The IAASB released the 2022 Handbook of International Quality Management, Auditing, Review, Other Assurance, and Related Services Pronouncements. The latest edition of the handbook includes:

• IAASB’s new and revised suite of quality management standards:
• International Standard on Quality Management (ISQM) 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements
• ISQM 2, Engagement Quality Reviews
• International Standard on Auditing (ISA) 220 (Revised), Quality Management for an Audit of Financial Statements
• Conforming and Consequential Amendments to Other ISAs Arising from the Quality Management Project
• Conforming and Consequential Amendments to the IAASB’s Other Standards as a Result of the New and Revised Quality Management Standards
• International Standard on Related Services (ISRS) 4400 (Revised), Agreed-Upon Procedures Engagements
• The following standards, which are not yet effective for this version of the handbook, are included in the back of Volume 1:
• ISA 600 (Revised), Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors)
• Conforming and Consequential Amendments to Other International Standards arising from ISA 600 (Revised)

Review the three volumes of the report on the IAASB website.

Sustainability/environmental, social, and governance (ESG) reporting has quickly become a matter of global importance. A broad range of interested and affected parties are calling on organizations to be transparent about sustainability/ESG matters.

The AASB is monitoring the IAASB’s progress on this initiative, including providing feedback on the IAASB’s meeting agenda papers and has approved a project to adopt ISSA 5000 concurrently in Canada as Canadian Standard on Sustainability Assurance (CSSA) 5000, General Requirements for Sustainability Assurance Engagements. The AASB’s Sustainability Assurance Committee supports the AASB in reviewing and responding to materials issued by the IAASB.

Access the project page on the AASB website.

At the September 12-13, 2023, board meeting the AASB approved narrow-scope amendments to CAS 700, Forming an Opinion and Reporting on Financial Statements, and CAS 260, Communication with Those Charged with Governance, subject to the PIOB’s due process certification.

The narrow-scope amendments to CAS 700 and CAS 260 will become effective for audits of financial statements for periods beginning on or after December 15, 2024. The narrow-scope amendments were issued in the Handbook in November 2023.

Access the project status on the FRAS Canada website.

Fraud: The AASB discussed issues related to the International Auditing and Assurance Standards Board’s (IAASB) proposed revisions to International Standard on Auditing (ISA) 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements.

Listed Entity/Public Interest Entity Track-1: The AASB discussed issues related to the IAASB’s narrow-scope amendments project to revise the definitions of “listed entity” and “public interest entity,” including proposed revisions to ISA 700 (Revised), Forming an Opinion and Reporting on Financial Statements, and ISA 260 (Revised), Communication with Those Charged with Governance.

Audits of Less Complex Entities (LCEs): The AASB discussed issues related to the IAASB’s project to develop an ISA for Audits of Financial Statements of Less Complex Entities (ISA for LCE).

Sustainability Assurance: The AASB discussed issues related to the IAASB’s project to develop International Standard on Sustainability Assurance (ISSA) 5000, General Requirements for Sustainability Assurance Engagements.  

Access the meeting summary on the FRAS Canada website.

The narrow-scope amendments to IAS 1 require entities to disclose their material accounting policy information, instead of significant accounting policies. The amendments are effective for annual reporting periods beginning on or after January 1, 2023, with early application permitted.

Of note, the Guide is intended to assist auditors with respect to these amendments to IAS 1. The publication does not amend or override the CASs, the texts of which alone are authoritative. Reading the publication is also not a substitute for reading the CASs

Re­view the Guide on the AASB's web­site.

Here’s an excerpt from the comments:

“We are pleased with the IAASB’s proposal to include audits of group financial statements (Group audits) in the scope of the proposed ISA for LCE. Not all group audits exhibit characteristics of complexity. As such, audits of less complex groups should be within the scope of the proposed ISA for LCE.

However, we have significant concerns with the proposed “bright line” exclusion of the use of the proposed ISA for LCE when component auditors are involved. We believe that the proposed prohibition could increase the complexity of the auditor’s decision-making process regarding the use of the proposed ISA for LCE. Consequently, we believe the prohibition will considerably limit the application of the proposed ISA for LCE in Canada and will be a significant factor as we assess whether the proposed ISA for LCE meets the needs of Canadians.

As a result, we recommend that the Authority not include a prohibition when component auditors are involved. In our view, the qualitative characteristics set out in the Authority that describe the typical LCE, in addition to the group-specific qualitative characteristics set out in ED-ISA for LCE Part 10, should be adequate for the purpose of determining the appropriate use of the proposed ISA for LCE for group audits.”

Access the AASB comments on the IAASB website.

Here’s an excerpt from the comments:

“We support the proposed amendments to ISA 700 (Revised). We agree that the revisions provide a clear mechanism to operationalize the IESBA’s transparency requirement, while recognizing that some jurisdictions, like Canada, adopt the ISAs but apply ethical requirements different from the IESBA Code.

However, we believe paragraph 17 of ISA 260 (Revised) should be amended to include an explicit requirement for the auditor to communicate with those charged with governance which independence requirements were applied. We believe those charged with governance should be fully informed regarding the firm’s independence, including which independence requirements were applied. We are concerned that proposed paragraph A29 of ISA 260 (Revised) may not, in all circumstances, achieve this desired transparency.

” Finally, we are concerned that the IAASB has other projects underway, in addition to this project, that may result in multiple changes to the auditor’s report. These changes, in relatively quick succession, could create implementation challenges and reduce the understandability of the auditor’s report. In considering any future revisions to the auditor’s report, we strongly urge the IAASB to ensure such revisions are coordinated to mitigate the risk of these potential unintended consequences.

Access the AASB comments on the IAASB website.

A copy of the revised JPS can be obtained on the AASB’s website.

The JPS will be added to the CPA Canada Handbook, Assurance shortly, as an appendix to CAS 500, Audit Evidence.

Reappointed for one-year terms ending on March 31, 2024: 

• Ian Bandeen, LL.B, BCL, Chairman of the Advisory Board, Select Vantage Inc.
• Donna Bovolaneas, FCPA, FCA, retired after a long and diverse career focused primarily on financial reporting and audit quality

Appointed as a new member for a three-year term ending on March 31, 2026:

• Anne-Marie Ethier, FCPA, LPA, Audit Partner and member of the Board of Deloitte Canada and Chile, Deloitte LLP

Retired as a member on March 31, 2023: 

• Sheila Filion, CPA, CA, an assurance partner with Virtus Group Chartered Professional Accountants and Business Advisors LLP in Saskatchewan
• Johnny Walker, LL.B., CPA, CA, CBV, an investment banker and finance professional and has held senior management roles with global investment banks working in Canada, the U.S., and internationally

For fur­ther de­tails re­fer to press release.

The topics discussed include:

• Risks impacting external audits
• The role of governance and culture within an audit firm, particularly with regards to audit quality
• Observations on the implementation of the new Canadian auditing standard on quality management systems
• Fraud detection and prevention
• Developments in sustainability and climate disclosure reporting standards and practices
• Risks related to emerging technologies, including artificial intelligence
• IFRS 17 Insurance Contracts implementation

Roundtable participants reaffirmed their shared commitment to fostering a robust Canadian financial system by maintaining open and proactive engagement, acting on issues early and in a coordinated manner.

Access the news release on the CPAB website.