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AASOC Public Meeting Report – February 25-26, 2021

The Auditing and Assurance Standards Oversight Council (AASOC) discussed the activities of the Auditing and Assurance Standards Board (AASB) and related matters.

At its virtual meeting held on February 25-26, 2021, AASOC received presentations on, and discussed the following:

  • Chair’s Opening Remarks
  • Approval of December AASOC Minutes
  • AASB Update
  • AASB Due Process
  • Performance Review Committee Update
  • AASB Annual Plan Performance Assessment as at December 31, 2020
  • AASB Performance Assessment for the 2016-2021 Strategic Plan
  • AASB Planned Activities for the Period April 1-June 30, 2021
  • Incoming AASB Chair
  • Sustainability – Exploring the Landscape
  • Auditing in a COVID-19 Environment

Chair’s Opening Remarks

AASOC Chair Kevin Nye welcomed all attendees to the meeting.

Approval of December 2020 AASOC Minutes

AASOC approved the minutes of the meeting held on December 15, 2020.

AASB Update

AASB Chair Ken Charbonneau briefed AASOC on some of the Board’s activities since his last update to the Council.

Audits of Less Complex Entities

Mr. Charbonneau informed AASOC that in December 2020, the International Auditing and Assurance Standards Board (IAASB) approved a project proposal to develop a separate standard for audits of less complex entities (LCEs).

Mr. Charbonneau said that based on the AASB’s outreach activities, practitioners experience challenges in applying the Canadian Auditing Standards (CASs) when auditing LCEs. This is also a significant international issue. However, the international project focuses on a separate standard and the Board believes that this approach has fundamental public interest issues. So, the Board asked its Audits of Less Complex Entities Advisory Group (the Advisory Group) to consider domestic actions that may be taken to address the challenges practitioners face in auditing LCEs. First, the Advisory Group considered then-extant CAS 315, Identifying and Assessing the Risks of Material Misstatement Through Understanding the Entity and Its Environment, that stakeholders found challenging to apply in audits of LCEs. Following the Advisory Group’s assessment, the Board concluded at its February 2021 meeting that these matters will be addressed appropriately in newly revised CAS 315, Identifying and Assessing the Risks of material Misstatement, and related non-authoritative guidance.

Future-oriented Financial Information

Mr. Charbonneau reminded AASOC that, in March 2020, the AASB approved amendments to Assurance and Related Services Guideline (AuG) 6, Examination of a Financial Forecast or Projection Included in a Prospectus or Other Public Offering Document, and AuG-16, Compilation of a Financial Forecast or Projection, resulting from changes to the status of Section 4250, Future-oriented Financial Information.

In September 2020, staff consulted stakeholders and held outreach activities with the CPA provincial bodies practice advisors. In December 2020, the AASB reviewed the feedback and agreed on the public interest issues to include in the project proposal. The Board agreed that users of future-oriented financial information will need to be consulted as the project progresses.

At its February 2021 meeting, the AASB discussed using a Task Force, forming it, and piloting a new approach to accelerate the project’s timing. Staff will present project proposal to the AASB at its April 2021 meeting.

Evolution of Assurance

AASB Director Eric Turner briefed AASOC on the Evolution of Assurance project focused on gaining an understanding of stakeholders’ needs and expectations and determining if the existing standards meet them.

Three workstreams were established to meet these objectives.

  1. Determine whether existing standards meet stakeholder needs and expectations, focusing on fraud and going concern standards.
  2. Assess the value of non-authoritative guidance on Extended External Reporting.
  3. Explore evolving stakeholders needs, including the evolution gap. 

For the first workstream, the AASB reviewed the IAASB’s Discussion Paper, “Fraud and Going Concern in an Audit of Financial Statements,” at its December 2020 and January 2021 meetings. The Board submitted its response letter by the due date, February 1, 2021.

For the third workstream, at its December 2020 meeting, the AASB discussed a draft response letter to the IFRS® Foundation Trustees’ Consultation on Sustainability Reporting. The Board submitted its final response letter by the due date, December 17, 2020.

AASB Due Process

Mr. Turner noted that the AASB is seeking AASOC’s conclusion on whether the Board followed due process with proper regard for the public interest in developing and approving Canadian Standards on Quality Management (CSQM 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements, CSQM 2, Engagement Quality Reviews, CAS 220, Quality Management for an Audit of Financial Statements, and related conforming amendments) and withdrawing AuG-18, Criteria for Reports Issued Under Subsection 295(5) of “an Act Respecting Trust Companies and Savings Companies” in Québec.

After discussing the two projects, AASOC concluded that the AASB followed due process with proper regard for the public interest in developing and approving the Canadian Standards on Quality Management and withdrawing AuG-18.

Performance Review Committee Update

Performance Review Committee Chair Bruce West informed AASOC that the Committee met on January 29, 2021, to review the AASB’s nine-month Performance Report and to receive an update on the Board’s performance assessment relating to the 2016-2021 Strategic Plan.

Mr. West added that the Performance Review Committee agrees with the AASB’s nine-month review assessment, primarily noting that the Committee provided the Board Chair and Director with feedback on direction, positioning, and language for their consideration.

The Performance Review Committee agreed with the Board’s conclusion that the activities addressing the planned actions in the 2016-2021 Strategic Plan have been completed.

The Performance Review Committee was comfortable with the AASB’s approach to summarize internal activities in the 2021-2022 Annual Plan for April 1, 2021, and June 30, 2021. This summary is discussed below. 

AASB Annual Plan Performance Assessment as at December 31, 2020

Mr. Charbonneau stated that the AASB performed a nine-month review of its current Annual Plan for the period ended December 31, 2020. He added that the pandemic significantly influenced the Board’s activities during this period. Given the unprecedented times and the challenges faced globally, the Board reprioritized its projects, taking on unplanned activities. These unplanned activities affected the completion and timing of some activities identified in the Board’s Annual Plan. Although some activities were delayed, the Board concluded these delays will not affect the achievement of the 2016-2021 Strategic Plan’s objectives. These activities were not considered essential in completing the existing Strategic Plan. The Performance Review Committee agreed with this assessment at its January 29, 2021, meeting.

AASB Performance Assessment for the 2016-2021 Strategic Plan

Mr. Charbonneau said the AASB completed the planned actions designed to achieve the strategic objectives that serve the public interest set out in the Board’s 2016-2021 Strategic Plan. The Performance Review Committee agreed with this assessment at its January 29, 2021 meeting.

AASB Planned Activities for the Stub Period April 1-June 30, 2021

On the AASB’s 2021-2022 Annual Plan, Mr. Charbonneau said the Board publishes its Annual Plan on April 1 every year, in line with its fiscal period from April 1 to March 31. Due to the unforeseen impact of COVID-19, the Board decided to delay publishing its Draft Strategic Plan for stakeholder comment until early 2021. The delay was in the public interest as it allowed the Board to consider the implications of COVD-19 on its strategic objectives. The final 2022-2025 Strategic Plan will be issued on July 1, 2021. Therefore, the Board decided to delay publishing its 2021-2022 Annual Plan until July 1, 2021, consistent with the timing of the 2022-2025 Strategic Plan. In managing the stub period between April 1, 2021, and June 30, 2021, the Board summarized its activities, detailing key activities for this period. The Performance Review Committee expressed its full support for the Board’s decision and agreed with its rationale at the Committee’s meeting on October 28, 2020.

AASOC reviewed this summary and expressed no concerns.

Incoming AASB Chair

AASOC approved the appointment of Bob Bosshard as the new AASB Chair. Mr. Bosshard’s term will begin on July 1, 2021.

Sustainability – Exploring the Landscape

CPA Canada’s Vice-President of Research, Guidance and Support, Gordon Beal, updated AASOC on sustainability, environmental, and social reporting.

Mr. Beal noted that the shift of expectations from key stakeholders is driving the fundamental change for companies to understand their role in corporate social responsibility. He explained that stakeholders believe companies must integrate societal issues into their corporate thinking and take responsibility for the effects of operations on society.

In his presentation, Mr. Beal informed AASOC that stakeholders, including governments, customers, and shareholders/investors, are demanding more information about how firms are affecting society and the environment. He noted that today’s successful companies:

  • understand that business responsibilities extend to environmental and social responsibilities;
  • handle the interconnectedness and complexity of the business issues related to environmental and social matters;
  • challenge the status quo, working proactively with stakeholders; and
  • have dialogues and report strategically.

On the evolving corporate reporting landscape, Mr. Beal said that financial statements remain at the core of corporate reporting today. However, interest is increasing for an integrated approach to financial reporting that connects information, focuses on long-term decision making, and encompasses a holistic set of value drivers (e.g., natural, human, and social capital).

He also referenced the IFRS Foundation Trustees’ Consultation Paper on Sustainability that examines the need for globally consistent, comparable, and reliable sustainability standards.

Mr. Beal’s comments on members’ questions included the following:

  • There has been a sharper focus on environmental, social, and corporate governance following the COVID-19 pandemic.
  • Ninety-seven per cent of investors evaluate non-financial disclosures in their investment decisions.
  • Sustainability is a matter of public interest.
  • Seventy-six per cent of stakeholders believe chief executive officers should take the lead on corporate social responsibility rather than wait for the government to impose it.

Auditing in a COVID-19 Environment

Jean-François Trépanier, Grant Thornton Partner and AASB Vice-Chair, briefed AASOC on how the COVID-19 pandemic affects auditors’ abilities to obtain sufficient appropriate audit evidence.

Mr. Trépanier explained the pandemic affected entities in different ways. Some entities adapted by pivoting their business models or operational logistics and others greatly benefited from the pandemic. He noted that even within the same industry, entities experienced COVID-19 differently, making it difficult to generalize the issues taking place on the global stage.

Mr. Trépanier said that audit engagements remain significant to a firm’s overall performance. However, other services, such as review engagements and compilation engagements, are also fundamental.

He noted that auditors’ work conducted at the start of the pandemic was primarily related to 2019 financial statements, which were not affected by the pandemic for most entities. Therefore, the effect on the financial statements was not significant at that point in time. However, the challenge for practitioners was the process of conducting the audit, which changed overnight. There was a lot of cooperation and communication between firms and regulators to navigate this unprecedented time.

Like most industries, auditors benefited tremendously from technology during the pandemic because it facilitated new processes and aided in delivering high-quality work.

In response to a question related to an increase in audit risk as a result of COVID-19, Mr. Trépanier agreed that audit risk has increased in the virtual environment the firms are operating. To counter this, firms continue to reinforce the importance of supervision and review.

In response to a question on fraud and going concern, Mr. Trépanier referred to CAS 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements. He said this CAS specifically requires the engagement team discuss fraud risk factors, management’s controls, and unusual management behaviour. This discussion involves key members of the engagement team, including junior staff.


The Auditing and Assurance Standards Oversight Council (AASOC) is an independent, volunteer body established by the Canadian Institute of Chartered Accountants (now Chartered Professional Accountants of Canada) in 2002. It serves the public interest by overseeing and providing input on the activities of the Auditing and Assurance Standards Board (AASB), which sets standards for assurance and related service engagements. Reporting to the public and consisting of prominent leaders from business and regulators, AASOC’s responsibilities include appointing AASB members, providing input on strategic priorities and evaluating the performance of the AASB.