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Canadian Auditing Standards

Listed Entity and Public Interest Entity

Summary

The International Ethics Standards Board for Accountants (IESBA) approved revisions in the International Code of Ethics for Professional Accountants (including International Independence Standards) (the IESBA Code) to the definitions of the terms “listed entity” and “public interest entity” (PIE) in December 2021.

The International Standards on Quality Management (ISQMs) and International Standards on Auditing (ISAs) include requirements specific to listed entities and refer to entities with public interest.

Staff Contact(s)

Chi Ho Ng, CPA, CA Principal, Auditing and Assurance Standards Board

Jacqui Kuypers, CPA, CA Principal, Auditing and Assurance Standards Board

Project Status

  • Information gathering

    AASB submitted its response to the IESBA Exposure Draft

  • Approving project

    The IAASB approved project proposal in March 2022

  • Consulting stakeholders

    Track 1 Exposure Draft issued in August 2022

    Stakeholders were encouraged to respond by September 16, 2022

    Read what stakeholders had to say about the Exposure Draft

  • Deliberating feedback
  • Final pronouncement

    The IAASB approved narrow-scope amendments to ISA 700 (revised) and ISA 260 (revised)

    The AASB approved narrow-scope amendments to CAS 700 and CAS 260

News


November 1, 2023

News

Update: AASB approves narrow-scope amendments to CAS 700 and CAS 260

At the September 12-13, 2023, Board meeting the AASB approved narrow-scope amendments to CAS 700, Forming an Opinion and Reporting on Financial Statements, and CAS 260, Communication with Those Charged with Governance, subject to the PIOB’s due process certification. The PIOB has now certified the IAASB’s due process for ISA 700 (Revised) and ISA 260 (Revised) and the IAASB has released the final standards. The narrow-scope amendments to CAS 700 and CAS 260 will become effective for audits of financial statements for periods beginning on or after December 15, 2024. The narrow-scope amendments were issued in the Handbook in November 2023.

May 9, 2023

News

AASB Response – Proposed Narrow Scope Amendments to ISA 700 (Revised) and ISA 260 (Revised)

The Board submitted a comment letter responding to the IAASB’s Exposure Draft, Proposed Narrow Scope Amendments to ISA 700 (Revised), Forming an Opinion and Reporting on Financial Statements and ISA 260 (Revised), Communication with Those Charged with Governance. Read our response letter to learn more.      

February 7, 2023

International Activity, Resource, Article

Survey: Prioritizing Projects in the IAASB’s Work Plan for 2024-2027

The AASB is seeking your input and help in responding to the IAASB’s Proposed Strategy and Work Plan for 2024-2027. The survey is designed to gather your input on which projects should be prioritized by the IAASB. Read the work plan and provide your input via our survey by March 31, 2023.

August 9, 2022

Document for Comment

Proposed Narrow-scope Amendments to CAS 700, Forming and Opinion and Reporting on Financial Statements, and CAS 260, Communication with Those Charged with Governance, as a Result of the Revisions to the IESBA Code that Require a Firm to Publicly Disclose When a Firm Has Applied the Independence Requirements for Public Interest Entities

Share your views on the AASB Exposure Draft – Proposed Narrow-scope Amendments to CAS 700, Forming an Opinion and Reporting on Financial Statements, and CAS 260, Communication with Those Charged with Governance. Submit your comments by September 16, 2022. For full details, visit the Document for Comment page.

August 2, 2022

International Activity

IAASB Proposes Narrow Scope Amendments to Operationalize Changes to the IESBA Code that Enhance Transparency About Independence

The International Auditing and Assurance Standards Board (IAASB) issued its Exposure Draft of narrow scope amendments to ISA 700 (Revised), Forming an Opinion and Reporting on Financial Statements, and ISA 260 (Revised), Communication with Those Charged with Governance. Comments are due to the IAASB on October 4, 2022. The AASB is expected to issue its related exposure draft on August 9, 2022.

Meeting & event summaries


February 8, 2024

AASB Decision Summary – January 24, 2024

The AASB discussed issues regarding the Canadian exposure draft related to the IAASB’s proposed narrow-scope amendments to International Standards on Quality Management and International Standards on Auditing. Key issues discussed included:

  • the public interest considerations of not adopting the IAASB’s proposed narrow-scope amendments at this time;
  • the IAASB’s proposed narrow-scope amendments to its review engagement standard;
  • the Canadian wraparound document, including the questions; and
  • the other Canadian exposure draft considerations, including the exposure period, the targeted outreach plan, and compliance with the Board’s due process.

The AASB, the Public Trust Committee (PTC) and its Independence Standing Committee (ISC) recognize the importance of coordination and collaboration to ensure that the Canadian Independence Standards and the Board’s standards are interoperable and not in conflict. Recognizing the ISC’s role in defining “public interest entity” in the Canadian context, the Board sees merit in deferring the consideration of adopting the IAASB’s narrow-scope amendments until the PTC has completed its due process to finalize its “public interest entity” definition for the Canadian Independence Standards. This deferral allows the Board to evaluate the final updates to the Canadian Independence Standards, once approved by the PTC, and their interoperability with the IAASB’s narrow-scope amendments.

The AASB unanimously approved the Canadian exposure draft proposing not to adopt the IAASB revisions at this time. The Board expects to issue the exposure draft in late February 2024, with comments due by April 8, 2024.

January 4, 2024

AASB Decision Summary – December 4-5, 2023

The AASB discussed issues related to the IAASB’s possible approval of issuing an exposure draft on Listed Entity/Public Interest Entity ̶ Track 2 and the related issues that are prevalent in Canada. Key issues discussed included:

  • the implications of the application of differential requirements in ISA 720 to listed entities;
  • the exposure period of the IAASB’s exposure draft; and
  • the AASB’s approach to considering the IAASB’s revisions in Canada, considering expected activity of the Independence Standing Committee , and the resulting impact on the Canadian exposure draft.

The IAASB is expected to approve its potential exposure draft at its meeting in December 2023. The AASB is expected to approve the Canadian exposure draft at its meeting in January 2024.

December 14, 2023

AASB Decision Summary – November 17, 2023

The AASB discussed the Independence Standing Committee’s (ISC) views on the definition of “public interest entity” (PIE). Key areas discussed included:

  • the ISC’s overarching development framework;
  • the categories of entities; and
  • the exemptions (by size and type).

October 10, 2023

AASB Decision Summary – September 12-13, 2023

The AASB unanimously approved narrow-scope amendments to Canadian Auditing Standard (CAS) 700, Forming an Opinion and Reporting on Financial Statements, and CAS 260, Communication with Those Charged with Governance, subject to the International Public Interest Oversight Board’s due process approval of narrow-scope amendments ISA 700 (Revised) and ISA 260 (Revised).

Prior to approval, the AASB concluded:

  • through unanimous decision, that re-exposure was not necessary as there are no Canadian amendments in CAS 700 or CAS 260; and
  • that the narrow-scope amendments will be effective for audits of financial statements for periods beginning on or after December 15, 2024.

Once the Auditing and Assurance Standards Oversight Council confirms that the AASB followed due process with proper regard for the public interest, the final narrow-scope amendments will be issued in the CPA Canada Handbook – Assurance in November 2023.

June 29, 2023

AASB Decision Summary – June 12-13, 2023

The AASB discussed issues related to the IAASB’s narrow-scope amendments project to revise the definitions of “listed entity” and “public interest entity,” including proposed revisions to ISA 700 (Revised), Forming an Opinion and Reporting on Financial Statements, and ISA 260 (Revised), Communication with Those Charged with Governance. Key issues discussed included:

  • the proposed final revisions to ISA 700 (Revised), including revisions to application material supporting the conditional requirement for the auditor to disclose the independence requirements applied; and
  • the proposed final revisions to ISA 260 (Revised), including the new requirement for the auditor to communicate with those charged with governance, the independence requirements applied, regardless of whether they were differential independence standards.

The IAASB expects to approve final revisions at its June 2023 meeting.

The AASB also discussed whether any Canadian amendments should be made when adopting the revisions in the equivalent Canadian Auditing Standards (CASs). After discussing the feedback received on its Exposure Draft and the final revisions proposed by the IAASB, the AASB intends to adopt the IAASB’s revisions without Canadian amendments.

The AASB plans to approve final revisions to the CASs in September 2023.


April 4, 2023

AASB Decision Summary – March 13-14, 2023

The AASB discussed issues related to the IAASB’s narrow-scope amendments project to revise the definitions of “listed entity” and “public interest entity,” including proposed revisions to ISA 700 (Revised), Forming an Opinion and Reporting on Financial Statements, and ISA 260 (Revised), Communication with Those Charged with Governance. Key issues discussed included:

  • the proposed changes to ISA 700 (Revised) and ISA 260 (Revised); and
  • how the IAASB addressed the feedback provided by the AASB in its response letter to the Exposure Draft.

December 13, 2022

AASB Decision Summary – November 28-29, 2022

The AASB discussed issues related to the IAASB’s narrow-scope amendments project to revise the definitions of “listed entity” and “public interest entity”, and other revisions to align with recent changes to the International Ethics Standards Board for Accountants International Code of Ethics for Accountants (including International Independence Standards) (IESBA Code). Key issues included:

  • the IAASB’s proposed objective and guidelines for establishing differential requirements for certain entities in the International Standards on Quality Management (ISQMs) and ISAs;
  • the factors and examples in evaluating the extent of public interest of an entity;
  • a case-by-case analysis of extant differential requirements for listed entities in the ISQMs and ISAs;
  • the IAASB adopted the IESBA definition of “public interest entities” (PIE) and “publicly traded entity” into the ISQMs, ISAs, and the Glossary of Terms; and
  • the introductory and application material in the ISQMs and ISAs.

The AASB also discussed possible implications in Canada of the proposed revisions, considering the Codes of Professional Conduct that practitioners are required to comply with in Canada are not the same as the IESBA Code. The Board will discuss these implications further at future meetings.

October 12, 2022

AASB Decision Summary – September 29, 2022

The AASB discussed feedback received on its Exposure Draft, “Proposed Narrow-scope Amendments to CAS 700, Forming an Opinion and Reporting on Financial Statements, and CAS 260, Communication with Those Charged with Governance, as a Result of the Revisions to the International Ethics Standards Board for Accountants (IESBA) Code that Require a Firm to Publicly Disclose When a Firm Has Applied the Independence Requirements for Public Interest Entities.” Key issues included:

  • when auditors should be required to disclose in the auditor’s report the independence requirements they complied with;
  • whether auditors should be required to communicate the independence requirements applied in their communications with those charged with governance; and
  • the potential Canadian amendments to the International Auditing and Assurance Standards Board’s (IAASB) proposed revisions.

The AASB also discussed its draft response to the IAASB’s Exposure Draft, “Proposed Narrow Scope Amendments to ISA 700 (Revised), Forming an Opinion and Reporting on Financial Statements, and ISA 260 (Revised), Communication with Those Charged with Governance, as a Result of the Revisions to the IESBA Code that Require a Firm to Publicly Disclose When a Firm Has Applied the Independence Requirements for Public Interest Entities (PIE).”

October 3, 2022

AASB Decision Summary – September 8-9 2022

The AASB discussed its draft responses to the IAASB’s Exposure Draft, "Proposed Narrow Scope Amendments to ISA 700 (Revised), Forming an Opinion and Reporting on Financial Statements, and ISA 260 (Revised), Communication with Those Charged with Governance as a Result of the Revisions to the International Ethics Standards Board for Accountants (IESBA) Code that Require a Firm to Publicly Disclose When a Firm Has Applied the Independence Requirements for Public Interest Entities (PIE)." Key issues discussed included:

  • whether the auditor’s report is the appropriate mechanism for publicly disclosing when the auditor has applied relevant ethical requirements for independence for certain entities in performing the audits of financial statements;
  • the proposed revisions to ISA 700 (Revised) and ISA 260 (Revised);
  • whether the IAASB should consider revisions to International Standard on Review Engagements 2400 (Revised), Engagements to Review Historical Financial Statements, to address transparency about the ethical requirements for independence applied for certain entities; and
  • the proposed effective date of the revisions to ISA 700 (Revised) and ISA 260 (Revised).

The IAASB’s deadline for comments on its Exposure Draft is October 4, 2022. The AASB will respond.

August 3, 2022

AASB Decision Summary – July 19, 2022

The AASB discussed issues related to the International Auditing and Assurance Standards Board’s (IAASB) narrow-scope amendments project to revise the definitions of “listed entity” and “public interest entity”, and other revisions to align with recent changes to the International Ethics Standards Board for Accountants International Code of Ethics for Accountants (including International Independence Standards) (IESBA Code). The AASB discussed:

  • revisions the IAASB made to the proposed changes to International Standard on Auditing (ISA) 700 (Revised), Forming an Opinion and Reporting on Financial Statements, and ISA 260 (Revised), Communication with Those Charged with Governance, in finalizing its Exposure Draft;
  • whether there is a need for Canadian amendments to the wording in ISA 700 (Revised) and ISA 260 (Revised); and
  • issues related to the Canadian exposure draft, including comment period and fatal-flaw review of the French translation.

The AASB approved the exposure draft. The exposure draft is expected to be issued in early August 2022, with a comment deadline of September 16, 2022.

June 27, 2022

AASB Decision Summary – June 6-7 2022

The AASB discussed issues related to the IAASB’s narrow-scope maintenance of standards project on listed entity and public interest entity. The project addresses the IAASB’s actions with respect to recent revisions to the International Ethics Standards Board for Accountants’ (IESBA) International Code of Ethics for Professional Accountants (including International Independence Standards). The revisions result from the IESBA project on the definitions of listed entity and public interest entity. Key issues discussed included:

  • the IAASB’s proposed revisions to ISA 700 (Revised), Forming an Opinion and Reporting on Financial Statements, and ISA 260 (Revised), Communication with Those Charged with Governance;
  • the content of the IAASB’s draft exposure draft, including the proposed approach to revisions, along with the alternative approach set out in the draft explanatory memorandum; and
  • the IAASB’s approach to possible revisions to International Standard on Review Engagements (ISRE) 2400 (Revised), Engagements to Review Historical Financial Statements.

The AASB also discussed Canadian implications of the IAASB’s project. Canadian practitioners are required to follow Codes of Professional Conduct set by provincial accounting bodies. The Canadian Codes are different from the IESBA Code. They do not use the term “public interest entity” or require the auditor to publicly disclose when differential independence requirements applicable to certain entities have been applied on an audit. Key Canadian issues discussed included:

  • whether the AASB should propose Canadian amendments in adopting the IAASB’s proposed revisions to ISA 700 (Revised) and ISA 260 (Revised);
  • whether there are any implications to Canadian Standard on Review Engagements (CSRE) 2400, Engagements to Review Historical Financial Statements, which is not adopted from ISRE 2400 (Revised); and
  • the content and timing of a Canadian exposure draft.

The IAASB expects to approve an exposure draft at its June 2022 meeting. The AASB would then approve a Canadian exposure draft shortly after.

April 12, 2022

AASB Decision Summary – March 7-8, 2022

The AASB provided input to the IAASB members from Canada on issues related to the IAASB’s narrow-scope maintenance of standards project on listed entity and public interest entity. Key issues discussed included:

  • the scope of the project, including whether it should focus only on revisions to International Standards on Quality Management (ISQMs) and ISAs;
  • proposed disclosure about when a firm has applied the independence requirements for public interest entities, including where this disclosure may be made; and
  • proposed revisions to ISA 260 (Revised), Communication with Those Charged with Governance, regarding communications about independence with those charged with governance.

The IAASB is expected to approve the project proposal at its March 2022 meeting.

October 18, 2021

AASB Decision Summary – October 15 and 18, 2021

The AASB discussed issues related to the IESBA’s project to revise the definitions of “listed entity” and “public interest entity” in the IESBA Code of Ethics for Professional Accountants and provided input to the IAASB members from Canada. Key issues discussed included:

  • the IESBA’s proposal for transparent public reporting when the firm applies the enhanced independence requirements for public interest entities;
  • key aspects of the IAASB’s draft project proposal, including scope, objectives, and timeline; and
  • the IAASB’s proposed case-by-case approach to determining whether current differential requirements for listed entities should be expanded to apply to all categories of public interest entities, and the impact of adopting the definition of “publicly traded entity” to replace “listed entity” in the IAASB’s standards.

March 9, 2021

AASB Decision Summary – March 8-9, 2021

The AASB received an update on the IESBA’s Exposure Draft, “Proposed Revisions to the Definitions of Listed Entity and Public Interest Entity in the Code.” The AASB decided that it will respond to the question in the Exposure Draft that aims to gather information to assist the IAASB in its deliberations on how the proposed IESBA changes affect the ISAs.

Disclaimer

This project summary has been prepared for information purposes only. Decisions reported are tentative and reflect only the current status of discussions on this project, which may change after further Board deliberations. Decisions to publish Handbook material are final only after a formal voting process.