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AASB Response – Quality Management at the Firm and Engagement Level, Including Engagement Quality Reviews

Aug 06, 2019

On August 6, 2019, the Auditing and Assurance Standards Board (AASB) released their four comment letters responding to the IAASB’s Exposure Drafts for “Quality Management at the Firm and Engagement Level, Including Engagement Quality Reviews,” including, proposed International Standard on Quality Management (ISQM) 1; proposed ISQM 2, and proposed ISA 220 (Revised).

Review the comment letters for full details on the AASB's website.

CAQ releases highlights of June 2019 joint meeting with the SEC staff

Jul 29, 2019

In July 2019, the Center for Audit Quality (CAQ) published highlights of the CAQ SEC Regulations Committee joint meeting with the SEC staff held on June 25, 2019.

Topics discussed at the meeting include:

  • Use of income averaging for purposes of testing significance when registrant has applied the full retrospective method of adopting ASC 606 but has not revised the earliest two periods.
  • Emerging Growth Company (EGC) Transition Issues.
  • Application of amended MD&A provisions that permit the omission of the earliest period of MD&A in a filing in circumstances where there has been a retrospective change to the financial statements.
  • Interim periods required for changes in stockholders’ equity in a registration or proxy statement.
  • Non-GAAP measures, including individually tailored non-GAAP financial measures.

Review the highlights on the CAQ's website.

2019 Toronto and Montreal audit committee forum highlights

Jul 23, 2019

On July 23, 2019, the Canadian Public Accountability Board (CPAB) released highlights from their forums in Toronto and Montreal that allowed audit committee chairs and CFOs to discuss current audit quality matters and share experiences on common issues. 

The forum covered issues facing audit committees of Canadian reporting issuers, including:

  • Emerging technology for auditors
  • Cybersecurity protection for reporting issuers
  • Expanded auditors report
  • Auditor assessments and Audit Quality Indicators
  • Transparency of CPAB’s inspection findings

Review the highlights on the CPAB's website.

IAASB webinars audits of less complex entities

Jul 23, 2019

On July 23, 2019, the International Auditing and Assurance Standards Board (IAASB) issued a series of webinars on the challenges and possible actions that the IAASB is exploring it its current Consultation Paper, "Audits of Less Complex Entities".

Listen to the IAASB's webinars on the Consultation Paper, which is open for public comment until September 12, 2019.

  • In English with Prof. Roger Simnett, IAASB Member and Audits of Less Complex Entities Working Group Chair
  • In French with Isabelle Tracq-Sengeissen, IAASB and Working Group Member
  • In Spanish with Fernando Ruiz, IAASB and Working Group Member

FRC consults on enhanced ethical and auditing standards

Jul 15, 2019

On July 15, 2019, the Financial Reporting Council (FRC) issued a consultation proposing important changes to the UK’s Ethical and Auditing Standards. The FRC proposes to set more stringent ethical rules for auditors, in response to findings from recent audit enforcement cases and from audit inspections. Comments are request by September 27, 2019.

In response to feedback from investors, the FRC also proposes to enhance the quality and content of auditor’s reports in order to improve transparency about what is found in the course of an audit.

Key changes proposed include:

  • A clearer and stronger ‘objective, reasonable and informed third party test’ which requires audit firms to consider whether a proposed action would affect their independence from the perspective of public interest stakeholders rather than another auditor.
  • Enhancing the authority of the Ethics Partner function within audit firms, in order to ensure firm wide focus on ethical matters and the public interest, and to require reporting to those charged with governance where an audit firm does not follow the Ethics Partner’s advice.
  • The list of prohibited non-audit services that auditors of Public Interest Entities (PIEs) can provide to audited bodies has been replaced with a much shorter list of permitted services, all of which are ‘closely related’ to an audit or required by law and/or regulation. No other services can be provided.
  • The requirement for the auditors of all UK listed entities to include in their published auditor’s reports the performance materiality threshold used in the audit.

Review the press release and consultation paper on the FRC's website.

PCAOB posts CAM resources for investors and audit committees

Jul 11, 2019

On July 11, 2019, the Public Company Accounting Oversight Board (PCAOB) released two new resources on critical audit matters (CAMs), one specifically for investors and the other for audit committees.

These resources advance the PCAOB’s strategic priority of cultivating effective communications with stakeholders, as well as providing timely, relevant, and useful information to them.

In May, Erin Dwyer joined the PCAOB as a direct point of contact for and liaison to investors, audit committees, and preparers. Erin shares some additional information about her role and these CAMs-related resources in this short video.

Review the resources on the PCAOB's website:

Investor relations: Get up to speed now on critical audit matters

Jul 09, 2019

On July 9, 2019, the Center for Audit Quality (CAQ) released a list of frequently asked questions about critical audit matters (CAMs) to help inform investor relations (IR) professionals as they prepare for those conversations

Starting in the summer of 2019, auditors will be required to communicate CAMs in their auditor’s reports. Investors with questions about CAMs may turn to a company’s IR group for answers.

Review the publication on the CAQ's website.

Introduction to Extended External Reporting Assurance Consultation Paper

Jul 09, 2019

On July 9, 2019, the International Auditing and Assurance Standards Board (IAASB) issued a webinar on the extended external reporting (EER) Consultation Paper.

Listen to IAASB member and Task Force Chair, Marek Grabowski, discuss the extended external reporting (EER) Consultation Paper that includes the first part of the draft guidance for practitioners applying International Standard on Assurance Engagements (ISAE) 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information, to EER assurance engagements.

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

CPAB response to IAASB Exposure Drafts for ISQM

Jul 02, 2019

On July 2, 2019, the Canadian Public Accountability Board (CPAB) released its comments on the IAASB’s Exposure Drafts for ISQM 1, ISQM 2 and ISA 220.

CPAB oversees all firms that audit reporting issuers; we have experience in overseeing firms that vary in size and nature. They have found that the most relevant factor to consider in assessing the need for a quality management system is the nature of the engagements that a firm performs, and not the firm’s size, nature or circumstances. The exposure draft provides significant latitude to firms to opt out of the requirements due to their nature and circumstances (para 5), which they believe dilutes the proposed standards. They would strongly encourage the IAASB to reconsider its approach in this area.

They believe the IAASB could further enhance the exposure draft in a few key areas, by:

  • Adopting a more proactive approach to achieving quality results in the design and implementation of responses to quality risks, with greater emphasis on preventative measures;
  • Adding greater specificity to how the quality management system framework is defined so that it can be tested for operating effectiveness; and
  • Identifying the potential for conflict within the firm structure and including further guidance to foster skepticism and an appropriately independent mindset at different levels and locations.

Review the comments on the CPAB’s website.

Global Ethics Board Launches eCode; Takes Usability and Accessibility of Code of Ethics to Next Level

Jun 26, 2019

On June 26, 2019, the In­ter­na­tional Ethics Stan­dards Board for Ac­coun­tants (IESBA) launched the eCode – a web-based tool that delivers the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code) on a digital platform.

The eCode represents the outcome of a strategic initiative to leverage modern technologies, including mobile access, to make the content of the Code as widely accessible and visible and as user-friendly as possible. In addition to enhanced search and navigation, the eCode includes links to non-authoritative resources that provide contextual information or explain the rationale for particular provisions in the Code.

Re­view the IESBA’s  press release and a copy of the eCode on the IESBA's web­site.

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