Assurance

Audits of Less Complex Entities – Progress Toward a Solution

Sep 13, 2022

On September 13, 2022, the Auditing and Assurance Standards Board (AASB) provided an update on its progress to finding a solution for practitioners in applying Canadian Auditing Standards to audits of less complex entities.

This update includes:

  • overview of Discussion Paper respondents;
  • what you told us;
  • what we are doing now; and
  • what assistance is available now

Review the report on the AASB's website.

PCAOB Issues Publication on Inspections of Audit Firms

Aug 31, 2022

August 31, 2022, the Public Company Accounting Oversight Board (PCAOB) issued "Spotlight: Observations From the Target Team’s 2021 Inspections", which details the results of audit firm inspections conducted by the Board’s Division of Registration and Inspections (the “Division”) in 2021.

Specifically, the publication discusses the Division’s observations, as well as the auditor’s responsibilities and good practices, related to four key topics: (1) fraud, (2) interim reviews of special-purpose acquisition companies (SPACs) and de-SPACs, (3) going concern, and (4) cash and cash equivalents.

Review the publication on the PCAOB's website.

PCAOB Signs Agreement with Chinese Authorities, Taking First Step Toward Complete Access for the PCAOB to Select, Inspect and Investigate in China

Aug 26, 2022

On August 26, 2022, the Public Company Accounting Oversight Board (PCAOB) released a statement about it having signed a Statement of Protocol with the China Securities Regulatory Commission and the Ministry of Finance of the People’s Republic of China, which is the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong completely, consistent with U.S. law.

The agreement grants the PCAOB complete access to the audit work papers, audit personnel, and other information its needs to inspect and investigate any firm it chooses, with no loopholes and no exceptions.

The PCAOB Is currently finalizing preparations to be on the ground by mid-September so it can put this agreement to the test.

The Statement of Protocol specifically grants the PCAOB complete access in three important ways:

  • The PCAOB has sole discretion to select the firms, audit engagements and potential violations it inspects and investigates – without consultation with, nor input from, Chinese authorities;
  • Procedures are in place for PCAOB inspectors and investigators to view complete audit work papers with all information included and for the PCAOB to retain information as needed; and
  • The PCAOB has direct access to interview and take testimony from all personnel associated with the audits the PCAOB inspects or investigates.

Re­view the press release on the PCAOB’s web­site.

PCAOB Releases Resource for Audit Committees

Aug 26, 2022

In August 2022, the Pub­lic Com­pany Ac­count­ing Over­sight Board (PCAOB) has issued “Spotlight — Audit Committee Resource (August 2022)”, which primarily consists of questions that public-company audit committees may wish to consider as part of their ongoing engagement and discussion with their auditors, including how the auditors are responding to the financial reporting and audit risks posed by the current economic environment.

Topics covered in the publication include:

  • fraud and other risks;
  • initial public offerings and mergers and acquisitions;
  • audit execution;
  • audit firms’ quality control systems;
  • compliance with auditor independence requirements; and
  • technology (e.g., auditing digital assets, responding to cyberthreats, and use of data and technology in the audit).

Re­view the publication on the PCAOB's web­site.

CPAB Express – Existence of crypto-assets held by third parties

Aug 19, 2022

On August 19, 2022, the Cana­dian Pub­lic Ac­count­abil­ity Board (CPAB) re­leased a bulletin that high­lights their concerns about the quality of evidence that some auditors are obtaining when auditing the existence of crypto-assets held in custody by third parties.

The bulletin describes things that CPAB believes auditors should be considering when auditing the financial statements of reporting issuers that use custodians to safeguard their crypto-assets.

Re­view the bulleting on the CPAB’s web­site.

SEC Approves the PCAOB’s Updated Standard on Requirements Related to the Lead Auditor’s Use of Other Auditors

Aug 15, 2022

On August 12, 2022, the Securities Exchange Commission (the SEC) approved the Public Company Accounting Oversight Board’s (PCAOB) updated standards for audits that involve multiple auditing firms. The amended standards strengthen the requirements for lead auditors who supervise other auditors in an audit, helping to enhance audit quality and protect investors.

The PCAOB’s updated standards make enhancements across two broad areas. First, the amended standards specify certain procedures for lead auditors to perform when supervising other auditors. Second, they require lead auditors to prioritize their supervisory activities around higher-risk areas in the audit.

Re­view the SEC’s press re­lease  on the SEC’s website and the PCAOB’s Release No. 2022-002Planning and Supervision of Audits Involving Other Auditors and Dividing Responsibility for the Audit With Another Accounting Firm, on the PCAOB's web­site.

AASB Exposure Draft issued: Amendments to the CASs with respect to the IESBA’s Revised Definitions of Listed Entities and PIEs

Aug 09, 2022

On August 9, 2022, the Auditing and Assurance Standards Board (AASB) issued an Exposure Draft of “Proposed Narrow-scope Amendments to CAS 700, Forming and Opinion and Reporting on Financial Statements, and CAS 260, Communication with Those Charged with Governance, as a Result of the Revisions to the IESBA Code that Require a Firm to Publicly Disclose When a Firm Has Applied the Independence Requirements for Public Interest Entities”. Comments to the AASB must be received by September 16, 2022.

The Exposure Draft is similar to the one of the same name issued by the IAASB on July 6, 2022 relating to changes to the ISAs for which comments are due by October 4, 2022.

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

IAASB: Quality Management Implementation Resources available

Aug 02, 2022

The IAASB has issued several resources to assist practitioners in the first-time implementation of its new and revised quality management standards. These include guides for ISQM 1, ISQM 2 and ISA 220 (Revised), and a definition of an engagement team fact sheet.

Refer to the IAASB’s focus area web page for these and other resources.

Learn more about the IAASB’s new and revised quality management standards with two on-demand video panel discussions from IFAC

Aug 02, 2022

In order to support implementation and help small- and medium-sized practices (SMPs) understand, navigate and apply the revised standards, IFAC in collaboration with the Forum of Firms held two video panel discussions. These focus on providing an overview of International Standard on Quality Management 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements, how firms are planning its implementation, and sharing practical examples, tips and suggested good practices.

These videos are available in English; translated transcripts are also available in Spanish and French and consist of:

  • ISQM 1: Getting Ready for the New Risk-Based Approach – a discussion of the standard and the shift in mindset needed to apply the new risk-based approach.
  • ISQM 1: Early Lessons Learned and Next Steps - a discussion on how to get started on implementation and tips and best practices.

Re­view the press re­lease and videos on IFAC’s web­site.

IAASB issues new FAQ Publication for Reporting Going Concern Matters in the Auditor’s Report

Aug 01, 2022

On August 1, 2022, the IAASB issued a non-authoritative publication to address some of the common questions related to reporting going concern matters in the auditor’s report. Specifically, the publication focuses on the use of and interrelationship of the Material Uncertainty Related to Going Concern and Key Audit Matters sections, and the Emphasis of Matter paragraphs, in an auditor’s report prepared in accordance with the International Standards on Auditing (ISAs).

The FAQ publication does not amend or override the International Standards on Auditing, the texts of which alone are authoritative. Reading the publication is not a substitute for reading the ISAs.

For further information, refer the IAASB’s press release and FAQ publication.

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