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AASOC Public Meeting Report – May 22, 2020

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

At this call held on May 22, 2020, AASOC received presentations on, and discussed the following:

  • Chair’s Opening Remarks
  • Approval of March AASOC Minutes
  • AASB COVID-19-Pandemic Activities
  • AASB Due Process

Chair’s Opening Remarks

AASOC Chair Kevin Nye welcomed all attendees to the meeting. He informed the Council that in addition to the AASB’s due process approvals, the Council will also receive an update on how the COVID-19 pandemic affected the Board’s activities.

Mr. Nye also expressed an opportunity for AASOC to enhance its engagement on the Independence Standing Committee’s set-up activities. He noted that to better exercise its oversight responsibilities, the Council needs to familiarize itself with international independence issues and consider how they may impact Canada. One Council member suggested that the Council receive an update on independence matters from the Canadian representative on the International Ethics Standards Board of Accountants (IESBA). Staff will try to arrange this update for the Council’s June meeting.

Stephenie Fox, Vice-President, Standards, FRAS Canada, informed the Council that the Monitoring Group intends to issue a Plan of Action document in June 2020. It also plans to maintain its two boards: the International Auditing and Assurance Standards Board (IAASB) and the IESBA. The Monitoring Group will also reduce the boards’ size from 18 to 16 members. It will also clarify the Public Interest Oversight Board’s role.

Approval of March AASOC Minutes

Subject to some edits, the minutes of the meeting held on March 25, 2020 were approved by AASOC.

AASB COVID-19-Pandemic Activities

AASB Chair Ken Charbonneau briefed AASOC on how the COVID-19 pandemic affected the Board’s activities.

The AASB discussed the overarching risks to the its Annual Plan at its meeting on April 20, 2020. Some of these risks include the lack of face-to-face meetings, the impact of the IAASB’s activities, staffing shortages, and the reduction of CPA Canada funding. The Board also revisited the key actions planned for the first quarter of 2020 in light of the pandemic-related uncertainties. Board staff are reassessing planned outreach and related activities, as well as new models for consultations on standards being developed. The Board will reconsider its activities for the balance of the fiscal year as new information becomes available.

The AASB also discussed the effective dates of the standards that have been approved but are not yet effective, and whether any should be deferred. The Board decided that no action is required at this time. However, it will continue to actively monitor the current environment for further developments and communicate to stakeholders, as necessary.

In discussing its 2022-2025 Strategic Plan, the AASB decided to delay issuing its draft Strategic Plan until a later date so it has time to consider the content and to provide stakeholders with the opportunity to engage with the Board and provide feedback. The final Strategic Plan would likely be issued one quarter later than originally planned (i.e., by July 1, 2021) and cover the same planning period. Mr. Charbonneau informed AASOC that more details on the revised timeline of the Board’s 2022-2025 Strategic Plan will be provided at the Council’s June meeting.

Carol Paradine, CEO of the Canadian Public Accountability Board, briefed AASOC on the implications of COVID-19 on audit. She noted that in addition to considering how the pandemic affects the going concern of entities, the auditor must also consider remote working, impairment valuations, and cyber risk.

AASB Due Process

Conducting a Performance Audit in the Public Sector in Accordance with Canadian Standard on Assurance Engagements (CSAE) 3001

AASB Director Eric Turner announced the goal of this session is to provide AASOC with a basis to conclude on whether the AASB followed due process with proper regard for the public interest in developing and approving Assurance and Related Services Guideline (AuG) 50, Conducting a Performance Audit in the Public Sector in Accordance with CSAE 3001 and the related consequential amendments.

He reminded AASOC that the AASB undertook a project in September 2015 to update the public sector auditing standards to reflect changes in auditing standards and the evolution of audits in the public sector. AuG-50 is the second phase of this project.

In response to a AASOC member’s question, Mr. Charbonneau noted that although rarely used, the AASB’s confidentiality accommodation is provided on all of the its consultations and is consistent with the IAASB’s due process. He added that the respondent’s identity is only shared with the Board to consider the issues raised in the letter. He further added that the respondent’s letter is not shared on the Board’s website.

An AASOC member noted that although the AASB agreed not to add additional guidance and examples on identifying internal controls, as a respondent suggested, he asked why the Basis for Conclusions does not address this point. Mr. Turner noted that the Board agreed that this can better be accomplished on a holistic standard level rather than specific to AuG-50 as this type of guidance could be appropriate across a broad range of engagements. The Board did not believe this was a significant matter that needed to be reflected in the Basis for Conclusions.

AASOC concluded that the AASB followed due process with proper regard for the public interest in developing and approving the amendments to AuG-50 and the related consequential amendments.

Agreed-Upon Procedures

Mr. Turner informed AASOC that Canadian Standard on Related Services (CSRS) 4400, Agreed-Upon Procedures Engagements, (AUP) is a project AASB undertook in 2015 to update Section 9100, Reports on the Results of Applying Specified Auditing Procedures to Financial Information Other than Financial Statements. The Board subsequently decided this project would also update Section 9110, Agreed-Upon Procedures Regarding Internal Control over Financial Reporting. The goal of this session is to provide the Council with a basis to conclude on whether the Board followed due process with proper regard for the public interest in developing and approving CSRS 4400 and the related consequential amendments.

The new standard covers agreed-upon procedures engagements on any financial and non-financial subject matters.

After discussing and raising some questions, AASOC agreed to revisit this topic at its meeting on June 22-23, 2020.

Other Matters

AASOC approved the appointment of Brendan Blair to the AASB for a three-year term beginning on June 1, 2020 and ending on March 31, 2023.