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2018

2017 Audit Fee Survey Report

Jan 16, 2018

On January 16, 2018, Financial Executives International (FEI) released their 2017 Audit Fee Survey Report, where public company respondents reported a median 1.3 percent audit fee increase, compared with 1.6 percent in the 2016 edition of the report.

Mergers and acquisitions, growing documentation requests from external auditors and new accounting standards were among the factors contributing to higher fees.

M&A contributed to higher audit fees for nearly three-fourths of the 80 public companies that reported fee increases for their 2016 audits. For instance, one chief accounting officer at a healthcare provider cited acquisition-related valuation services and purchase accounting reviews as major factors for higher audit fees.

The new revenue standard has had a limited effect on audit fees so far, but 68 percent of respondents expect fees to increase for audits of their 2017 results and in upcoming PCAOB inspections.

Overall, 2,296 registrants (36 percent) reported an audit fee decrease, while 2,120 registrants (33 percent) reported an increase in their audit fees.

Review the report on FEI's website.

A plain and simple overview of auditing considerations related to cryptocurrencies

Jul 26, 2018

On July 26, 2018, the Au­dit­ing and As­sur­ance Stan­dards Board (AASB) has re­leased an In Brief entitled, ‘A plain and simple overview of auditing considerations related to cryptocurrencies’.

Canada is experiencing a surge in companies with cryptocurrency holdings or transactions. This creates new audit risks for auditors as most lack experience in dealing with cryptocurrencies. On top of that, each cryptocurrency has its own unique features and characteristics bringing unique challenges in auditing each particular cryptocurrency.

The In Brief, ‘A plain and simple overview of auditing considerations related to cryptocurrencies’ raises the following questions:

  • Should you accept or continue an engagement for a client with material cryptocurrency holdings or transactions?
  • Do you have the appropriate experience and skillset to identify and assess all the risks of material misstatement and related assertions?
  • Will you be able to obtain the audit evidence your need through designing and performing the right responses to those risks?

It also advises that CPA Canada has recently released guidance, Audit Considerations Related to Cryptocurrency Assets and Transactions, as a first step to assist auditors in this regard and provides a summary of the contents of this material.

 

AASB Annual Plan – 2018-2019

Apr 02, 2018

On April 2, 2018, the Auditing and Assurance Standards Board (AASB) released its Annual Plan, which sets out the AASB’s key activities and targets to be undertaken in 2018-2019, helping to achieve its objectives in the five-year strategic plan.

Their 2016-2021 Strategic Plan includes the following objectives:

  • Maintain a globally respected Canadian standard-setting capability that identifies and responds to the needs of Canadian stakeholders for standards and guidance that serve the public interest.
  • Achieve a high level of engagement with stakeholders to support the development of standards and guidance.
  • Set, and assist with the successful implementation of, standards and guidance that form the basis for high-quality, value-added, and relevant audits, other assurance, and related services that meet the needs of Canadian stakeholders.

Review the Annual Plan on the AASB's website.

AASB approves Assurance and Related Services Guideline (AuG) 49

Jun 29, 2018

On June 29, 2018, the Auditing and Assurance Standards Board (AASB) unanimously approved new 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.

The Board also approved related consequential amendments to Canadian Standard on Related Services (CSRS) 4460, Reports on Supplementary Matters Arising from an Audit or a Review Engagement.

The Board concluded that changes made in finalizing the guideline were not significantly different from the proposals in the Exposure Draft and determined that re-exposure is not needed. The new guideline will be effective for reports dated on or after April 1, 2019, with early application permitted. The guideline is expected to be included in a Handbook update in September 2018.

For further details refer to the related project on the AASB’s website.

AASB Exposure Draft – Auditor's Consent to the Use of the Auditor's Report in Connection with a Designated Document

May 04, 2018

On May 4, 2018, the Auditing and Assurance Standards Board (AASB) issued an Exposure Draft of a proposed new standard that deals with an auditor’s consent in connection with designated documents. Stakeholders are encouraged to submit their comments by July 31, 2018.

The AASB proposes to issue revised Section 7170, AUDITOR’S CONSENT TO THE USE OF THE AUDITOR’S REPORT IN CONNECTION WITH A DESIGNATED DOCUMENT. The revised Section 7170 would replace:

  • Section 7170, Extant AUDITOR’S CONSENT TO THE USE OF THE AUDITOR’S REPORT INCLUDED IN A BUSINESS ACQUISITION REPORT; and
  • Section 7500, AUDITOR'S CONSENT TO THE USE OF THE AUDITOR'S REPORT IN CONNECTION WITH DESIGNATED DOCUMENTS.

The Exposure Draft proposes that the revised Section 7170 deal with an auditor's responsibilities in responding to requests to consent to the use of the auditor’s report in connection with a designated document. A designated document consists of the following continuous disclosure documents filed with securities regulatory authorities:

  • audited financial statements; or
  • a document that contains, or incorporates by reference, the audited financial statements.

Documents currently within the scope of Section 7500 that will be included within the scope of the proposed Section 7170 include:

  • the entity’s audited financial statements; or
  • the entity’s annual report that contains the entity’s audited financial statements and the auditor’s report thereon.

Several documents currently within the scope of Section 7500 will be excluded from the scope of the revised Section 7170 unless they meet the definition of a designated document under the revised Section 7170. These documents include the entity’s:

  • MD&A;
  • material change report; and
  • AIF

Review the Exposure Draft on the AASB's website.

AASB Response – Monitoring Group Consultation Paper, Strengthening the Governance and Oversight of the International Audit-related Standard-setting Boards in the Public Interest

Mar 02, 2018

On March 2, 2018, the Auditing and Assurance Standards Board's (AASB) response to the Monitoring Group’s consultation paper, which sets out options that have the potential to dramatically reform the global audit standard-setting process, was posted.

The AASB's response outlines in detail their observations on the proposals, noting both areas they support and those that should be re-examined.

Review the response posted on the IOSCO's website.

AASOC Response – Monitoring Group Consultation Paper, Strengthening the Governance and Oversight of the International Audit-related Standard-setting Boards in the Public Interest

Mar 02, 2018

On March 2, 2018, the Auditing and Assurance Standards Oversight Council's (AASOC) response to the Monitoring Group’s consultation paper was posted. The response outlines what proposals they agree with, have concerns with, and provides overall comments for the Monitoring Group’s consideration.

There are a number of areas where the AASOC has concerns with the proposals as set forth in the consultation paper and they offered the following comments for consideration:

  • AASOC does not support establishing a single board to cover both auditing and assurance and ethical standards as they see this as contradicting the multi-stakeholder approach they support.
  • AASOC disagrees with separating the setting of ethical standards for auditors from those of other professional accountants.
  • AASOC does not support moving to a simple majority vote of the boards to approve a new or revised standard; rather, the AASOC supports the current approach of requiring a two-thirds majority.

Review the response posted on the IOSCO's website.

AASOC Updates Terms of Reference

Feb 02, 2018

On February 2, 2018, the Auditing and Assurance Standards Oversight Council (AASOC) released its revised Terms of Reference, which were updated following a joint review of the activities of AASOC and AcSOC.

The Terms of Reference of both Councils are now more closely aligned and reflect current oversight procedures.

Review the Terms of Reference on the AcSOC's website.

Audit Quality Indicators - CPAB Final Report

Jun 27, 2018

On June 27, 2018, the Canadian Public Accountability Board (CPAB) released their final report on Audit Quality Indicators (AQIs). CPAB believes that AQIs have significant potential to positively impact audit quality.

The report includes a discussion on the:

  • benefits and challenges from using AQIs
  • process for implementing AQIs
  • diverse opinions on the usefulness of specific AQIs

Review the full report on the CPAB's website.

Basis for Conclusions – Preface to the CPA Canada Handbook - Assurance

Jul 03, 2018

On July 3, 2018, the Auditing and Assurance Standards Board (AASB) released a summary of the process it followed in reviewing the amendment criteria when adopting ISQCs as CSQCs, ISAs as CASs, and ISAEs as CSAEs.

The following sets out key matters considered by the AASB in its review:

  • Applying the criteria to the adoption of ISAs
  • Responding to emerging issues
  • Consideration of the term “public interest”
  • Amendment criteria used by other national standard setters

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

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