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CSRE 2400: The new Review Engagement Standard - Are you ready?


Published on December 15, 2016

In December 2015, the Auditing and Assurance Standards Board (“AASB”) approved Canadian Standard on Review Engagements (“CSRE”) 2400, Engagements to Review Historical Financial Statements. Effective for periods ending on or after December 14, 2017 (with no option for early adoption), this standard replaces the existing review engagement standards (the “existing review standards”) for financial statements and other historical financial information.

The new standard is substantially based on International Standard on Review Engagements (“ISRE”) 2400, Engagements to Review Historical Financial Statements, which was issued by the International Auditing and Assurance Standards Board (“IAASB”) and has been in effect since periods ending December 31, 2013. The adoption of CSRE 2400 is one more step in Canadian efforts towards harmonization with international standards to enable the consistent delivery of high-quality assurance engagements domestically and globally.

The need for a new review standard

Prior to the issuance of CSRE 2400, the existing review engagement standards had not been updated since their release almost 30 years ago. Since then, marketplace demand and uses for review engagements have expanded considerably, and over time, so has the emergence of leading practices in the application of existing review standards. Coupled with the heightened demand for transparency and accountability in conducting assurance engagements, it became clear that the existing review standards were no longer adequate in meeting the expectations of users of financial statements.

The new standard has therefore been drafted to address the evolving needs of financial statement users, to reflect leading practices in the conduct of review engagements (some of which had already been widely adopted in practice), and to provide clarity on assurance concepts, principles, and other matters related to the performance of review engagements in the Canadian environment.

Does CSRE 2400 affect your engagement?

CSRE 2400 only applies to reviews of historical financial statements. Reviews of interim financial statements conducted by an entity’s auditor to meet the requirements of securities legislation will continue to fall under Section 7060, Auditor Review of Interim Financial Statements.

Key changes from the existing review standards

Since the release of the existing review standards, significant progress has been made in the way assurance engagements are conducted, and practices have evolved over time. Consequently, in order to properly perform their review engagements or access relevant guidance, practitioners have found it necessary to refer to Canadian Auditing Standards for topics not covered by the review standards. CSRE 2400 was designed to be self-standing such that practitioners performing review engagements would not normally need to refer to Canadian Auditing Standards or other sections of the CPA Canada Handbook for additional guidance. The outcome of this was the incorporation of applicable assurance concepts into the new review standard, resulting in some major changes to the existing review standards. Additionally, there are some new requirements in CSRE 2400 that cannot be found in the existing review standards. The following is an overview of some of the most significant differences.

Topic New requirements
Materiality The new standard introduces the concept of materiality for review engagements. Although the application of materiality in the performance of a review is not new, the existing review standards did not explicitly require its use. CSRE 2400 now requires practitioners to determine materiality and to revise it in the event they become aware of information that would cause them to determine a different amount initially.
Areas where material misstatements are likely to arise


Practitioners are required to identify areas in financial statements where material misstatements are likely to arise under CSRE 2400, which is a more robust requirement than in the past.

 The existing review standards did not have this explicit requirement; that said, it is likely that when practitioners were performing their review engagements, they focused on financial statement areas they believed posed the most inherent risk of misstatement.

Communication with management and those charged with governance


Whereas the existing review standards did not provide explicit guidance on communication with management and those charged with governance, CSRE 2400 requires the timely communication of all matters concerning the engagement that are of sufficient importance to merit their attention.

Additionally, the new standard indicates which inquiries the practitioner is required to make of management and others within the entity.

Information produced by the entity


The practitioner is now required to consider whether the data from the entity’s accounting system and accounting records is adequate for performing analytical procedures.

The standard also requires that the practitioner obtain evidence that the financial statements agree with, or reconcile to, the underlying accounting records.

Procedures to address specific matters


The new standard includes a requirement to perform procedures on specific matters such as related party relationships and transactions, fraud and non-compliance with laws or regulations, going concern, use of work performed by others and opening balances in an initial review engagement.



From the concept of materiality, all misstatements identified during the review, other than those that are clearly trivial, must be accumulated and communicated to management, and a request must be made to management to correct the misstatements.

The Practitioner’s Report


A new report is issued at the conclusion of the review engagement to communicate the conclusion. The new report format more clearly defines the responsibilities of management and the practitioner, although the substance of the conclusion has not changed.

Similar to an audit opinion, there is a new requirement to consider including an Emphasis of Matter paragraph (to draw attention to a matter in the financial statements or disclosures, such as going concern) or an Other Matter paragraph (to draw attention to a matter pertaining to the review, such as when the prior period financial statements have been reviewed by a predecessor accountant).

The date of the report can be no earlier than the date on which the practitioner has obtained sufficient appropriate evidence. Previous standards required that the date of substantial completion of the review be used as the report date.

These changes to the report are intended to drive higher quality communication between the practitioner and users of the report regarding the financial statements and the results of procedures performed during the engagement.

The list above is not exhaustive—CSRE 2400 also sets out more extensive requirements in some areas already covered in the existing review standards.

Preparing early for adoption

Overall, CSRE 2400 provides a more robust and comprehensive standard than the existing review standards. The new standard ensures greater visibility over the level of materiality used in the review, the errors identified and their resolution by management, and the results of any fraud and related party inquiries, to name a few areas. Combined, these enhancements will provide the users of financial statements, including those charged with governance, management and other third parties, more useful insights into the entity than previous reviews. Given the increased efforts required to deliver more informative results, some costs may increase.

From management’s perspective, if your organization’s financial statements are subject to a review by a public accountant, the conduct of the review will likely impact you in the following ways:

  • A more comprehensive inquiry and analysis of certain pinpointed financial statement items with a greater likelihood of material misstatement
  • Further requests for support on related party relationships and transactions, fraud and non-compliance with laws or regulations, going concern, and the use of work performed by others
  • Specific request of management to correct any errors accumulated during the review
  • More extensive and explicit communications with management and those charged with governance

Greater effort may be required in preparing for the year-end review process and for the process itself as a more rigorous analysis will be performed by your public accountant, especially in these focus areas. As part of the year-end planning process, you should also consider the impact this additional work will have on your scheduling and budgeting.

CPA Canada has released two Audit & Assurance Alerts and a guide on the topic – I would encourage you to read these publications and the new standard to better understand the implications of the changes.

If you have any questions on how CSRE 2400 may impact reviews of your entity’s financial statements, please feel free to reach out to your Deloitte professionals for assistance.


Lilian Cheung Lilian Cheung
Senior manager, National Assurance Services
Lilian specializes in audits of not-for-profit and public sector organizations. She is an editor of A State of Change, our Canadian National not-for-profit newsletter. Currently, she is on secondment with the Canadian National office, providing support to client service teams on assurance matters in the private company, public sector, and not-for-profit spaces.


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