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ISA 540 (Revised) implementation support: Audit client briefing

Nov 19, 2019

On November 19, 2019, the International Standard on Auditing (ISA) 540 (Revised) Implementation Working Group released an Audit Client Briefing (Briefing) based on the Canadian Auditing Standard (CAS) Audit Client Briefing of the Chartered Professional Accountants of Canada (CPA Canada), published in October 2019 and is used with permission of CPA Canada.

The purpose of this Briefing is to make chief financial officers, other senior management responsible for financial statement preparation, and staff directly involved in determining accounting estimates aware of matters to consider in preparing for the auditor’s requests pertaining to ISA 540 (Revised), Auditing Accounting Estimates and Related Disclosures.

This Briefing provides an overview of:

  • Management’s responsibilities in determining when accounting estimates are needed;
  • Management’s responsibilities regarding the main components of an estimation process; and
  • The impact on management because of changes to the auditor’s responsibilities, including broad questions auditors are likely to ask those involved in the detailed aspects of the estimation process.

This Briefing does not constitute an authoritative pronouncement of the International Auditing and Assurance Standards Board (IAASB), nor does it amend, extend or override the ISAs or other of the IAASB’s International Standards. It is not meant to be exhaustive and reading this Briefing is not a substitute for reading the ISAs.

Review the press release and Briefing on the IAASB's website.

Deloitte Canada's Julie Corden appointed to the IAASB

Nov 18, 2019

On November 18, 2019, the International Auditing & Assurance Standards Board (IAASB) announced their new appointments and re-appointments.

"It is a pleasure to welcome Ms. Almond, Ms. Jackson, and Ms. Corden, now in a permanent capacity, to the International Auditing and Assurance Standards Board.  I look forward to the diverse perspectives they will bring to our group of passionate, dedicated volunteers.  I am also delighted that Fiona Campbell will serve as Deputy Chair for another year," said Tom Seidenstein, IAASB Chair.  " I want to thank Karin French and Marek Grabowski for their steadfast service to our board.  Their contributions were invaluable, and we are grateful for their dedication and commitment".

Review the press release on the IAASB's website.

Demand for sustainability assurance is growing

Nov 12, 2019

On November 12, 2019, the Journal of Accountancy published an article on how the demand for sustainability assurance is likely to grow in the coming years, according to a new survey conducted by The Conference Board.

Thirty-seven of the 57 large U.S. and European companies participating in the survey said they obtain assurance on at least some of their publicly reported sustainability information. Seventy percent of the companies that obtain this assurance said they expect that the need for sustainability assurance will increase over the next five years.

Review the full article on the Journal of Accountancy's website.

Where do audit committees have opportunities to enhance disclosure?

Nov 11, 2019

On November 11, 2019, the National Association of Corporate Directors (NACD) released a blog on how the state of investor confidence in audit committees is strong in 2019, with a recent Center for Audit Quality (CAQ) survey finding that 81 percent of U.S. retail investors feel independent audit committees are effective in their investor protection role.

How can this foundation of confidence in audit committees be strengthened further? The CAQ believes that greater transparency about the audit committee’s role and responsibilities is key, as detailed in a new report by the CAQ and Audit Analytics on audit committee transparency.

Review the full blog on the NACD's website.

Update – AASB expands key audit matter reporting

Nov 08, 2019

On November 8, 2019, the Auditing and Assurance Standards Board (AASB) released an update following the feedback it received on its Exposure Draft, Communication of Key Audit Matters in the Auditor’s Report.

After reviewing the feedback received, the AASB agreed to require key audit matter reporting for other listed entities, excluding listed entities required to comply with National Instrument 81-106.

Review the update on the AASB's website.

Auditing in the crypto-asset sector

Nov 07, 2019

On November 7, 2019, the Canadian Public Accountability Board (CPAB) released its 2019 inspections insights on auditing in the crypto-asset sector. There are currently 48 Canadian reporting issuers with activities in the crypto-asset sector. Those activities include a variety of crypto-asset trading strategies and crypto-asset mining.

They found significant findings (deficiencies in the application of generally accepted auditing standards that could result in a restatement of the company’s financials) in seven of eight audit files inspected to date. Remediation remains in progress for some of those audits.

The five most common deficiencies include:

  1. Auditors did not have an adequate understanding of audit risks when they designed their audit approaches.
  2. Auditors relied on information obtained from crypto-exchanges and custodians without evaluating the reliability of that information.
  3. For entities that hold self-custodied crypto-assets, auditors did not obtain sufficient evidence to support the entities’ ownership claims to those assets.
  4. Auditors did not evaluate the reliability of information obtained from blockchains.
  5. For entities engaged in crypto-asset mining activities, auditors that limited their audit work to vouching crypto-assets received to the blockchain did not obtain sufficient audit evidence.

Review the publication on the CPAB's website.

How audit committees can improve disclosure

Nov 06, 2019

On November 6, 2019, the Center for Audit Quality (CAQ) released its 2019 Audit Committee Transparency Barometer. The Barometer tracks S&P Composite 1500 proxy disclosures to gauge transparency around audit committee oversight of the external auditor and other key financial reporting topics.

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 and a summary on the Journal of Accountancy's website.

Preventing audit extinction

Oct 24, 2019

On October 24, 2019, the Public Company Accounting Oversight Board (PCAOB) released a speech by J. Robert Brown, Jr., PCAOB Member, where he discusses how the audit has evolved to retain relevance in response to the interests of investors and other market forces.

In his speech, he also highlights on the types of information increasingly used by investors that are currently outside the audit, including alternative performance measures, or what I will call in this speech Non-GAAP financial measures, key performance indicators (KPIs), XBRL, and sustainability disclosure. Finally, it helps to start conversations among investors, audit firms, and other stakeholders about relevance and possible changes that will help prevent auditors from becoming the weavers of the 21st century.

Review the full speech on the PCAOB's website.

The future of international standard setting

Oct 21, 2019

On October 21, 2019, the International Auditing and Assurance Standards Board (IAASB) published a speech by Tom Seidenstein IAASB Chair to the Institute of Chartered Accountants of England and Wales’s Audit Conference.

In his speech, Mr. Seidenstein expresses that he firmly believes that auditors must play a critical role in ensuring trust in markets. He worries that trust is eroding in these institutions and in the way the economy works. It is his belief that that the IAASB, in conjunction with their many stakeholders, can and must play a role in enhancing and possibly restoring trust where it has eroded.

Review the full speech on the IAASB's website.

Focus on professional skepticism

Oct 18, 2019

On October 18, 2019, the International Auditing and Assurance Standards Board (IAASB) published its third update to stakeholders highlighting the IAASB’s efforts to appropriately reflect professional skepticism in its standards.

Review the update on the IAASB's website.

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