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 May 18, 2021, AASOC received presentations on, and discussed the following:
- Chair’s Opening Remarks
- Approval of AASOC Minutes
- AASB Update
- Performance Review Committee Report
- AASB Performance Assessments
- AASB Strategic Plan
- AASB 2021-2022 Annual Plan
Chair’s Opening Remarks
AASOC Chair Kevin Nye welcomed all attendees to the meeting. He announced that Edward Waitzer will chair the newly formed Independent Review Committee on Standard Setting, which includes seven other members. The first meeting is scheduled for June 2021.
Approval of AASOC Minutes
Subject to minor changes, the minutes of the meetings held on February 25-26, 2021, April 19, 2021, and April 26, 2021, were approved by AASOC.
AASB Chair Ken Charbonneau briefed AASOC on the AASB’s activities since the last update.
Audits of Less Complex Entities
AASB Director Eric Turner presented an update on the Audits of Less Complex Entities (LCE) project. He explained that in March 2021, the International Auditing and Assurance Board (IAASB) discussed the first draft of the proposed LCE standard and met again in May 2021 to discuss the issue of applicability. The AASB reviewed the draft standard and identified some concerns. The Board concluded that it will issue a discussion paper seeking input from stakeholders on the IAASB’s Exposure Draft.
In response to a question, Mr. Turner said the AASB will discuss, at its July 2021 meeting, non-traditional mechanisms to collect stakeholder feedback.
Future-oriented Financial Information
Mr. Turner reminded AASOC members that, in 2020, the AASB conducted research to understand challenges practitioners face when compiling future-oriented financial information (FOFI) using AuG-16, Compilations of a Financial Forecast or Projection. Based on this research, the Board concluded that a new project was needed.
In April 2021, the AASB approved a project proposal to develop a new standard to replace AuG-16. This proposed new standard aims to clarify the scope, codify good practice, and ensure consistency in concepts and terminology with CSRS 4200, Compilation Engagements.
The FOFI project will pilot a new approach to speed up time-to-market. The proposed new standard is estimated to be completed by January 2023. A key element of the approach is to appoint a Reference Group. The Reference Group will include users and preparers who provide input throughout the development of the new standard. Mr. Turner added that the AASB hopes that a Reference Group will serve as a sounding board for key issues, save time in obtaining user feedback, and help the Task Force identify issues sooner.
Mr. Turner noted that the AASB’s next steps include recruiting for the Reference Group and for the Task Force, with the first Task Force meeting planned for June 2021.
AASOC supported the AASB’s new approach.
Performance Review Committee Report
Performance Review Committee Chair Bruce West informed AASOC that the Committee met on April 15, 2021, and May 12, 2021. At the Committee’s April meeting, Janet Grove was announced as the new Committee Chair. Mr. West also noted that John Walker has now joined the Nominating and Governance Committee as a member.
Mr. West stated that at its April meeting, the Performance Review Committee reviewed the AASB’s 2020-2021 Annual Performance Assessment, its 2016-2021 Strategic Plan Performance Assessment, and its 2021-2022 Annual Plan, including the results of its environmental analysis and risk assessment.
Ms. Grove said the Performance Review Committee’s May meeting focused on the AASB’s 2021-2022 Annual Plan and its upcoming Strategic Plan. The Committee also discussed stakeholder engagement.
AASB Performance Assessments
Mr. Charbonneau stated that since AASOC’s February meeting, performance assessments of the AASB’s 2020-2021 Annual Plan and its 2016-2021 Strategic Plan have been updated to the fiscal year ended March 31, 2021. At their April meetings, the AASB made progress on these assessments and the Performance Review Committee provided more comments.
AASOC had no additional comments regarding the assessments and agreed with the Performance Review Committee's assessment of the AASB’s performance.
AASB Strategic Plan
Mr. Charbonneau reminded AASOC that in January 2021, the AASB issued its 2022-2025 Draft Strategic Plan for public comment with a response deadline of April 15, 2021. A summary of comments on the Draft 2022-2025 Strategic Plan received during consultations was included in a Summary of Consultation report.
Mr. Charbonneau explained that in addition to the written feedback received from stakeholders, a social media campaign was launched using a tailored marketing approach to highlight specific topics. This consultation strategy included a series of Zoom sessions, LinkedIn communications, and leveraging the new FRASCanada community platform to engage stakeholders in surveys and consultations.
Mr. Charbonneau noted that, based on the consultations, stakeholders provided broad support for the Draft Strategic Plan. They also provided feedback specific to the remote work environment. The AASB concluded that a separate environmental theme is needed to ensure that the Board focuses on the changes to the work environment. The Board was pleased with the quality of feedback from stakeholders and plans to issue a Feedback Statement summarizing the feedback and recognizing the value of stakeholders’ participation.
AASB 2021-2022 Annual Plan
Mr. Turner presented AASOC with the first draft of the AASB’s 2021-2022 Annual Plan, which the Board and the Performance Review Committee have discussed. He highlighted that this Annual Plan is the first under the Board’s new Strategic Plan. The Board’s Annual Plan is future-looking and includes continuing activities and projects underway as well as new objectives highlighted in the Board’s new Strategic Plan. Based on specific risks, some focus areas will include strengthening stakeholder engagement and assessing the implications that advances in technology have on assurance and related services standards.
The AASB plans to approve the final 2021-2022 Annual Plan at its June 2021 meeting. It will be issued at the same time as the Strategic Plan, in early July.
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.