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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.

2018 Audit Committee Transparency Barometer

Nov 01, 2018

On November 1, 2018, the Center for Audit Quality (CAQ) released the "Audit Committee Transparency Barometer", an annual report issued jointly by the CAQ and Audit Analytics.

The amount of information available to investors and other stakeholders on audit committee oversight of the external auditor continues to increase.

Notable findings in this year's report include the following:

  • 40 percent of S&P 500 companies disclose considerations in appointing the audit firm (up from 13 percent in 2014), compared to 27 percent of mid-cap companies (up from 10 percent in 2014) and 19 percent of small-cap companies (up from 8 percent in 2014).
  • 46 percent of S&P 500 companies disclose criteria considered when evaluating the audit firm (up from 8 percent in 2014), compared to 36 percent of mid-cap companies (up from 7 percent in 2014) and 32 percent of small-cap companies (up from 15 percent in 2014).
  • 26 percent of S&P 500 companies disclose that the evaluation of the external auditor is at least an annual event (up from 4 percent in 2014), compared to 17 percent of mid-cap companies (up from 3 percent in 2014) and 12 percent of small-cap companies (up from 4 percent in 2014).

In addition to presenting statistics on disclosure trends, the Barometer offers disclosure examples to illustrate how audit committees are enhancing information for investors and others.

Review the report on the CAQ's website.

A board member’s perspective: PCAOB’s 5-year strategic plan, transformation initiatives, and current developments

Nov 01, 2018

On November 1, 2018, the Public Company Accounting Oversight Board (PCAOB) released a speech by James G. Kaiser, PCAOB board member.

In his speech, Mr. Kaiser explains how in a 2018 survey, investors named independent auditors as the most effective entity in their investor protection roles, with 81 percent of investors expressing confidence.

He continues by stating that they must ensure the PCAOB is functioning effectively in an ever changing environment. They need to position themselves to be innovative so that they can anticipate and respond to changes rapidly. To figure out how to do that, the PCAOB is taking a fresh approach to their mission and how they are developing their strategic plan to achieve that mission.

Review the full speech on the PCAOB'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 – Agreed-upon Procedures Engagements

Nov 30, 2018

On November 30, 2018, the Auditing and Assurance Standards Board (AASB) issued an Exposure Draft of a proposed new standard proposing to adopt, with Canadian amendments, ISRS 4400 (Revised). Read and respond to the Exposure Draft by February 15, 2019.

The Exposure Draft consists of:

  • an explanation of why change is needed;
  • key public interest considerations;
  • main features of the Exposure Draft;
  • a link to the IAASB’s Exposure Draft, including its Explanatory Memorandum;
  • a description of the AASB’s process for adopting ISRS 4400 (Revised);
  • discussion of proposed Canadian amendments; and
  • a proposed effective date.

The result would be Canadian Standard on Related Services (CSRS) 4400, Agreed-upon Procedures Engagements, that would replace:

  • Section 9100, REPORTS ON THE RESULTS OF APPLYING SPECIFIED AUDITING PROCEDURES TO FINANCIAL INFORMATION OTHER THAN FINANCIAL STATEMENTS; and
  • Section 9110, AGREED-UPON PROCEDURES REGARDING INTERNAL CONTROL OVER FINANCIAL REPORTING.

Proposed effective date

The IAASB proposes that ISRS 4400 (Revised) be effective in approximately 18-24 months after the final standard is issued. CSRS 4400 is expected to have the same effective date. Practitioners will be permitted to apply CSRS 4400 before the effective date.

The AASB expects to use the same effective date for the CSRS as the IAASB does for ISRS 4400 (Revised).

Review the exposure draft 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 Exposure Draft – Compilation Engagements

Sep 04, 2018

On September 4, 2018, the Auditing and Assurance Standards Board (AASB) issued an Exposure Draft of a proposed new standard dealing with engagements to compile financial information that would replace the existing Section 9200, Compilation Engagements. Stakeholders are encouraged to submit their comments by November 30, 2018.

The AASB proposes to issue a new Canadian Standard on Related Services (CSRS) 4200, Compilation Engagements. This standard would replace:

  • Section 9200, Compilation Engagements and
  • AuG-5, Compilation Engagements – Financial Statement Disclosures

The main features of the Exposure Draft include:

  • Addressing the public interest issues
  • The clarity format
  • Quality control

The AASB is proposing that CSRS 4200 be effective for compiled financial information for periods ending at least 12 months after the issuance of the final standard into the Handbook. The effective date is anticipated to be in the second half of the year 2020. Earlier application of CSRS 4200 would be permitted.

Review the Exposure Draft on the AASB's website.

AASB Exposure Draft – Identifying and Assessing the Risks of Material Misstatement

Sep 06, 2018

On September 6, 2018, the Auditing and Assurance Standards Board (AASB) issued an Exposure Draft proposing the adoption of ISA 315 (Revised), with appropriate Canadian amendments, if any. Stakeholders are invited to comment until November 2, 2018.

This Exposure Draft consists of:

  • an explanation of why change was needed;
  • key public interest considerations;
  • 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; and
  • a proposed effective date.

Review the Exposure Draft on the AASB's website.

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