Williams discussed the need for updating standards, citing proposals and changes made by the PCAOB. She outlined efforts to address issues such as noncompliance and emphasized the importance of public comments in shaping standards. She also discussed PCAOB's enforcement actions, including sanctions and penalties, to ensure accountability and protect investors.

Williams encouraged firms to focus on quality control and remediation for improved audit quality and concluded by emphasizing the crucial role auditors play in fostering confidence in the financial system and protecting investors.

Access the speech on the PCAOB website

These amendments are intended to strengthen and modernize the requirements for the confirmation process by describing principles-based requirements for all methods of confirmation, including paper-based and electronic means of communications.

According to PCAOB’s Chair Erica Williams’s, “the new standard, which replaces a standard that had not been significantly updated in twenty years, is also a big step forward as the Board continues to execute its strategic goal of modernizing PCAOB standards.”

Access the order on SEC’s 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.

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.

The FAQ compilation addresses a variety of questions, including how the concept of materiality applies to sustainability reporting and assurance; the definition of double materiality; and how an assurance practitioner considers an organization’s “materiality process” during a sustainability assurance engagement, among other questions and answers.

The comment period for proposed ISSA 5000 is open until December 1, 2023. To promote broad and diverse participation in the ongoing public consultation, the IAASB has developed a stakeholder survey, which may be especially useful for stakeholders wishing to share less technical or overall feedback, and a response template.

Access the FAQ on the IAASB website.

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.

The updated IESBA Code mandates firms to publicly reveal their application of independence requirements for public interest entities in financial statement audits. The IAASB's revisions establish a concise and practical framework for fulfilling this obligation, facilitating effective communication in the auditor's report and with governance entities.

During the formulation of these changes, the IAASB closely collaborated and coordinated with the IESBA, ensuring alignment between crucial concepts in both organizations' standards to the best possible extent.

Review the amendments on the IAASB website.

In its preliminary 2023 regulatory assessments, significant findings were identified in seven out of the 53 files inspected at the four largest firms, constituting 13 percent of the total. This marked a slightly higher rate of findings compared to the previous year. The detailed inspection results for other firms, both annually and non-annually inspected, will be incorporated into their comprehensive annual report, which will be released in March 2024.

The interim report shed light on various aspects, including the progress made in implementing the new Canadian quality management standards. It offered insights into their initiatives concerning climate, fraud detection, the integration of artificial intelligence in audits, and public disclosures. Additionally, the report outlined crucial considerations for audit committees as they commenced year-end audit preparations.

Review the report on the CPAB website.

Here are some excerpts from the speech:

“This means audit opinions were signed without completing the audit work required to verify the accuracy of the financial statements. That is a serious problem at any rate, and 40% is completely unacceptable. I have challenged auditors to sharpen their focus and called on audit committees to hold their firms accountable. Of course, as our third pillar of strengthening enforcement suggests, the PCAOB has not hesitated to bring enforcement cases against auditors when appropriate.”

In addition to discussing enforcement, she highlighted the PCAOB’s efforts to improve the transparency of inspection results:

“In May, we announced enhancements to make our inspection reports more transparent with a new section on auditor independence and a range of other improvements to make more relevant, reliable, and useful information available for investors, researchers, and others.

In July, we rolled out new features on our website to help users compare inspection report data.

This was just the beginning of our work to increase transparency and make PCAOB data more accessible.

Transparency is one of the most powerful tools the PCAOB has to improve audit quality. Sharing our inspection results empowers audit committees and boards of directors – which are responsible for hiring auditors of public companies – to hold audit firms accountable directly.”

Re­view the speech on the PCAOB 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.