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
Audit Evidence
The AASB discussed issues related to the International Auditing and Assurance Standards Board’s (IAASB) proposed revisions to International Standard on Auditing (ISA) 500, Audit Evidence. Key issues included:
- a full review of proposed ISA 500;
- the conforming and consequential amendments related to ISA 500;
- the exposure period and the proposed implementation period; and
- the topics to be covered in the explanatory memorandum accompanying the exposure draft of ISA 500.
The IAASB expects to approve an exposure draft at its September 2022 meeting. The AASB would then approve a Canadian exposure draft shortly after.
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 included:
- options for adding further transparency in the auditor’s report regarding fraud;
- whether the proposed changes should apply to listed entities or all entities; and
- the proposed structure for ISA 240.
Going Concern
The AASB discussed issues related to the IAASB’s project to revise ISA 570 (Revised), Going Concern. Key issues included:
- terminology;
- risk identification and assessment;
- management’s assessment of going concern;
- professional skepticism; and
- transparency about going concern in the auditor’s report.
Listed Entity and Public Interest Entity
The AASB discussed its draft responses to the IAASB’s Exposure Draft, "Proposed Narrow Scope Amendments to ISA 700 (Revised), Forming an Opinion and Reporting on Financial Statements, and ISA 260 (Revised), Communication with Those Charged with Governance as a Result of the Revisions to the International Ethics Standards Board for Accountants (IESBA) Code that Require a Firm to Publicly Disclose When a Firm Has Applied the Independence Requirements for Public Interest Entities (PIE)." Key issues discussed included:
- whether the auditor’s report is the appropriate mechanism for publicly disclosing when the auditor has applied relevant ethical requirements for independence for certain entities in performing the audits of financial statements;
- the proposed revisions to ISA 700 (Revised) and ISA 260 (Revised);
- whether the IAASB should consider revisions to International Standard on Review Engagements 2400 (Revised), Engagements to Review Historical Financial Statements, to address transparency about the ethical requirements for independence applied for certain entities; and
- the proposed effective date of the revisions to ISA 700 (Revised) and ISA 260 (Revised).
The IAASB’s deadline for comments on its Exposure Draft is October 4, 2022. The AASB will respond.
Other Canadian Standards
Audits of Less Complex Entities
The AASB discussed issues related to the IAASB’s project to develop a separate standard for audits of less complex entities (LCEs). Key issues included:
- the Authority of proposed ISA for LCE, including the content and presentation of the qualitative characteristics of a typical LCE;
- whether to incorporate accounting estimates that are more complex in the ISA for LCE, and if so, how;
- proposed changes to the Authority to allow less complex group audits to be performed using ISA for LCE, including how to address the use of component auditors; and
- how to revise requirements to be more proportionate to audits of LCEs.
Sustainability
The AASB discussed issues related to the IAASB’s project for developing an overarching standard for assurance on sustainability reporting, and issues related to its development. Key issues included:
- the content of the project proposal;
- the structure for an overarching standard for assurance on sustainability reporting;
- the initial proposals regarding the defined terms for the overarching standard; and
- the approach to developing the requirements for the overarching standard.
The IAASB expects to approve a standard-setting project proposal at its September 2022 meeting.
At its next meeting, the AASB will discuss IAASB issues and next steps for Canadian sustainability assurance standard setting.
Other
Annual Plan
The AASB discussed and revisited its activities in the 2022-2023 Annual Plan considering further changes to staff resources and its additional activities in the first half of the year.
Independent Review Committee on Standard Setting
The AASB received an update from the Chair of the Independent Review Committee on Standard Setting in Canada.