Assurance

Investor Advisory: Exercise Caution with Third-Party Verification/Proof of Reserve Reports

Mar 08, 2023

Crypto entities may engage a service provider to issue a “proof of reserve” report to attempt to address concerns about the safety and availability of customer assets held by various crypto platforms or institutions.

The PCAOB has issued an investor advisory highlighting the need for investors to exercise caution when relying on proof of reserve reports to conclude that there are sufficient assets to meet customer liabilities given inherent limitations associated with these reports.

Quality Management and Group Audits Highlighting Certain Aspects of Interaction between ISA 220 Revised and ISA 600

Feb 22, 2023

The International Auditing and Assurance Standards Board (IAASB) issued a fact sheet on the interactions between ISA 220 (Revised) on quality management at the engagement level, and ISA 600 on group audits.

Review the publication on the IAASB's website.

IAASB New Technology-Focused FAQ

Feb 08, 2023

On February 8, 2023, the Technology Consultation Group of the International Auditing and Assurance Standards Board (IAASB) released non-authoritative support material to help address certain frequently asked questions about investigating exceptions and the concept of performance materiality when performing audit procedures using automated tools & techniques (ATT).

While not unique to ATT, questions on these topics have become more prevalent with the increasing use of ATT, which enable analyzing data sets with large volumes of information.

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

AASB: Revised JPS concerning communications between Auditors and Actuaries approved

Feb 01, 2023

On February 1, 2023, the Au­dit­ing and As­sur­ance Stan­dards Board (AASB) announced that the revised Joint Policy Statement (JPS), effective for communications between the auditor and the actuary involved in the preparation of financial statements that are initiated on or after March 31, 2023, has been approved by both the Canadian Actuarial Standards Board and by the AASB. Early application is permitted.

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.

 

IAASB Opens Consultation on Less Complex Group Audits

Jan 24, 2023

On Jan­u­ary 24, 2023, the In­ter­na­tional Au­dit­ing and As­sur­ance Stan­dards Board (IAASB) opened the public consultation for a group audit-specific section of the proposed auditing standard for less complex entities (LCEs). The proposed section, Part 10, Audits of Group Financial Statements, is intended to form part of the proposed International Standard on Auditing for Audits of Financial Statements of Less Complex Entities (ISA for LCE) when finalized. The Exposure Draft is open for public comment until May 2, 2023.

Group audits were not included in the scope of the original Exposure Draft of the ISA for LCE. Given stakeholder feedback, the IAASB reconsidered its decision to exclude group audits and developed proposals that address audits of less complex groups.

With the inclusion of group audits, the IAASB has proposed changes to the Authority of the proposed ISA for LCE. For example, the IAASB removed the prohibition on using the standard when the audit is a group audit unless component auditors are involved, other than in limited circumstances in which a physical presence is needed for a specific audit procedure for the group audit (e.g., for attending a physical inventory count or inspecting physical assets).

Re­view the press release and Exposure Draft on the IAASB's web­site.

AASB Guide regarding the impact of recent amendments to IAS 1

Jan 24, 2023

On January 24, 2023, the Auditing and Assurance Standards Board (AASB) issued a guide to address how the International Accounting Standards Board’s (IASB) narrow-scope amendments to International Accounting Standard (IAS) 1, Presentation of Financial Statements affect the Canadian Auditing Standards (CASs) and Canadian Standard on Review Engagements (CSRE) 2400, Engagements to Review Historical Financial Statements.

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.

 

PCAOB Proposes New Standard for the Auditor’s Use of Confirmation

Jan 20, 2023

The Public Company Accounting Oversight Board (PCAOB) issued for public comment a proposed new standard that, if adopted, would strengthen and modernize the requirements for the auditor’s use of confirmation. Comments are requested by February 20, 2023.

To modernize the PCAOB’s confirmation standard, the proposed standard includes principles-based requirements that would apply to all methods of confirmation, including paper-based and electronic communications. The proposal, if adopted, would better integrate the PCAOB’s confirmation standard with its risk assessment standards.

The confirmation process touches nearly every audit. It involves an auditor sending a confirmation request directly to a confirming party (e.g., a financial institution), evaluating the information received, and addressing nonresponses and incomplete responses to obtain audit evidence about one or more financial statement assertions.

When properly designed and executed, confirmation can be a critical part of the evidence that auditors obtain to support their opinion regarding a company’s financial statements. A properly designed and executed confirmation can also be an important response for auditors to address fraud risks.

Detailed questions are included throughout the proposal, and commenters are encouraged to:

  1. comment on any or all topics
  2. respond to any or all questions
  3. provide feedback in areas not covered by specific questions, and
  4. provide any evidence that informs commenters’ views.

Review the proposal on the PCAOB's website.

IAASB begins work on global standards for ESG assurance

Jan 16, 2023

On January 16, 2023, the International Auditing and Assurance Standards Board (IAASB) published a public consultation for its 2024-27 proposed strategy and work plan, with it wishing to develop an overarching standard for assurance on sustainability reporting.

The new globally accepted standards aim to improve investor confidence and “reduce the risk of material misstatements”.

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

CAQ and Deloitte Issue Report on Audit Committee Practices

Jan 13, 2023

On January 13, 2023, in collaboration with Deloitte’s Center for Board Effectiveness, the Center for Audit Quality (CAQ) issued "Audit Committee Practices Report: Priorities and Committee Composition". The report is intended to provide insight into shifting priorities as well as trends and practices related to audit committee composition.

Review the press release and report on the CAQ’s website.

IAASB digital technology market scan: Robotic process automation

Jan 12, 2023

On January 12, 2023, the International Auditing and Assurance Standards Board (IAASB) released their publication "Market Scan", where they explore Robotic Process Automation, a technology used for executing repetitive tasks that has applications across the audit process, from data transformation to workpaper creation, as well as potential for forming part of an audited entity’s IT environment.

This publication covers:

  • What is Robotic Process Automation and why is it important?
  • The latest developments
  • What this might mean for the IAASB

Review the publication on the IAASB's website.

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