to support efficient and effective LCE audits, whether through additional non-authoritative guidance or other initiatives.
Targeted Standards in the ISA 500 Series
The AASB discussed 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.
Regarding proposed amendments to ISA 501, key issues discussed include:
- enhancing the application material to address the use of technologies in managing and auditing inventory and the use of an expert when management uses technology in inventory management, leveraging ISA 315 (Revised), Identifying and Assessing the Risks of Material Misstatement;
- supporting attendance at inventory counts either physically or remotely, using technological tools, where appropriate, and encouraging the IAASB to clarify in application material when each approach would provide sufficient appropriate audit evidence; and
- clarifying the sufficiency and appropriateness of audit evidence obtained for inventory existence and condition in circumstances involving cycle counts or inventory held at multiple locations.
Regarding proposed amendments to ISA 505, key issues discussed include:
- clarification of the role of an “intermediary,” including establishing boundaries on its facilitation role and distinguishing between control and responsibility over the external conformation process;
- appropriateness of the verb “determine” to describe the auditor’s required work effort in the proposed requirement for the auditor to perform external confirmations on cash, cash equivalents, and accounts receivable;
- the IAASB’s proposals on professional skepticism; and
- the proposed removal of the “stand back” requirements.
The IAASB will continue to discuss issues related to ISA 501 and ISA 505 at its September Board meeting, with approval of the exposure draft anticipated in December 2026.
Other Topics
ISA for LCE
The AASB received an update on the IAASB’s project to maintain the ISA for LCE. The AASB did not adopt the ISA for LCE for use in Canada.
The update included the results of the AASB staff’s targeted review of the draft IAASB exposure draft and key observations.
The AASB confirmed it will not formally respond to the IAASB’s exposure draft, as the ISA for LCE is not used in Canada. Instead, the AASB will pursue alternative avenues for sharing AASB feedback from its targeted monitoring.
ISRE 2410
The AASB received an update on IAASB’s Exposure Draft on the International Standard on Review Engagements (ISRE) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity’s Annual Financial Statements. ISRE 2410 has not been adopted in Canada. Instead, a domestically developed standard, Section 7060, Auditor Review of Interim Financial Statements, is used.
The update included the results of the AASB’s Securities Regulation Advisory Group’s targeted review of the IAASB’s Exposure Draft and key observations.
The AASB confirmed it will not formally respond to the IAASB’s Exposure Draft, as ISRE 2410 was not adopted in Canada. Instead, the AASB will pursue alternative avenues for sharing the AASB’s feedback from its targeted review.
Securities Regulatory Matters – IFRS 18
The AASB received an update on the ongoing discussions between the Securities Regulations Advisory Group and other key interested and affected parties regarding the audit implications of IFRS 18 Presentation and Disclosure in Financial Statements. Key topics discussed included:
- the auditor’s responsibilities regarding disclosures of management-defined performance measures in financial statements;
- the auditor’s considerations when securities regulators require a reporting issuer to restate or refile a management's discussion and analysis containing a non-generally accepted accounting principles financial measure that corresponds to a management-defined performance measure in the financial statements; and
- matters arising from the entity’s first-time transition to IFRS 18.
The AASB noted that discussions on these items are at an early stage. Therefore, the Board agreed on the importance of continuing discussions and, where appropriate, identifying opportunities to communicate more broadly with other interested and affected parties as views evolve.