At its meeting on June 6-7, 2022, the AASB approved an Exposure Draft of a revised “Joint Policy Statement Concerning Communications between Actuaries Involved in the Preparation of Financial Statements and Auditors” appended to CAS 500, Audit Evidence. The Board expects to issue the Exposure Draft in June 2022, with a comment deadline of September 19, 2022.

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At its meeting on 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 IESBA Code that result from the IESBA project on the definitions of listed entity and public interest entity. Key issues discussed included: (i) the IAASB’s proposed revisions to ISA 700 (Revised) and ISA 260 (Revised); (ii) 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 (iii) the IAASB’s approach to possible revisions to ISRE 2400 (Revised). 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: (i) whether the AASB should propose Canadian amendments in adopting the IAASB’s proposed revisions to ISA 700 (Revised) and ISA 260 (Revised); (ii) whether there are any implications to CSRE 2400, which is not adopted from ISRE 2400 (Revised); and (iii) 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.

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At its meeting on June 6-7, 2022, the AASB discussed issues related to developing a new Canadian standard on compilations of FOFI. This new standard will replace Assurance and Related Services Guideline (AuG) 16, Compilation of a Financial Forecast or Projection. Key issues discussed included: (i) whether the new standard should clarify the AuG-16 definitions of “forecast” and “projection”; (ii) whether the new standard’s scope should include budgets and pro forma financial information; and (iii) what requirements and guidance might be needed in the new standard to guide the practitioner to compile FOFI that is not misleading.

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At its meeting on June 6-7, 2022, the AASB discussed issues related to the IAASB’s project to develop a standard for audits of less complex entities (LCEs). Key issues discussed included: the Authority of the standard, including: (i) whether the IAASB should describe what an LCE is, rather than setting out characteristics of entities that would not use the standard; (ii) whether the IAASB should require or encourage jurisdictions to establish quantitative thresholds (i.e., size tests to determine if an entity is an LCE); (iii) how requirements in the draft LCE standard could be rewritten to be more principles-based, and whether such changes would result in increased efficiencies in an LCE audit; (iv) the IAASB’s approach to including essential explanatory material in the LCE standard; and (v) whether the IAASB has addressed the significant concerns and barriers to having a separate standard that provides reasonable assurance that several respondents to the IAASB’s Exposure Draft raised. The AASB also discussed next steps in Canada, including additional research on Canadian issues that staff proposes to undertake.

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At its meeting on June 6-7, 2022, the AASB discussed a letter received from one of its stakeholders regarding Canadian Standard on Quality Management (CSQM) 1. The stakeholder asked the AASB to consider deferring the effective date, citing several reasons. The AASB acknowledged and understood the implementation challenges its stakeholder raised. After a thorough discussion, however, the Board concluded that deferring the effective date of CSQM 1 would not be in the public interest. The Board and staff will continue to engage with and support those responsible for developing standards implementation guidance, tools, and training to explore what more can be done to support the implementation of CSQM 1.

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At its meeting on June 6-7, 2022, the AASB discussed the IAASB’s proposed revisions to ISA 500. Key issues discussed included: (i) the objectives of the standard; (ii) the definition for audit evidence; (iii) the addition of general information technology control examples in the standard; (iv) the inclusion of a diagram on ISA 500 in the explanatory memorandum to the exposure draft; and (v) the conforming amendments related to ISA 500.

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At its meeting on June 6-7, 2022, the AASB discussed issues related to the IAASB’s project to revise ISA 240. Key issues discussed included: (i) the introductory paragraphs of the standard; the need for specialized skills; (ii) identifying and assessing the risks of material misstatement due to fraud; (iii) the presumption of fraud risk in revenue recognition; (iv) clarifying the requirements and application material in ISA 240 related to the approach to testing journal entries; and (v) communicating with those charged with governance.

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At its meeting on June 6-7, 2022, the AASB discussed issues related to the IAASB’s project to revise ISA 570. Key issues discussed included: (i) the timeline over which the going concern assessment is made; and (ii) transparency about going concern in the auditor’s report.

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