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Assurance

Update – AASB expands key audit matter reporting

Nov 08, 2019

On November 8, 2019, the Auditing and Assurance Standards Board (AASB) released an update following the feedback it received on its Exposure Draft, Communication of Key Audit Matters in the Auditor’s Report.

After reviewing the feedback received, the AASB agreed to require key audit matter reporting for other listed entities, excluding listed entities required to comply with National Instrument 81-106.

Review the update on the AASB's website.

The future of international standard setting

Oct 21, 2019

On October 21, 2019, the International Auditing and Assurance Standards Board (IAASB) published a speech by Tom Seidenstein IAASB Chair to the Institute of Chartered Accountants of England and Wales’s Audit Conference.

In his speech, Mr. Seidenstein expresses that he firmly believes that auditors must play a critical role in ensuring trust in markets. He worries that trust is eroding in these institutions and in the way the economy works. It is his belief that that the IAASB, in conjunction with their many stakeholders, can and must play a role in enhancing and possibly restoring trust where it has eroded.

Review the full speech on the IAASB's website.

Focus on professional skepticism

Oct 18, 2019

On October 18, 2019, the International Auditing and Assurance Standards Board (IAASB) published its third update to stakeholders highlighting the IAASB’s efforts to appropriately reflect professional skepticism in its standards.

Review the update on the IAASB's website.

AASB response – Audits of less complex entities

Oct 04, 2019

On October 4, 2019, the International Auditing and Assurance Standards Board (IAASB) published the Auditing and Assurance Standards Board's (AASB) comment letter responding to the IAASB’s Discussion Paper, Audits of Less Complex Entities: Exploring Possible Options to Address the Challenges of Applying the ISAs.

Overall, the AASB is very supportive of the IAASB’s efforts to obtain a greater understanding of the challenges that practitioners encounter in applying the ISAs in a scalable and proportionate manner.

The challenges in applying the ISAs require a solution that focuses on the complexity of the elements of an entity’s operations and financial statements rather than on the complexity of the entity. Therefore, the AASB believes that the most effective solution is to address within each ISA the ability to scale or modify requirements for the less complex elements of an entity’s operations and financial statements. Also, the solution needs to be practical and achievable in a reasonable timeframe.

However, the AASB does not believe that the development of a separate auditing standard for LCEs based on the ISAs is an appropriate solution.

Review the comment letter on the IAASB’s website.

Critical audit matters: What firms are reporting

Oct 04, 2019

On October 4, 2019, the Journal of Accountancy released an article on how some important themes are emerging in auditors’ reporting of critical audit matters, which are the key component of the biggest change to public company auditor reporting in 70 years.

Goodwill and intangible assets, revenue, and income taxes were the most frequent topical areas reported identified in a summary of 52 audit reports of large accelerated filers analyzed by Deloitte.

Meanwhile, a sample of public company auditors’ reports reviewed for the JofA showed that in reporting on critical audit matters, practitioners are providing detailed discussion of the audit procedures they performed and including cross-references to the related notes in the financial statements that are related to the critical audit matters.

Critical audit matters provide auditors with an unprecedented opportunity to communicate in auditor’s reports, and the first reports filed under the new PCAOB rules show that practitioners are providing a thorough and thoughtful approach to that communication.

Review the full article on the Journal of Accountancy's website.

CPAB releases 2019 fall inspections results

Oct 03, 2019

On October 3, 2019, the Canadian Public Accountability Board (CPAB) released its "Audit Quality Insights Report: 2019 Fall Inspections Results".

CPAB has inspected 66 of 72 audit engagement files that will be reviewed by the end of 2019 across the four firms. To date, we have identified significant findings (deficiencies in the application of generally accepted auditing standards that could result in a restatement of the company’s financials) in 12 of those files. The total number of inspection findings to date is lower than 2018.

Most of these findings required the firm to carry out additional audit procedures to determine the need, if any, to restate the financial statements due to material error. The remaining findings required firms to add evidence to the audit file to show they had obtained sufficient and appropriate audit evidence with respect to a major balance sheet item or transaction stream.

CPAB expects firms to remediate file deficiencies before their reporting issuer’s next quarterly report. Where a restatement is required, the firm works with the reporting issuer and securities legal counsel to issue the restatement as soon as possible. No restatements have been required to date.

Review the report on CPAB's website.

"Keep Calm and Carry On": The role of regulators in cybersecurity and resiliency

Oct 03, 2019

On October 3, 2019, the Public Company Accounting Oversight Board (PCAOB) published a speech by Kathleen M. Hamm, PCAOB Board Member, where she shares her views on a topic that intertwines both technology and capital market regulation: cybersecurity, resiliency, and the role of financial regulators.

In her speech, she discusses the following:

  • Nature of cyber threats
  • Framework for effective responses
  • Levers of financial regulators
  • Baseline protections and best practices
  • Response and recovery

Review the full speech on the PCAOB's website.

Report digs into CAM preparations

Sep 10, 2019

On September 10, 2019, Intelligize released the report "Critical Audit Matters: Public company adaptation to enhanced auditor reporting" where they examine data from a survey of 171 compliance specialists at public companies to examine how public company compliance officials are adapting their own corporate disclosure and processes to comply with this new regime.

Among the issues considered were the impact of  “dry runs,” changes to company disclosures and changes in controls. The report includes a 25-page appendix with examples of CAMs, organized by subject matter, which should prove to be interesting reading for those about to embark on the project.  Interestingly, the report stressed the importance of lining up the investor relations team to consider how best to communicate the company’s message about CAMs.

Review the press release and report on Intelligize's website and a summary on Cooley Pubco's website.

Non-authoritative Guidance – System and Organization Controls (SOC) Engagements

Aug 30, 2019

On August 30, 2019, the Auditing and Assurance Standards Board (AASB) released a non-authoritative guidance that is intended to provide a roadmap for practitioners who are engaged to conduct SOC attestation engagements under Canadian standards; or both Canadian and U.S. standards and/or international standards.

Review the guidance on the AASB's website.

Basis for Conclusions – Reporting on controls at a service organization relevant to user entities’ internal control over financial reporting

Aug 30, 2019

On August 30, 2019, the Auditing and Assurance Standards Board (AASB) released the Basis for Conclusions, which is a summary of the process followed in issuing CSAE 3416 and the Board’s conclusions regarding significant comments received in response to its Exposure Draft.

Review the Basis for Conclusions on the AASB's website.

Correction list for hyphenation

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