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Consultation Paper, Extended External Reporting Assurance

Feb 28, 2019

On February 28, 2019, the International Auditing and Assurance Standards Board (IAASB) released a Consultation Paper, seeking feedback on its progress in developing draft guidance in the first phase of its EER Assurance project. Comments are requested by June 21, 2019.

Extended external reporting (EER) is becoming increasingly common and there is a growing demand for assurance engagements in relation to it.

EER encapsulates many different forms of reporting including, but not limited to, integrated reporting, sustainability reporting and other reporting by entities about environmental, social and governance matters.

The IAASB Consultation Paper, Extended External Reporting Assurance, includes the first part of draft guidance for practitioners applying International Standard on Assurance Engagements (ISAE) 3000 (Revised), Assurance Engagements Other than Audits or Reviews of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. Input received will assist the IAASB in continuing to develop a complete non-authoritative guidance document due to be published in the second phase of the project.

The consultation includes draft guidance covering:

  • The suitability of criteria (reporting framework or standards) used to prepare the EER report;
  • Preparer-developed criteria to determine the matters reported on (a preparer’s “materiality process”);
  • The types of misstatements that may occur in the EER report (building assertions);
  • The materiality of misstatements in the EER report;
  • The preparer’s governance and internal control over its process to prepare the EER report; and
  • Narrative and future-oriented information in the EER report.

The IAASB invites input on the draft guidance from all stakeholders, especially those with practical experience in this evolving area of reporting, including practitioners and other experts involved in performing engagements, preparers of EER reports, investors and other users, standard setters, and regulators.

Review the Consultation Paper on the IAASB's website.

Focus on Professional Skepticism

Feb 22, 2019

On February 22, 2019, the International Auditing and Assurance Standards Board (IAASB) published a professional skepticism communiqué.

This communiqué is part of a series from the IAASB Professional Skepticism Working Group, providing updates on the IAASB’s efforts to appropriately reflect professional skepticism in its standards, together with other relevant news and information.

Review the communiqué and previous editions on the IAASB's website.

AASB defers disclosure of engagement partner name for audits of certain MJDS filers

Feb 15, 2019

On February 15, 2019, the Auditing and Assurance Standards Board (AASB) published an update on the issue of naming the engagement partner on the auditor’s report and why they deferred its application for one year.

Are you an MJDS filer who has audits that comply with both Canadian GAAS and PCAOB accounting standards, or Canadian GAAS only?

The AASB deferred application of paragraph 46 for one year for audits of financial statements conducted in accordance with Canadian GAAS when the name of the engagement partner is submitted on Form AP for filing with the PCAOB. As a result, paragraph 46 does not apply to audits of financial statements of affected filers for periods ending before December 15, 2019. The AASB will monitor and support the activities of stakeholders to resolve the issue during the deferral period.

Review the update on the AASB's website.

In Brief Podcast – The impact of the AASB’s Exposure Draft on Reporting on Controls at a Service Organization on Practitioners reporting in both Canada and the United States

Feb 11, 2019

On February 11, 2019, the Auditing and Assurance Standards Board (AASB) released a podcast that provides an overview, in light of the recently released exposure draft, of key considerations for practitioners required to report on controls at a service organization under both Canadian and U.S. standards.

Practitioners required to report under both Canadian and U.S. standards need to understand how their approach to these engagements will change should the proposed standard become effective.

There are two key changes that practitioners should be aware of:

  • The AICPA introduced two new overarching standards required to be applied by practitioners, in addition to their standalone service organization standard.
  • There are some areas within proposed CSAE 3416 where the AASB concluded that additional requirements, beyond those in the AICPA equivalent standard, are necessary.

Listen to the podcast and review the transcript on the AASB's website.

Global Consultation on Quality Management for Firms and Engagements Now Open

Feb 08, 2019

On February 8, 2019, the International Auditing and Assurance Standards Board (IAASB) released several Exposure Drafts that propose to bring important changes to the way professional accountancy firms are expected to manage quality—for audits, reviews, and other assurance and related services engagements. Comments are requested by July 1, 2019.

The proposed standards include a new proactive risk-based approach to effective quality management systems within firms that establish the foundation for consistent engagement quality. The new approach improves the scalability of the standards because it promotes a system tailored to the nature and circumstances of the firm and its engagements.

The IAASB proposals are intended to improve engagement quality through:

  • Modernizing the standards for an evolving and increasingly complex environment, including addressing the impact of technology, networks, and use of external service providers;
  • Increasing firm leadership responsibilities and accountability, and improving firm governance;
  • More rigorous monitoring of quality management systems and remediating deficiencies;
  • Enhancing the engagement partner’s responsibility for audit engagement leadership and audit quality; and
  • Addressing the robustness of engagement quality reviews, including engagement selection, documentation, and performance.

Given the significance of the changes and the need for firms to adjust how they manage quality, the IAASB has also developed draft guidance and tools, such as examples and frequently asked questions. These materials will help firms understand the proposals, including how to apply them in different circumstances.

Exposure Drafts

Review the press release on the IAASB's website.

AASB Exposure Draft – Communication of Key Audit Matters in the Auditor’s Report

Jan 31, 2019

On January 31, 2019, the Auditing and Assurance Standards Board (AASB) issued an Exposure Draft proposing revisions to CAS 700, relating to the communication of key audit matters in the auditor’s report. Comments are requested by May 15, 2019.

Main features of the Exposure Draft

The AASB proposes to expand the requirements for auditors to communicate KAM for audits of complete sets of general purpose financial statements so that they apply to:

  • all entities listed on the TSX, TSXV, NEO and CSE; and
  • all entities required to comply with NI 81-106

Review the Exposure Draft on the AASB's website.

Exposure Draft Supplement – Identifying and Assessing the Risks of Material Misstatement – Proposed Conforming Amendments to CAS 540 and CAS 200

Jan 31, 2019

On January 31, 2019, the Auditing and Assurance Standards Board (AASB) issued a supplement to the September 2018 Exposure Draft, “Identifying and Assessing the Risks of Material Misstatement” (ED-CAS 315), to explain and illustrate the proposed conforming amendments to revised CAS 540, and paragraph A42 of CAS 200, arising from ED-CAS 315. Comments are requested by May 1, 2019.

This Exposure Draft Supplement consists of:

  • proposed changes;
  • a description of the AASB’s process for adopting ISAs;
  • a discussion of proposed significant Canadian amendments; and
  • a proposed effective date.

The IAASB proposes that the revised ISAs be effective for audits of financial statements for periods beginning on or after December 15, 2020. The revised CASs are expected to have the same effective date as the revised ISAs. Auditors will be permitted to apply these revised CASs before the effective date.

Review the Exposure Draft Supplement on the AASB's website.

Auditor reporting guide: Reporting implications of Canadian Auditing Standards

Jan 15, 2019

This reporting guide published by CPA Canada aims to promote consistency in the form and content of practitioners' reports by providing guidance with respect to commonly occurring reporting circumstances.

Reporting Implications of Canadian Auditing Standards has been developed by the Task Force on Audit Reporting Implications of the New Canadian Auditing Standards. The material in this guide represents the views of the task force.

Review the guide in our publications section.

Keep up to date! Assurance over Key Performance Indicators

Jan 14, 2019

On January 14, 2019, the Auditing and Assurance Standards Board (AASB) released an article on reporting and providing assurance over key performance indicators.

There are a number of developments resulting from efforts by the AASB and others to enhance the trust and credibility of information reported outside of the financial statements.

This article discusses:

  • What is driving the increased focus and discussion in this area?
  • What’s the AASB doing about this?
  • What else is happening in Canada?
  • What’s next?

Review the article on the AASB's website.

In Brief Podcast – AASB’s Exposure Draft, Reporting on Controls at a Service Organization

Jan 14, 2019

On January 14, 2019, the Auditing and Assurance Standards Board (AASB) released a podcast that provides a plain and simple overview of the AASB’s Exposure Draft, "Reporting on Controls at a Service Organization Relevant to User Entities’ Internal Control Over Financial Reporting."

Stakeholders have told the AASB that the Canadian and U.S. marketplace for engagements to report on controls at a service organization are highly integrated. The AASB are therefore committed to maintaining the current alignment between the Canadian and U.S. Standards for these types of engagements.

The proposed changes outlined in the exposure draft will impact:

  • Someone with oversight over a service organization OR someone with oversight over a company who engages a service provider
  • A practitioner who prepares CSAE 3416 reports OR an auditor who uses CSAE 3416 reports as audit evidence

Aside from aligning CSAE 3416 with the AICPA’s new standard, the revisions are also intended to ensure the Canadian standard:

  • Aligns with the Canadian umbrella standard, CSAE 3000; and
  • Continues to align in most respects with the International Standard on Assurance Engagements, ISAE 3402

Listen to the podcast and review the transcript on the AASB's website.

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