Audit Evidence & Risk Response

The AASB discussed the IAASB’s project to revise International Standard on Auditing (ISA) 330, The Auditor’s Responses to Assessed Risks; ISA 500, Audit Evidence; and ISA 520, Analytical Procedures. Key issues discussed included:

• the circumstances in which tests of controls alone may be appropriate;
• the auditor’s assessment of accuracy and completeness when evaluating the reliability of information from sources internal to an entity;
• the procedures the auditor is required to perform when evaluating the reliability of the information intended to be used as audit evidence; and
• whether ISA 500 requires a specific documentation requirement.

The AASB also discussed issues related to the approval of the Canadian exposure draft of proposed amendments to Canadian Auditing Standard (CAS) 330, The Auditor’s Responses to Assessed Risks; CAS 500, Audit Evidence; and CAS 520, Analytical Procedures. Key issues discussed included:

• identifying the proposed Canadian amendments to the three standards;
• determining the exposure period and timing in Canada;
• developing potential content and questions for this exposure draft;
• developing the AASB’s engagement plan; and
• reviewing key steps to ensure compliance with the AASB’s due process.

The IAASB expects to approve its exposure draft of the three standards at its June 2026 meeting. The AASB expects to approve its Canadian exposure draft in late July and issue it in late August. Outreach activities are planned for September and October 2026.

The AASB discussed issues related to the IAASB’s project to revise International Standard on Auditing (ISA) 330, The Auditor’s Responses to Assessed Risks; ISA 500, Audit Evidence; and ISA 520, Analytical Procedures. Key issues discussed include:

• clarifying that an analytical procedure that does not meet the definition of a substantive analytical procedure, can still provide audit evidence when performed in combination with tests of detail or tests of controls;
• determining when tests of controls alone may be appropriate;
• the auditor’s responsibilities with respect to obtaining audit evidence about the operating effectiveness of indirect controls that support the effective operation of direct controls;
• clarifying the auditor’s consideration of the attributes of reliability, when evaluating the relevance and reliability of information intended to be used as audit evidence;
• potential content for an appendix in ISA 500 related to the auditor’s use of technological tools; and
• considering the significant consequential amendments to ISA 315, Identifying and Assessing the Risks of Material Misstatement.

At its June 2026 meeting, the IAASB is expected to approve an exposure draft of the three standards. The AASB will approve its Canadian exposure draft soon thereafter.

The AASB discussed issues related to the International Auditing and Assurance Standards Board’s (IAASB) project to revise International Standard on Auditing (ISA) 330, The Auditor’s Responses to Assessed Risks; ISA 500, Audit Evidence; and ISA 520, Analytical Procedures. Key issues discussed included:

• different options for revising paragraph 18 of ISA 330;
• aligning requirements in ISA 330 and ISA 500 regarding evaluating relevance and reliability of information;
• proposed changes to analytical procedures in ISA 520;
• proposed requirement for selecting items for testing; and
• placement of a “stand-back” requirement in ISA 700, Forming an Opinion and Reporting on Financial Statements.

At its March 2026 meeting, the AASB will continue to discuss these and other issues, as it follows the IAASB’s progress on this project. The IAASB is expected to approve the exposure drafts of the three standards in June 2026.

The AASB discussed issues related to the International Auditing and Assurance Standards Board’s (IAASB) project to revise International Standard on Auditing (ISA) 330, The Auditor’s Responses to Assessed Risks; ISA 500, Audit Evidence; and ISA 520, Analytical Procedures. Key issues discussed included:

• options for revising the requirement to design and perform substantive procedures on material classes of transactions, account balances and disclosures that are determined not to be significant (paragraph 18 of extant ISA 330);
• whether to allow use of tests of controls alone;
• the auditor’s work related to authenticity of information intended to be used as audit evidence;
• whether a requirement is needed in the ISAs related to use of technology by auditors; and
• work effort for investigating results of analytical procedures and substantive analytical procedures.

The AASB discussed issues related to the IAASB’s project to revise International Standard on Auditing (ISA) 330, The Auditor’s Responses to Assessed Risks; ISA 500, Audit Evidence; and ISA 520, Analytical Procedures. Key issues discussed included:

• definitions for “tests of details,” “substantive analytical procedures,” and “analytical procedures”;
• designing and performing a “substantive analytical procedure”;
• using audit evidence from previous audits;
• positioning of the stand-back requirement from ISA 330; and
• application material related to automated tools and techniques.

The AASB discussed issues related to the International Auditing and Assurance Standards Board’s (IAASB) project to revise International Standard on Auditing (ISA) 330, The Auditor’s Responses to Assessed Risks, ISA 500, Audit Evidence, and ISA 520, Analytical Procedures. Key issues discussed included:

• alternative options for the placement of the stand-back requirement, currently in paragraph 26 of ISA 330;
• a description of automated tools and techniques, and placement of the description in the ISAs;
• challenges identified with the current requirement for performing audit procedures for each material class of transactions, accounting balances, and disclosures (paragraph 18 of ISA 330); and
• whether test of controls alone can provide sufficient appropriate audit evidence at the assertion level.

The AASB discussed the draft project proposal developed by the IAASB for revisions to ISA 500, Audit Evidence, ISA 330, The Auditor’s Responses to Assessed Risks, and ISA 520, Analytical Procedures – to be known as the Integrated Project. Key issues discussed included:

• intersection of the Technology Gap Analysis with this project; 
• consideration of activities to address issues identified under this project; and 
• the timeline for the project.

The IAASB is expected to approve the project proposal at its December meeting.

The AASB also discussed and was supportive of establishing an advisory group to inform the work on this project. The Board considered the composition of the advisory group, the skill sets needed among members, and the timeline for recruitment.

The AASB discussed issues related to the IAASB’s information gathering for an integrated project on risk response. Key issues discussed included:

• how to use audit evidence about the operating effectiveness of controls obtained in previous periods;
• what challenges are present in carrying out the requirement to perform substantive procedures for material classes of transactions, account balances and disclosures, irrespective of risk;
• situations where testing operating effectiveness of controls should be required;
• the root cause of issues related to nature, timing, and extent of testing controls; and
• whether a revision to ISA 520, Analytical Procedures, is necessary.

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 discussed included:

• the new requirement for when the auditor uses automated tools and techniques for obtaining audit evidence;
• the conditional requirement related to accuracy and completeness; and
• the way forward for the project and its completion timeline.

The AASB discussed issues related to the International Auditing and Assurance Standards Board’s (IAASB) project to revise International Standard on Auditing (ISA) 500, Audit Evidence. Key issues discussed included:

• the modernizing of the standard with respect to technology by including a conditional requirement for when the auditor uses automated tools and techniques during the audit;
• the addition of a definition for persuasiveness in the standard and whether the term needed to be elevated to a requirement;
• the clarification of how the auditor determines which attributes to consider when evaluating relevance and reliability of information intended to be used as audit evidence;
• whether to clarify the conditional requirement to consider accuracy and completeness in relation to information generated by the entity only; and
• whether the stand-back requirement was duplicative with the requirement in ISA 330, The Auditor’s Responses to Assessed Risks.

The AASB discussed comments received on its Exposure Draft, “CAS 500, Audit Evidence” and reviewed a draft of its response letter to the IAASB’s Exposure Draft of ISA 500, Audit Evidence. Key issues discussed included:

• the key overall messages of the response letter;
• how the auditor’s use of technology was addressed in the Exposure Draft and whether the response letter should advocate for non-authoritative guidance outside of the standard, or a specific requirement in the standard; and
• the level of engagement achieved with interested and affected parties, as outlined in the outreach plan for the project.

The AASB will submit its response in advance of the IAASB’s deadline on April 24, 2023.

The AASB reviewed feedback received on the Exposure Draft of the proposed CAS 500, Audit Evidence. Key matters discussed included:

• the outreach activities completed related to the Exposure Draft;
• the key issues identified by respondents to the proposed changes; and
• the proposed direction for responses to the International Auditing and Assurance Standards Board’s (IAASB) Exposure Draft questions.

The AASB will review and discuss a draft of its response letter at its April 2023 meeting.

The AASB discussed issues related to the International Auditing and Assurance Standards Board’s (IAASB) project to revise International Standard on Auditing (ISA) 500, Audit Evidence.

Key issues included:

• the revisions the IAASB made to the proposed changes to ISA 500 in finalizing its exposure draft; 
• the conforming and consequential amendments related to ISA 500;
• the matters related to the Canadian Exposure Draft, including the comment period and fatal-flaw review of the French translation; and
• a review of the Canadian wrap-around document to be issued as part of the Canadian exposure draft.

The AASB approved the exposure draft, which it expects to issue in late November 2022, with a comment deadline of March 15, 2023.

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.

The AASB discussed the International Auditing and Assurance Standards Board’s (IAASB) proposed revisions to International Standard on Auditing (ISA) 500, Audit Evidence. Key issues discussed included:

• the objectives of the standard;
• the definition for audit evidence;
• the addition of general information technology control examples in the standard;
• the inclusion of a diagram on ISA 500 in the explanatory memorandum to the exposure draft; and
• the conforming amendments related to ISA 500.

The AASB discussed the International Auditing and Assurance Standards Board’s proposed International Standard on Auditing (ISA) 500, Audit Evidence. Key issues discussed included:

• how persuasiveness relates in determining sufficient and appropriate audit evidence;
• presenting biases that impact the auditor; and
• clarifying the use of remote observation as an audit procedure.

The AASB provided input to the International Auditing and Assurance Standards Board (IAASB) members from Canada on issues related to the IAASB’s project to revise International Standard on Auditing (ISA) 500, Audit Evidence. Key issues discussed included:

• the first read of the proposed revised requirements;
• how technology is addressed in the proposed revisions; and
• potential conforming and consequential amendments as a result of revisions to ISA 500.

The AASB will review the proposed application material to the revised standard at a future meeting.

The AASB provided input to the International Auditing and Assurance Standards Board (IAASB) members from Canada on issues related to the IAASB’s project to revise International Standard on Auditing (ISA) 500, Audit Evidence. Key issues discussed included:

• the proposed approach for using the terms “consistent and inconsistent” and “corroborate and contradict” in the context of exercising professional skepticism relating to audit evidence; and
• including new requirements in the proposed standard to:
  • address professional skepticism, and
  • conclude whether sufficient appropriate audit evidence has been obtained.

The AASB provided input to the International Auditing and Assurance Standards Board (IAASB) members from Canada on the IAASB Working Group’s project proposal to revise International Standard on Auditing (ISA) 500, Audit Evidence.

Key issues discussed included:

• developing a set of factors in relation to, or attributes of, information for auditors to use when considering information to use as audit evidence;
• differentiating the auditor’s work effort in relation to information to use as audit evidence; and
• introducing and defining the concept of persuasive audit evidence.

The AASB discussed the International Auditing and Assurance Standards Board’s (IAASB) proposals for the way forward in relation to audit evidence, including a proposal to revise International Standard on Auditing (ISA) 500, Audit Evidence.

The IAASB plans to discuss this topic at its June 2020 meeting.

The AASB discussed the International Auditing and Assurance Standards Board’s (IAASB) information gathering and targeted outreach activities related to audit evidence, as well as the stakeholder consultation plan for Canada. Issues discussed included matters that the Board believes are causing the most difficulties with audit evidence in practice and how these matters can be best addressed.

The AASB decided to form an advisory group to provide input to the Board on issues as the International Auditing and Assurance Standards Board (IAASB) audit evidence project progresses. The Board discussed the size of the advisory group and relevant experience that members should have. The Board will issue a public call to identify and engage potential members.