At its meeting on June 7-8, 2021, the AASB approved its Exposure Draft, “Quality Management – Conforming Amendments to Other Canadian Standards,” by email ballot vote. One member voted against approving the Exposure Draft. The Exposure Draft will be issued in late June 2021, with comments due by September 30, 2021.

At its meeting on June 7-8, 2021, the AASB provided input to the IAASB members from Canada on the IAASB’s project to develop a separate standard for audits of the financial statements of less complex entities (LCEs). Key issues discussed included: (i) the extent of judgment inherent in the characteristics of complexity and how many of these characteristics an entity needs to exhibit before it is no longer appropriate to use the separate standard for audits of LCEs; (ii) understanding the related implications, including the work effort and reporting, of transitioning between International Standards on Auditing (ISAs) and the separate standard for audits of LCEs; and (iii) the proposed approach to maintain the separate standard for audits of LCEs, including the potential for narrow-scope amendments, when necessary. The AASB expects to approve a Canadian discussion paper for audits of the financial statements of LCEs at its July 2021 meeting.

At its meeting on June 7-8, 2021, the AASB provided input to the IAASB members from Canada on issues related to information the IAASB gathered on ISA 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements. Key issues discussed included possible actions to: (i) address the presumed risks of fraud in revenue recognition; (ii) enhance the introductory paragraphs of the standard to clarify the auditor’s responsibilities in relation to fraud; and (iii) retain the definition of fraud but incorporate additional guidance to address how other concepts, such as bribery and corruption, may impact the auditor’s responsibilities related to fraud. Based on the information it gathered, the IAASB anticipates approving a project proposal to revise ISA 240 at a future meeting.

At its meeting on June 7-8, 2021, the AASB provided input to the IAASB members from Canada on issues related to the IAASB’s project to revise ISA 600, Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors). Key issues discussed included: (i) clarifying the application of the risk-based approach in a group audit engagement; (ii) documenting the group auditor’s determination that component auditors have the competence, capabilities, and sufficient time to perform the engagement; and (iii) removing the requirement related to using audit evidence from an audit performed for another purpose and including a general paragraph on this topic in the introduction of the standard.

At its meeting on June 7-8, 2021, the AASB discussed the way forward in Canada for applying the IAASB’s “Non-Authoritative Guidance on Applying ISAE 3000 (Revised) to Extended External Reporting (EER) Assurance Engagements.” The AASB decided to issue the IAASB non-authoritative guidance as AASB guidance. The non-authoritative guidance will be accompanied by a supporting document outlining the limited differences in applying Canadian Standard on Assurance Engagements 3000, Attestation Engagements Other than Audits or Reviews of Historical Financial Information, compared to International Standard on Assurance Engagements 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information. The supporting document, linking to the non-authoritative guidance, is expected to be issued in August 2021.