The new auditor’s report represents a step change in the information content of the report. It better describes what an audit is and what an auditor does, including an ability to provide further transparency in the reporting of key audit matters.

A significant component of the auditor reporting ISAs is a requirement that auditors of listed entities communicate key audit matters — those matters that, in the auditor’s judgment, were of most significance in the audit.

Canadian stakeholders made it clear in a variety of interactions that changes to auditor reporting standards need to recognize that the Canadian and U.S. capital markets are closely integrated. They emphasized that if key audit matter reporting requirements and the entities to which they would apply, are significantly different between Canada and the U.S. this could create confusion in the marketplace and potentially affect comparability of information across the North American capital markets.

The U.S. Public Company Accounting Oversight Board has not finalized its auditor reporting standards, including with respect to a key audit matter reporting concept. As a result, the AASB believes that it is not appropriate at this time to mandate key audit matter reporting for listed entities in Canada.

The final CASs, as adopted, do not contain a key audit matter reporting requirement at this time. They do allow for law or regulation to require reporting of key audit matters and for the auditor to decide to do so.

While there are other differences between the CASs and U.S. reporting standards, the AASB understands, based upon discussions with stakeholders, such differences do not create the same sensitivities as key audit matter reporting.

The AASB will continue to monitor developments in the U.S. and post-implementation studies in other jurisdictions in considering future expansion of key audit matter reporting to other entities.

Review the message from the Chair on the AASB's website.