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CAQ issues updated version of its publication on audit quality disclosures

Apr 02, 2019

On April 2, 2019, the Center for Audit Quality (CAQ) released an updated version of its publication “External Auditor Assessment Tool.”

The External Auditor Assessment Tool is designed to assist audit committees in carrying out their responsibilities of appointing, overseeing, and determining compensation for the external auditor. The tool contains sample questions to help committees in four specific areas:

  • quality of services and sufficiency of resources provided by the engagement team;
  • quality of services and sufficiency of resources provided by the audit firm;
  • communication and interaction with the external auditor; and
  • auditor independence, objectivity, and professional skepticism.

The tool also includes a sample form and rating scale for obtaining input from company personnel about the external auditor, as well as resources for additional reading.

For more information, see the press release on the CAQ’s website.

AASB Annual Plan – 2019-2020

Apr 01, 2019

On April 1, 2019, the Auditing and Assurance Stan­dards Board (AASB) pub­lished its Annual Plan for 2019-2020. This Annual Plan sets out the Board’s key activities in 2019-2020, in order to help it achieve the objectives in its five-year Strategic Plan for 2016-2021.

The AASB is in the fourth year of its current Strategic Plan.

As part of its activities in 2020-2021, the AASB plans to:

  • monitor, participate, and respond to international developments, including the Monitoring Group consultation on Strengthening the Governance and Oversight of the International Audit-Related Standard-Setting Boards in the Public Interest;
  • monitor the use of emerging technologies in financial reporting and audit;
  • progress several key audit standards projects, including those relating to the following: auditor reporting (combined reporting and disclosure of the audit engagement partner’s name); considering revisions to CAS 600, Group Audits; issuing the revisions to CAS 315, Identifying and Assessing the Risks of Material Misstatement, and the changes to the Quality Management standards;
  • progress standards for engagements other than audits of financial statements, including those related to the following: approve revised standards for Agreed-upon Procedures; issue a revised standard for Compilation Engagements; issue revised standards for performance audits in the Public Sector; and issue a revised standard on Reporting on Controls at a Service Organization.    

For further details, refer to the Annual Plan on the AASB's web­site.


SEC makes announcement about exhibits containing immaterial, competitively harmful information

Apr 01, 2019

On April 1, 2019, the U.S. Securities and Exchange Commission (SEC) posted to its website an announcement on the new rules and procedures in the Commission’s recently issued final rule “FAST Act Modernization and Simplification of Regulation S-K.”

The announcement addresses issues related to exhibits containing immaterial and competitively harmful information. Specific topics discussed in the announcement include (1) new rule requirements related to the identification of where information has been omitted from a filed exhibit, (2) the review process for registrant filings for compliance, and (3) transition issues.

The SEC recently adopted new rules that permit registrants to file redacted material contracts without applying for confidential treatment of the redacted information provided the redacted information (i) is not material; and (ii) would be competitively harmful if publicly disclosed. Those rules will become effective upon their publication in the Federal Register, which is expected to be on April 2, 2019.

For more information, see the SEC announcement on the SEC’s Web site.

AASB Video – Communicating Key Audit Matters in the Audit Report

Mar 29, 2019

On March 29, 2019, the Au­dit­ing and As­sur­ance Stan­dards Board (AASB) re­leased a video that takes you through the key aspects of the AASB’s January 31, 2019 Exposure Draft, Communication of Key Audit Matters in the Auditor’s Report. Stakeholders are reminded that their responses to the AASB on this important topic are due by no later than May 15, 2019

Access the video on the AASB's web­site.


AASB In Brief – A plain and simple overview of the AASB’s exposure draft on Quality Management

Mar 29, 2019

On March 29, 2019, the Au­dit­ing and As­sur­ance Stan­dards Board (AASB) re­leased an In Brief relating to its upcoming exposure draft on Quality Management. The AASB is in the process of developing, and plans to issue, an exposure draft proposing the adoption of ISQM 1, ISQM 2 and ISA 220 (Revised), with appropriate Canadian amendments, if any. The In Brief is intended to provide an overview of the planned exposure draft and the ways stakeholders can provide input.

Access the In Brief on the AASB's web­site.


CPAB Quality Insights Report: 2018 Inspections Results

Mar 29, 2019

On March 29, 2019, the Cana­dian Pub­lic Ac­count­abil­ity Board (CPAB) re­leased its Quality Insights Report: 2018 Inspections Results, which dis­cusses CPAB's find­ings for par­tic­i­pat­ing firms in­spected in 2018.

During 2018 CPAB inspected 32 firms (2017: 45) and 139 engagement files (2017: 154).

Overall, CPAB found that the trend in audit quality results has improved for most firms over the past 15 years; however, their current inspections show that sustainable, consistent audit quality remains a challenge in Canada. CPAB believes that: (i) all participating audit firms must enhance their commitment to continuous improvement at every level of their organization and embed a culture of quality to deliver audits that are of consistently high quality; and (ii) that quality management systems will be critical to this improvement.

2018 marked the first year of CPAB’s enhanced assessment of the quality management systems at the country’s four largest public accounting firms and they found that all of the firms require improvement.

CPAB’s 2017 in­spec­tions of the 14 pub­lic ac­count­ing firms re­viewed an­nu­ally (those with 100 or more re­port­ing is­suers) in­di­cate that, de­spite an over­all de­crease in sig­nif­i­cant in­spec­tion find­ings com­pared to last year, au­dit qual­ity con­tin­ues to be in­con­sis­tent.

In summary, the number of files with significant findings increased, files with other findings decreased and files with no findings remained similar to last year. 

  • Big Four firms: 80 engagement files; 16 with significant findings.
  • Four national/network firms: 23 engagement files; 10 with significant findings.
  • Six large regional firms: 19 engagement files; 8 with significant findings.

For further details, re­view the re­port on the CPAB's web­site.

IAASB – Quality Management Webcast Series: Firms' Risk Assessment Process

Mar 29, 2019

On March 29, 2019, the International Au­dit­ing and As­sur­ance Stan­dards Board (IAASB) released the first webcast in a multi-part series on its recently proposed quality management standards. In this webcast, Task Force Chair Karen French provides a deep-dive on a firm's risk assessment process. The IAASB reminds stakeholders that its quality management standards are currently open for public consultation until July 1, 2019.

Access the webcast on the IAASB's web­site.


AASB Basis of conclusions re the amendments to paragraph 46 of CAS 700

Mar 29, 2019

On March 29, 2019, the Auditing and Assurance Standards Board (AASB) released its Basis of Conclusions for the recent amendments to the effective date of paragraph 46 of CAS 700, Forming an Opinion and Reporting on Financial Statements.

The Basis for Conclusions has been prepared to make Canadian stakeholders aware of the AASB’s revisions to CAS 700, how the AASB obtained input from stakeholders, and how it dealt with significant matters arising from comments received. It includes background information relating to the reporting requirements for Canadian reporting issuers that are Multijurisdictional Disclosure System filers and the requirements in CAS 700 regarding disclosure of the engagement partner name.

Access the Basis of Conclusions on the AASB’s website.

IAASB Video – Quality management standards and small- and medium-sized practices

Mar 28, 2019

The International Au­dit­ing and As­sur­ance Stan­dards Board (IAASB) recently released a suite of proposed international standards on quality management. The proposals change the way professional accountancy firms are expected to manage quality—for audits, reviews, and other assurance and related services engagements. This video, issued on March 28, 2019, explains how the IAASB’s proposed quality management standards are scalable for small- and medium-sized practices.

Access the video on the IAASB's web­site.


SEC opens comment period on the PCAOB’s proposals related to auditing accounting estimates and the use of specialists

Mar 28, 2019

On March 28, 2019, the U.S. Securities and Exchange Commission (SEC) has issued two notices of filing in which it announces that it has opened the comment periods for the Public Company Accounting Oversight Board (PCAOB)’s proposed rules on (i) auditing accounting estimates, including fair value measurements, and amendments to PCAOB auditing standards and (ii) amendments to auditing standards on the auditor’s use of the work of specialists.

Comments on both releases are due 21 days after the date of their publication in the Federal Register. For more information, see the notices of filing on the PCAOB’s proposed rules on auditing accounting estimates and use of specialists on the SEC’s website. In addition, see Deloitte U.S.’s January 16, 2019, Audit & Assurance Update for more information about the two proposals.

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