At its meeting on June 8-9, 2020, the AASB provided input to the IAASB members from Canada on issues related to the IAASB’s project to revise standards for quality management at the firm and engagement level, including engagement quality reviews. Issues discussed related to proposed ISQM 1 included: (i) revising the definition of “quality risk” to include the concept of “reasonable possibility”; (ii) replacing all references to “factors” with “conditions, events, circumstances, inactions or actions”; (iii) clarifying the risk assessment process through practical examples in the application material; and (iv) encouraging the adoption of the suite of quality management standards as a package. Issues discussed related to proposed ISQM 2 included: (i) aligning the IAASB provisions related to the objectivity of the engagement quality reviewer and proposed revisions to the IESBA Code addressing objectivity of appropriate reviewers. Issues discussed related to ISA 220 (Revised), included: (i) revising the engagement resources section in ISA 220 (Revised) to account for circumstances where engagement team resources may not be assigned by the firm, but rather obtained directly; and (ii) providing a general illustrative example of a situation when resources may not be assigned by the firm, other than that of a group audit engagement. The AASB also discussed a one-year deferral of the standards’ effective date to December 15, 2022. This would account for COVID-19’s impact on firm activities. The IAASB expects to approve final proposed ISQM 1, ISQM 2, and ISA 220 (Revised) at its September 2020 meeting. The AASB expects to approve the Canadian equivalent standards at its January 2021 meeting.

Review the Executive Summary on the AASB's Web site.