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Canadian Auditing Standards

AASB Exposure Draft – Proposed Amendments to Canadian Auditing Standard (CAS) 240, The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements

Summary

High-quality audits support the smooth functioning of capital markets. The public interest is best served when everyone in the financial reporting system has confidence in audits. In recent years, high-profile international corporate failures and significant accounting restatements have put a spotlight on those involved in the preparation, approval, audit, analysis, and use of financial reports, particularly in the area of fraud.

The IAASB has now issued an Exposure Draft of International Standard on Auditing (ISA) 240 (Revised), The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements, and the related conforming and consequential amendments. In addition, the IAASB’s Exposure Draft also includes an Explanatory Memorandum, which provides background to, and an explanation for, the proposed revisions to extant ISA 240.

The AASB plans, subject to comments received following exposure, to adopt proposed ISA 240 (Revised) and the proposed conforming and consequential amendments to other ISAs. The result would be revised respective Canadian Auditing Standards (CASs).

We want to hear from you. Share your feedback on this Exposure Draft and help to influence the international standard.

Staff Contact(s)

Karen DeGiobbi, CPA, CA Director, Auditing and Assurance Standards Board

Phone number  +1 416 204 3337
Email address  [email protected]

How to reply

Respond to AASB Exposure Draft – Proposed Amendments to CAS 240, The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements by submitting a comment letter (in a Word file) or by taking part in our online activities via Connect.FRASCanada.ca. The response deadline is May 6, 2024.

Proposed revised CAS 240, The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements
Submit a letter

Support Materials

Fraud
Virtual Roundtable Discussion – AASB Exposure Draft, “Proposed Amendments to CAS 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements”
What You Need to Know about Changes to the Fraud Audit Standard

Background

In September 2020, as part of its information-gathering activities, the IAASB issued a Discussion Paper, “Fraud and Going Concern in an Audit of Financial Statements: Exploring the Differences Between Public Perceptions About the Role of the Auditor and the Auditor’s Responsibilities in a Financial Statement Audit.” The Discussion Paper considered additional information that could be communicated by the auditor, and the issues and challenges in applying ISA 240 in light of the changing environment, jurisdictional developments, and changing public expectations. 

The AASB conducted extensive outreach to obtain Canadian views on the matters discussed in the IAASB’s Discussion Paper. Consistent with respondents’ views, the AASB expressed support for the IAASB in pursuing a project to revise ISA 240.  

In addition, in October 2021, the AASB, in collaboration with the Association of Chartered Certified Accountants, the Chartered Professional Accountants of Canada, and Chartered Accountants Australia and New Zealand, released a report “Closing the Expectation Gap in Audit – The Way Forward on Fraud and Going Concern: A Multi-stakeholder Approach.” The report examines the auditor’s role in the areas of fraud and going concern and the related expectation gap and identifies recommendations to narrow this gap.

At its May 2021 meeting, the IAASB discussed the responses to its Discussion Paper and possible actions to address issues that had been identified. The discussion informed the development of the IAASB’s project proposal to revise extant ISA 240, which was approved in December 2021.