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2017

2017 Audit Quality Symposium Key Messages

Jul 27, 2017

On July 27, 2017, the Canadian Public Accountancy Board (CPAB) released a report setting out the key messages from its fourth Audit Quality Symposium: Earning Investor Confidence which was held on May 16-17, 2017.

The report advises that three key messages emerged from the CPAB’s discussions with investors and key stakeholders and dialogue during and following the Symposium:

  1. Investors use a wide variety of financial and non-financial information to assess a company’s performance, financial condition and future prospects; very little of which comes from the annual audited financial statements. The belief by key stakeholders that all information disclosed by reporting issuers is equally reliable represents an expectations gap that creates a risk to the capital markets.
  2. Auditors and audit committees have an opportunity to engage increasingly with information outside the financial statements to enhance its reliability and reduce the expectations gap.
  3. Transformational change is required to ensure there is continued confidence in the information that drives the capital markets and the audit remains relevant. A fundamental transformation will only be successful if all parties in the financial reporting and disclosure system are engaged, support this transformation and reassess their respective roles and responsibilities.

For further details, see the meet­ing report on the CPAB's Web site.

AASB Exposure Draft – Auditing Accounting Estimates and Related Disclosures

May 09, 2017

On May 9, 2017, the Auditing and Assurance Standards Board (AASB) issued an Exposure Draft that proposes to adopt, with appropriate Canadian amendments if any, proposed amendments to ISA 540, and other conforming amendments. Stakeholders are encouraged to submit their comments by July 7, 2017.

This Exposure Draft consists of:

  • proposed changes;
  • a link to the IAASB’s Exposure Draft, including its Explanatory Memorandum;
  • a description of the AASB’s process for adopting ISAs;
  • a discussion of proposed significant Canadian amendments;
  • a proposed effective date; and
  • key changes to CAS 540 proposed in the Exposure Draft

Review the exposure draft on the AASB's Website.

AASB Exposure Draft – Reporting on Compliance with Specified Authorities for Transactions Coming to the Auditor’s Notice During the Audit of Financial Statements

Aug 01, 2017

On August 1, 2017, the Auditing and Assurance Standards Board (AASB) issued an Exposure Draft of a proposed new guideline that would replace an existing Standard. Stakeholders are encouraged to submit their comments by November 28, 2017.

The AASB proposes, subject to comments received following exposure, to issue Assurance and Related Services Guideline AuG-49, Reporting on Compliance with Specified Authorities for Transactions Coming to the Auditor’s Notice during the Audit of Financial Statements.

AuG-49 would replace AUDITING FOR COMPLIANCE WITH LEGISLATIVE AND RELATED AUTHORITIES IN THE PUBLIC SECTOR, paragraphs PS 5300.14-.16.

This Exposure Draft consists of:

  • Scope of proposed AuG-49
  • Separate section in the auditor’s report 
  • Wording of the opinion 
  • Modified opinions 
  • Alerting users about the auditor’s interpretations of requirements 
  • Form of report 

Although Guidelines typically become effective as at the date of issuance, the AASB proposes that AuG-49 would become effective for reports dated on or after April 1, 2019. This effective date aligns with the proposed effective date for CSAE 3530 and CSAE 3531. The AASB plans to withdraw Section PS 5300 once these new standards are effective.

Review the exposure draft on the AASB's Website.

AASB Operating Plan – 2017-2018

May 19, 2017

On May 19, 2017, the Auditing and Assurance Standards Board (AASB) released its Operating Plan where it sets out its objectives and planned activities along with other initiatives to be undertaken in 2017-2018.

The AASB's 2017-2018 Operating Plan is based on the vision, mission and strategic objectives set out in the 2016-2021 Strategic Plan. Appendix 1 outlines key assumptions made in developing this Plan.

The AASB 2016-2017 Annual Report includes details of their performance in relation to the goals set out in the 2016-2017 Operating Plan.

Review the Operating Plan on the AASB's Web site.

AASB Re-exposure Draft – Reporting on Compliance

Apr 19, 2017

On April 19, 2017, the Auditing and Assurance Standards Board (AASB) has issued a Re-exposure Draft of two proposed new standards that would replace existing Sections dealing with special reports on an entity’s compliance with agreement, statutes and regulations. Stakeholders are encouraged to submit their comments by July 28, 2017.

The AASB proposes, subject to comments received following re-exposure, to issue Canadian Standards on Assurance Engagements (CSAE) 3530, Special Considerations — Attestation Engagements to Report on Compliance, and CSAE 3531, Special Considerations — Direct Engagements to Report on Compliance. These standards would replace:

  • SPECIAL REPORTS — INTRODUCTION, Section 5800;
  • SPECIAL REPORTS — AUDITOR’S REPORTS ON COMPLIANCE WITH AGREEMENTS, STATUTES AND REGULATIONS, Section 5815; and
  • REVIEWS OF COMPLIANCE WITH AGREEMENTS AND REGULATIONS, Section 8600.

The standards would also replace AUDITING FOR COMPLIANCE WITH LEGISLATIVE AND RELATED AUTHORITIES IN THE PUBLIC SECTOR, paragraphs PS 5300.11-.13, addressing engagements that require an auditor, depending on the audit mandate, to express an opinion on whether an entity complied with specified authorities or whether its transactions were carried out in compliance with specified authorities.

Review the Re-exposure Draft on the AASB's Web site.

AASB Response – Auditing Accounting Estimates and Related Disclosures

Aug 17, 2017

On August 17, 2017, the Auditing and Assurance Standards Board (AASB) released a comment letter responding to the IAASB’s Exposure Draft.

Overall, the AASB are supportive of many of the proposals in the proposed International Standard on Auditing 540, Auditing Accounting Estimates and Related Disclosures (ED‐540). They feel, however, that for ED‐540 to be operational, further improvements are needed. The results of field testing conducted by Canadian practitioners showed that many had significant challenges with operationalizing the requirements in paragraphs 15 and 17‐19 in a manner that would achieve consistency of practice and appropriate use of the auditor’s professional judgment.

Review the response on the AASB's website.

AASB unanimously approved new and revised CASs relating to auditor reporting, KAM only communicated when required by law or regulation or if the auditor decides to do so

May 15, 2017

At its meeting on April 11, 2017, the AASB unanimously approved new and revised CASs relating to auditor reporting, and the auditor’s responsibilities relating to other information. The Board also unanimously approved related conforming amendments to other standards, and amendments to address disclosures in the audit of financial statements.

The Board concluded that changes made in finalizing the standards were significantly different from the proposals in the Exposure Drafts and Invitations to Comment. The significant differences from the proposals are: (i) deferring the effective date for application by one year; and (ii) amending the scope of reporting of key audit matters so that such matters are communicated in the auditor’s report only when required by law or regulation or the auditor decides to do so.

Since these changes were made in response to feedback received, the Board unanimously decided not to re-expose the CASs. The new and revised standards will be effective for audits of financial statements for periods ending on or after December 15, 2018 and are expected to be included in a Handbook update in mid-2017.

Review the executive summary on the AASB's Web site.

AASOC Announces New AASB Chair

Nov 24, 2017

On November 24, 2017, the Auditing and Assurance Standards Oversight Council (AASOC) announced that they appointed Ken Charbonneau, FCPA, FCA, ICD.D, as the new Auditing and Assurance Standards Board (AASB) Chair, effective April 1, 2018.

Review the press release on the AASOC's website.

AICPA issues framework related to cybersecurity risk management

Apr 26, 2017

On April 26, 2017, the American Institute of CPAs (AICPA) issued a framework related to cybersecurity risk management.

The purpose of the framework is to “enable all organizations — in industries worldwide — to take a proactive and agile approach to cybersecurity risk management and to communicate on those activities with stakeholders.”

Review the press release and system and organization controls for cybersecurity page on the AICPA’s Web site. In addition, see Deloitte’s cybersecurity risk management examination discussion.

AICPA issues new Technical Practice Aids

Apr 27, 2017

On April 27, 2017, the American Institute of CPAs (AICPA) issued five new Q&As related to its Technical Practice Aids on internal controls.

Specifically, the following Q&As have been added to TIS Section 8200:

  • .17, “Obtaining an Understanding of Business Processes Relevant to Financial Reporting and Communication.”
  • .18, “Obtaining an Understanding of Internal Control Relevant to the Audit.”
  • .19, “Obtaining an Understanding of the Controls Relevant to the Audit.”
  • .20, “Control Activities That Are Always Relevant to the Audit.”
  • .21, “Control Activities That May Be Relevant to the Audit.”

Review the recently issued technical questions and answers page on the AICPA’s Web site.

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