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CPAB audit quality insights report: 2019 Annual inspections results

Mar 27, 2020

On March 27, 2020, the Canadian Public Accountability Board (CPAB) released its annual inspections results noting an overall increase in significant findings in the audits of the 35 public accounting firms it inspected in 2019.

All participating audit firms must enhance their commitment to continuous improvement at every level of their organization and embed a culture of quality to deliver consistent, high quality audits.

Review the report on the CPAB's website.

IAASB consults on Extended External Reporting (EER) assurance

Mar 13, 2020

On March 13, 2020, the International Auditing and Assurance Standards Board (IAASB) released for feedback it’s non-authoritative EER Guidance. This is in response to organizations that are increasingly reporting about their broader performance or impact (“Extended External Reporting” or “EER”) either voluntarily or as required by law or regulation, and the growing demand for assurance engagements on such reporting. Comments are requested by July 13, 2020.

EER encapsulates many different forms of reporting including, but not limited to, integrated reporting, sustainability reporting and other reporting by entities about financial and non-financial matters, including environmental, social and governance matters, related to an entity’s activities.

The purpose of the IAASB’s Public Consultation on Proposed Guidance, Extended External Reporting Assurance is to promote consistent high-quality application of ISAE 3000 (Revised) Assurance Engagements Other than Audits or Reviews of Historical Financial Information so as to:

  • Strengthen the influence of EER assurance engagements on the quality of EER reports;
  • Enhance user trust in the resulting assurance reports; and
  • Engender greater confidence in the credibility of, trust in and reliance upon EER reports by their intended users.

The draft non-authoritative guidance addresses Special Considerations in Performing Assurance Engagements on Extended External Reporting.

Review the press release and guidance on the IAASB's webiste.

CPAB auditor’s responsibilities related to fraud project

Feb 06, 2020

On February 6, 2020, the Canadian Public Accountability Board (CPAB) released an overview of a project it launched in 2019 to evaluate how auditors are complying with Canadian Auditing Standards and to identify what actions can be taken by all relevant stakeholders to better prevent and detect corporate fraud.

There has been a brighter spotlight on fraud recently in the wake of high-profile corporate failures. A focus internationally has been on how far an auditor’s responsibility extends in detecting fraud in an audit of the financial statements.

Review the overview on the CPAB's website.

IAASB releases auditor reporting project update

Feb 03, 2020

On February 3, 2020, the International Auditing and Assurance Standards Board’s (IAASB) Auditor Reporting Implementation Working Group (ARIWG) published a project update in the form of a Communiqué, which provides an update on the IAASB’s post implementation review (PIR) of the revised auditor reporting standards.

The communique also includes other relevant news and information relevant to the IAASB’s PIR.

Review the press release and project update on the IAASB's website.

Basis for Conclusions – Compilation Engagements

Jan 31, 2020

On January 31, 2020, the Auditing and Assurance Standards Board (AASB) released this document, which summarizes the process the AASB followed in issuing CSRS 4200, Compilation Engagements, and the Board’s conclusions regarding significant comments received in response to its Exposure Draft.

CPAB going concern project

Jan 23, 2020

On January 23, 2020, the Canadian Public Accountability Board (CPAB) released an overview of the going concern project it launched in 2019 to enhance our understanding of how auditors approach their work to review management’s assessment of going concern risk and how to better apply best practices.

In the wake of international business failures, regulators and standard setters around the world are exploring whether enough is being done to publicly disclose material uncertainties around going concern.

Review the project overview on the CPAB's website.

AASB Exposure Draft – Conforming amendments to Canadian standards resulting from IAASB conforming amendments to IAASB International Standards as a result of the revised IESBA Code

Jan 17, 2020

On January 17, 2020, the Auditing and Assurance Standards Board (AASB) issued an Exposure Draft proposing to adopt, with appropriate amendments, proposed revisions to International standards issued by the International Auditing and Assurance Standards Board (IAASB). Comments are requested by March 27, 2020.

Review the press release and the Exposure Draft on the AASB's website.

Auditor Reporting Guide – Reporting implications of Canadian Auditing Standards (4th edition)

Dec 23, 2019

On December 23, 2019, the Task Force on Reporting Implications of the Canadian Auditing Standards released a fourth edition of the Auditor Reporting Guide.

The revised Auditor Reporting Guide includes a new chapter on Key Audit Matters.

Review the guide on the AASB's website.

FRC publishes an updated practice aid to assist audit committees in evaluating audit quality

Dec 19, 2019

On December 19, 2019, the Financial Reporting Council (FRC) published an updated practice aid to assist audit committees in evaluating audit quality in their assessment of the effectiveness of the external audit process.

The practice aid updates an earlier version to take into account developments since such as revisions to the UK Corporate Governance Code, the requirement for all Public Interest Entities (PIEs) to conduct a tender at least every 10 years and rotate auditors after at least 20 years, and increasing focus generally on audit quality and the role of the audit committee. It also takes account of commentary from audit committees suggesting how the Practice Aid could be more practical in focus and more clearly presented.

New sections have been added on audit tendering and transparency of audit committee reporting. Responding to comments from audit committees, some of the background material has been consolidated and shortened and the illustrative considerations for audit committees have been updated, made more practical in their focus, and more clearly presented in separate appendices.

The FRC encourages audit committees to use the Practice Aid to help develop their own approach to their evaluation of audit quality, tailored to the circumstances of their company. Audit committees are encouraged to see their evaluation as integrated with other aspects of their role related to ensuring the quality of the financial statements – obtaining evidence of the quality of the auditor’s judgments made throughout the audit, in identifying audit risks, determining materiality and planning their work accordingly, as well as in assessing issues.

While the Practice Aid is designed for audit committees of Premium Listed companies it may assist audit committees of other entities, particularly those adopting the Corporate Governance Code voluntarily.

Review the press release and full practice aid on the FRC's website.

IAASB enhances and modernizes ISA 315 for a more robust risk assessment

Dec 19, 2019

On December 19, 2019, the International Auditing and Assurance Standards Board (IAASB) released International Standard on Auditing (ISA) 315 (Revised 2019), its revised standard for identifying and assessing risks of material misstatement.

ISA 315 (Revised 2019) is an important part of the IAASB’s efforts to improve audit quality globally. In finalizing the changes, the IAASB focused on the understandability, complexity and length of the standard, and made enhancements and clarifications to encourage a more consistent and robust risk assessment, which forms the foundation of the auditor’s efforts to gather sufficient appropriate audit evidence. The revisions also modernize the standard to keep up with the evolving environment in which businesses operate, in particular in relation to technology, as well as a focus on why procedures are required.

ISA 315 (Revised 2019) becomes effective for financial statement audits for periods beginning on or after December 15, 2021.

Review the press release and final pronouncement on the IAASB's website.

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