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New Auditor Reporting - AASOC

Date recorded:

At the AASOC meeting on July 6, 2017, it was noted that the U.S. PCAOB had issued its final auditor reporting standards in June 2017. Requirements other than reporting on critical audit matters have an effective date of December 2017 for all entities. Reporting on critical audit matters will be required for large accelerated filers in June 2019, and in December 2020 for other filers. The SEC is expected to approve the PCAOB auditor reporting standards in October 2017.

There are three significant differences between the PCAOB auditor reporting standards and the Canadian Auditing Standards (CASs) on auditor reporting that the AASB approved in April 2017. These include (i) more extensive descriptions of the responsibilities of management and the auditor in the CAS report; (ii) a section on “other information,” which is included only in the CAS report; and (iii) disclosing the length of auditor tenure, which is included only in the PCAOB standards.

The AASB discussed the effect of these differences, including whether auditors of dual-listed entities could continue to issue a single auditor’s report. The AASB advised the AASOC that members of the Audit Reporting Implications of the New Canadian Auditing Standards Task Force are developing illustrative combined auditor’s reports that could be used for fiscal year-ends 2017 and 2018. These combined reports would illustrate how the new auditor reporting standards in Canada can be combined with the new PCAOB standards. The Task Force will need to work with relevant U.S. authorities to confirm that such a combined report would be acceptable to them. The AASB plans to keep AASOC apprised of the Task Force’s progress on this initiative.

The AASB also discussed the issue of when reporting on key audit matters should be required in Canada and to which entities it should apply. Its tentative conclusion is that key audit matter reporting should apply to audits of TSX-listed entities for periods ending on or after June 30, 2019. However, the AASB will discuss this conclusion with key stakeholders over the next few months. The AASB expects to make final decisions on these matters at its December 2017 meeting, assuming the SEC approves the PCAOB standards in October 2017.

Review the minutes on the AASOC's Web site.

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