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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.

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 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.

Basis for Conclusions – CSAE 3530, Attestation Engagements to Report on Compliance and CSAE 3531, Direct Engagements to Report on Compliance

Mar 01, 2018

On March 1, 2018, the Auditing and Assurance Standards Board (AASB) released a summary of the process it followed in developing the standards and the Board’s conclusions regarding significant comments received in response to its Exposure Draft and Re-exposure Draft.

CSAE 3530 and CSAE 3531 replace the following Sections:

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

The standards 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.

Effective when the practitioner's report is dated on or after April 1, 2019.

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

Big Four alumni can bias auditors

Feb 08, 2018

On February 8, 2018, Accounting Today released an article on a new academic study that scrutinizes how bias may play a role when an auditor used to work in the same accounting firm as the CFO of the company being audited.

The study looked at the “familiarity threat” to auditor independence when a CFO or other top executive of a company being audited used to be employed by the firm performing the audit. Before the wave of accounting scandals of the early 2000s, approximately one-third of the biggest U.S. corporations had top executives who were alumni of their companies' outside auditing firms. That included Enron, Global Crossing and Waste Management, which all fell prey to the accounting scandals.

Review the full article on Accounting Today's website.

CAM discussions may drive new corporate disclosures

Jun 18, 2018

On June 18, 2018, Compliance Week released an article on how audit committees may soon face pressure to increase certain areas of corporate disclosure to get ahead of “critical audit matter” disclosures that will begin appearing in audit reports in 2019.

The article describes how the CAM dialogue is inspiring audit committees to think hard even about their own disclosures. Audit committees do not want to see auditors disclosing information about the company that the company itself has not already disclosed. That concern emerged among auditors during the public dialogue and debate as the PCAOB developed the new auditor’s reporting model.

Review the full article on Compliance Week's website.

CPAB 2017 Annual Inspections Report

Mar 27, 2018

On March 27, 2018, the Canadian Public Accountability Board (CPAB) released its 2017 Annual Inspections Report, which discusses CPAB's findings for participating in firms inspected in 2017.

CPAB’s 2017 inspections of the 14 public accounting firms reviewed annually (those with 100 or more reporting issuers) indicate that – despite an overall decrease in significant inspection findings compared  to last year – audit quality continues to be inconsistent.

They inspected 128 (2016:135) annual firm audit files and identified significant findings in 15 (2016:24). The majority of their significant findings in 2017 required the audit firm to carry out additional audit procedures to determine the need, if any, to restate the financial statements due to material error. There were three restatements. 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.

Firms generally have sound audit methodologies and in most cases meet standards. However, recurring inspection findings indicate the need to manage audit quality through robust and effective quality management processes, embedding quality along the full audit cycle, not just assessing it at the end through internal and external inspections. The variability of results, combined with persistent deficiencies year over year, makes it clear the firms need to review their approach to audit quality and enhance their focus on consistent execution across the firm.

Review the report on the CPAB's website.

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