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.

The proposed ISSA 5000 is a principles-based, overarching standard suitable for both limited and reasonable assurance engagements on sustainability information reported across any sustainability topic. The IAASB drafted the standard to work with sustainability information prepared under any suitable reporting framework. The proposed standard is profession agnostic, supporting its use by both professional accountant and non-accountant assurance practitioners.

Comments on the proposed ISSA are requested by December 1, 2023.

Re­view the exposure draft and the additional supporting material on IAASB’s website.

The CAQ believes that audit committee members should speak out on this topic to let the PCAOB know:

1. Any change should keep the auditor focused on NOCLAR that could materially impact the financial statements, such as material penalties or loss contingencies.
2. Any requirement of the auditor should be risk-based and consider the role the company’s compliance program plays in detecting NOCLAR that could be material to the audited financial statements.

Comments on the proposal are due by August 7, 2023.

Access the sign-on letter on CAQ’s website and the proposal on the PCAOB website.

Once finalized, ISSA 5000 will serve as a comprehensive, stand-alone standard suitable for limited and reasonable sustainability assurance engagements. It will apply to sustainability information reported across any sustainability topic and prepared under multiple frameworks. Moreover, the standard will be profession-agnostic, enabling its use by professional accountants and other professionals performing sustainability assurance engagements.

Access the news release on the IAASB website.

Specifically, the proposal would:

• Clarify “the differences between tests of details and analytical procedures and emphasize the importance of appropriate disaggregation or detail of information.”
• Specify “the auditor’s responsibilities when using audit evidence for more than one purpose.”
• Outline “considerations for the auditor’s investigation of items when designing or performing substantive audit procedures.”
• Address the auditor’s “responsibilities for evaluating the reliability of certain audit evidence.”

Comments on the proposed amendments are due by August 28, 2023.

Re­view the proposed amendments on PCAOB’s website.