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)
Audit Evidence and Risk Response
The AASB discussed issues related to the International Auditing and Assurance Standards Board’s (IAASB) 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:
- alternative options for the placement of the stand-back requirement, currently in paragraph 26 of ISA 330;
- a description of automated tools and techniques, and placement of the description in the ISAs;
- challenges identified with the current requirement for performing audit procedures for each material class of transactions, accounting balances, and disclosures (paragraph 18 of ISA 330); and
- whether test of controls alone can provide sufficient appropriate audit evidence at the assertion level.
Fraud
The AASB discussed issues related to the IAASB’s project to revise ISA 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements. Key issues discussed included:
- the application of the requirement to incorporate an element of unpredictability in the selection of audit procedures; and
- risks of material misstatement related to management override of controls.
At its March meeting, as part of its due process, the IAASB will consider how the key changes to proposed ISA 240 (Revised) are mapped to the actions and objectives of the project proposal that support the public interest. Following which, the IAASB is expected to approve ISA 240 (Revised).
The AASB is expected to approve CAS 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements, at its June meeting.
Going Concern
The AASB discussed issues related to the final approval of CAS 570, Going Concern. Key issues discussed included:
- final changes made by IAASB before approval of ISA 570, Going Concern (Revised 2024); and
- final due process items prior to approval, including:
- consideration of any Canadian amendments;
- need for re-exposure;
- review of French translation;
- revising a draft Basis for Conclusions; and
- due process checklist.
The AASB concluded that re-exposure was not required as there are no Canadian amendments in CAS 570. Following discussion, the Board unanimously approved the final CAS 570. This standard is effective for audits of financial statements for periods beginning on or after December 15, 2026.
CAS 570 is expected to be published in a June 2025 CPA Canada Handbook update.
Technology Position
The AASB discussed issues related to the IAASB’s Gap of Analysis: Catalog of Issues and Proposed Actions (the Catalog). Key issues discussed included:
- firm- and engagement-level approval of technological resources;
- challenges of using artificial intelligence systems in audits, particularly black-box technologies; and
- the impact of entities’ use of technology on audits.
The IAASB is expected to provide “clearance” on the updated Catalog. After clearance, it will be uploaded to the IAASB Technology Page and periodically updated based on insights from monitoring activities.
Use of Experts
The AASB discussed issues related to the IAASB’s proposed narrow-scope amendments to ISA 620, Using the Work of an Auditor’s Expert, and other IAASB standards, as a result of revisions made to the International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code) regarding the use of experts. Key issues discussed included:
- whether the proposed new requirement in ISA 620 is needed, or if interoperability with the IESBA code could be better addressed through application material; and
- certain application material in ISA 620 and other IAASB standards that could be clarified to provide more explicit examples from the IESBA Code.
The IAASB is expected to approve a project proposal and an exposure draft at its March 2025 meeting and issue the exposure draft in April 2025.
The AASB also discussed the content and timing of a Canadian exposure draft, including whether Canadian amendments are needed in adopting the narrow-scope amendments. The AASB will further consider the need for Canadian amendments after the IAASB approves its exposure draft. The AASB is expected to issue an exposure draft in May 2025.
Other Canadian Standards (OCSs)
Sustainability Assurance
The AASB discussed the Canadian amendments for Indigenous matters to the International Standard on Sustainability Assurance 5000, General Requirements for Sustainability Assurance Engagements. Key issues discussed included:
- revisions for clarity and flow in the final drafting of the proposed Canadian amendments;
- final due process steps, including:
- re-exposure period, supporting approximately 90 days; and
- engagement plan, prioritizing the perspectives of Indigenous Peoples, communities, and assurance practitioners, while also emphasizing the importance of engagement with preparers of sustainability information; and
- revisions to the wraparound document that will accompany the re-exposure draft.
After reviewing the final drafting of the proposed Canadian amendment, the AASB unanimously approved the re-exposure draft. The anticipated publication date is late April 2025.
Other Topics
AASB Annual Plan and Emerging Issues
The AASB discussed emerging issues relevant to its standards and standard-setting activities. Key issues discussed included:
- the top themes identified through the monitoring process; and
- whether key themes identified from monitoring have been appropriately contemplated in the 2025-2026 planned activities and in the development of the 2026-2029 Strategic Plan.
The AASB confirmed that no additional activities are required in the 2025-2026 Annual Plan. The Board approved its 2025-2026 Annual Plan (to be published in April 2025).
AASB Performance Report
The AASB reviewed and approved its 2024-2025 Annual Performance Report and external Annual Report (to be published in June 2025).
AASB Strategic Plan
The AASB reviewed and approved its 2026-2029 Strategic Plan (to be published in April 2025).
Handbook Revisions on ISA for LCE
Handbook Revisions on ISA for LCE
The AASB discussed proposed Canadian amendments to the Handbook resulting from the AASB’s decision not to adopt the IAASB’s International Standard on Auditing for Audits of Financial Statements of Less Complex Entities (the ISA for LCE). The amendments are expected to be published in the May 2025 Handbook update.