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:
- options for revising the requirement to design and perform substantive procedures on material classes of transactions, account balances and disclosures that are determined not to be significant (paragraph 18 of extant ISA 330);
- whether to allow use of tests of controls alone;
- the auditor’s work related to authenticity of information intended to be used as audit evidence;
- whether a requirement is needed in the ISAs related to use of technology by auditors; and
- work effort for investigating results of analytical procedures and substantive analytical procedures.
Experts Narrow-scope Amendments
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) regarding the use of experts. Key issues discussed included:
- proposed post-exposure revisions to ISA 620, and other IAASB standards, including a new requirement that makes it explicit that the auditor is prohibited from using the work of an external expert when the auditor concludes that the expert does not have the necessary competence, capabilities, and objectivity for the auditor’s purposes;
- whether conforming amendments should be made to International Standard on Sustainability Assurance (ISSA) 5000, General Requirements for Sustainability Assurance Engagements, to include the same prohibition in ISA 620 and the other standards; and
- the proposed effective date of the narrow-scope amendments, including the construct of the effective date for other assurance and related services engagements.
The AASB also discussed a summary of outreach and feedback on the Exposure Draft, “Proposed Narrow-scope Amendments Related to the IAASB’s Using the Work of an External Expert Project“, and concluded that robust and appropriate engagement was obtained.
The IAASB is expected to approve the narrow-scope amendments at its September 2025 meeting. The AASB is expected to approve the narrow-scope amendments at its December 2025 meeting.
ISA 540 – Post-Implementation Review
The AASB discussed issues related to the IAASB’s plan for the ISA 540 (Revised), Auditing Accounting Estimates and Related Disclosures, post-implementation review (PIR). Key issues discussed included:
- the proposed PIR and whether there are any other matters or activities that should be included; and
- the benefits, implementation challenges, and questions related to ISA 540 (Revised) that the IAASB should consider in developing the public consultation survey that will be presented to members in December.
At its next meeting, the AASB will discuss the IAASB’s public consultation survey as well as any Canadian activities to support the IAASB’s PIR Plan.
ISA for Less Complex Entities (LCE)
The AASB discussed options to approach its monitoring of the IAASB’s upcoming projects to maintain the International Standard on Auditing for Audits of Financial Statements of Less Complex Entities (ISA for LCE), given the Board did not adopt the ISA for LCE for use in Canada.
The AASB decided that it will monitor and consider providing input only at key milestone stages of the IAASB’s maintenance projects.
The IAASB is expected to approve a project proposal for its maintenance project in December 2025.
Technology Position
The AASB discussed the semi-annual update for Component 3 of the IAASB’s Technology Position. Key issues discussed included:
- output from IAASB’s Component 3 monitoring;
- proposed changes to the catalogue of issues and possible actions on the IAASB’s Technology Position page, including an auditor reporting and transparency issue; and
- an update on the Technology Quality Management workstream.
The next semi-annual update will be provided in March 2026.
Other Canadian Standards (OCSs)
Compilations of Future-oriented Financial Information (FOFI) and Pro Forma
The AASB discussed key issues arising from outreach on the Exposure Draft of a new Canadian Standard on Related Services (CSRS) 4250, “Compilation Engagements on Future-oriented Financial Information and Pro Forma.” Key issues discussed included:
- revising the Compilation Engagement Report title to clearly identify the type of FOFI (e.g., forecasted FOFI or projected FOFI);
- allowing for an implementation period of at least 24 months following issuance of the CSRS and clarifying within the CSRS that early application is permitted; and
- adding application material without expanding the scope of the CSRS, to explain that while a practitioner would not be able to assert compliance with the CSRS, it may be adapted as necessary in the circumstances for use in the compilation of a forecast, projection or pro forma of non-financial information.
At its January 2026 meeting, the AASB will consider any remaining issues and perform a final read of the CSRS. The Board anticipates approval of the final standard in Spring 2026.
Sustainability Assurance
The AASB discussed the initial results of outreach on its Re-Exposure Draft, Canadian Amendments related to Indigenous Matters in the Canadian Standard on Sustainability Assurance (CSSA) 5000, General Requirements for Sustainability Assurance Engagements. Key issues discussed included:
- the summary of outreach activities and main areas of focus raised by respondents; and
- the next steps for analyzing and responding to the feedback received.
After reviewing the results of outreach activities, the Board concluded that robust and appropriate engagement was achieved on the Re-Exposure Draft.
At its next meeting, the Board will discuss the issues and recommendations based on the outreach feedback received.