This project will replace Assurance and Related Services Guideline (AuG) 16, Compilation of a Financial Forecast or Projection, with a new Canadian Standard on Related Services (“the CSRS”).
AuG-16 was first issued in 1993 and has not been updated since. When the AASB issued a new CSRS 4200, Compilation Engagements, to replace Section 9200, Compilation Engagements, the AASB determined that it should conduct preliminary research. The purpose of the research was to understand the implications of CSRS 4200 on AuG-16 and challenges faced by practitioners when assisting entities in compiling FOFI.
The public interest issues identified by the research include the following:
- Inconsistencies exist between AuG-16 and CSRS 4200. As a result:
- Inconsistencies in reporting between similar standards may create user confusion.
- Inconsistencies in performance requirements between similar standards may create confusion among practitioners about the required work effort.
- Practitioners may not be applying AuG-16 when they should. As a result:
- Practitioners may not be performing sufficient work and so the FOFI may be misleading.
- Practitioners may be attaching communications to FOFI that are not consistent with AuG-16 or they may not be attaching any communication. Users may be confused or misled by the inconsistent, or lack of, communication attached to FOFI.
- Practice has evolved since AuG-16 was first issued. As a result:
- AuG-16 may no longer reflect current good practice or include sufficient guidance.
- AuG-16 uses an old drafting convention that may be causing difficulty in readability and understandability of the required work effort.
- AuG-16 includes references to Section 4250, Future Oriented Financial Information, an accounting standard that was recently removed from the CPA Canada Handbook - Accounting and its content is now clearly identified as being non-authoritative. As a result:
- Practitioners may be unclear as to how the content of Section 4250 fits within AuG-16.
The AASB will address the public interest issues by:
- developing a new CSRS on compilations of FOFI that will include concepts and terminology consistent with CSRS 4200;
- identifying a clear scope in the new CSRS so practitioners can better decide when they need to apply the standard and how to communicate their involvement with FOFI;
- reflecting developments in matters relevant to FOFI in the new CSRS since AuG-16 was first issued and codify good practice; and
- considering the implications of removing Section 4250 from the CPA Canada Handbook – Accounting.