IAASB announces new strategy and work plan to advance Global Audit and Assurance Standards

Apr 11, 2024

On April 11, 2024, the International Auditing and Assurance Standards Board (IAASB) published its approved strategy and work plan to enhance the consistency and quality of audit and assurance standards worldwide. “Elevating Trust in Audit and Assurance: IAASB’s Strategy and Work Plan for 2024-2027” reflects the crucial role of audit and assurance in fostering trust in the world’s economies.

The new strategy reaffirms the IAASB's commitment to serving the public interest by developing globally accepted audit, review, and other assurance standards.

Key highlights of the strategy include:

  • Completing priority audit and assurance projects, emphasizing fraud, going concern, and sustainability assurance.
  • Commencing new initiatives and projects, including focusing on supporting the adoption and implementation of the overarching standard for sustainability assurance engagements, establishing an IAASB Technology Position, and conducting post-implementation reviews, as well as standard setting on, among other topics, audit evidence and risk response, materiality, and reviews of interim financial information.
  • Collaborating with official stakeholders across the external reporting ecosystem, including the International Ethics Standards Board for Accountants (IESBA), regulators, standard setters, and other stakeholders.
  • Engaging with regulatory and standard-setting partners to strengthen trust in markets globally.
  • Further, the Monitoring Group’s recommendations will be implemented to enhance independence and accountability in standard settings.

Access the press release on the IAASB’s website.

PCAOB Issues Proposals on Standardizing Disclosure of Firm and Engagement Metrics and Modernizing the Reporting Framework

Apr 09, 2024

On April 9, 2024, the Public Company Accounting Oversight Board (PCAOB) issued for public comment a proposal regarding public reporting of standardized firm and engagement metrics and a separate proposal regarding the PCAOB framework for collecting information from audit firms.

The firm and engagement metrics proposal would, if adopted, require PCAOB-registered public accounting firms that audit one or more issuers that qualify as an accelerated filer or large accelerated filer to publicly report specified metrics relating to such audits and their audit practice.

The proposal sets out standardized firm- and engagement-level metrics that PCAOB staff believes would create a useful dataset available to investors and other stakeholders for analysis and comparison. The proposed metrics cover (1) partner and manager involvement, (2) workload, (3) audit resources (4) experience of audit personnel, (5) industry experience of audit personnel, (6) retention and tenure, (7) audit hours and risk areas (engagement-level only), (8) allocation of audit hours, (9) quality performance ratings and compensation (firm-level only), (10) audit firms’ internal monitoring, and (11) restatement history (firm-level only).

The proposal would require reporting of firm-level metrics annually on a new Form FM, for firms that serve as the lead auditor for at least one accelerated filer or large accelerated filer. Reporting of engagement-level metrics for audits of accelerated filers and large accelerated filers would happen via a revised Form AP, which would be renamed “Audit Participants and Metrics.” Finally, the proposal would allow, but not require, limited narrative disclosures on both Form FM and Form AP to provide context and explanation for the required metrics.

The firm reporting proposal would, if adopted, amend the PCAOB’s annual and special reporting requirements to facilitate the disclosure of more complete, standardized, and timely information by registered public accounting firms. As is current practice, much information would be disclosed publicly, and some would be available to the PCAOB only for oversight.

The Board is proposing to enhance the required reporting of information by registered firms on the PCAOB’s public Annual Report Form, also known as Form 2, and the Special Reporting Form, also known as Form 3, in several key areas (financial information, governance information, network information, special reporting and cybersecurity).

The deadline for public comment on both proposals is June 7, 2024.

Access the press release on the PCAOB’s website.

A new IAASB video series explores proposed changes to fraud standard

Apr 04, 2024

On April 4, 2024, the International Auditing and Assurance Standards Board reached the midpoint of its public consultation on proposed amendments to its fraud standard, and a new four-part video series was released. The series will help stakeholders understand the proposed changes that strengthen auditor’s responsibilities related to fraud and the rationale behind them.

The video series includes the following:

  • Overview of Key Changes: Gain an understanding of the critical changes proposed by IAASB Member and Fraud Task Force Chair Julie Corden, a partner with Deloitte Canada. Julie also provides brief background information on why these changes are being proposed.
  • Spotlight on Auditor’s Responsibilities: Understand auditors’ responsibilities relating to fraud in an audit. IAASB Senior Manager Nathalie Baumgaertener Dutang explains how the proposed changes make these responsibilities more transparent and practical.
  • Auditor’s Response to Fraud or Suspected Fraud: How are auditors and engagement partners being asked to enhance how they respond to fraud or suspected fraud? IAASB Principal Angelo Giardina outlines the new requirements, relocated requirements, and clarifications.
  • Enhanced Transparency in the Auditor’s Report: Join IAASB Director Jasper van den Hout to learn more about how the proposed changes will improve transparency in the auditor’s report regarding auditors’ responsibilities relating to fraud as well as fraud-related procedures (i.e., Key Audit Matters related to fraud).

The revisions to ISA 240 represent a substantial enhancement of auditors’ duties concerning fraud. The IAASB urges all stakeholders to provide feedback using the Response Template, which aims to enable organized responses and simplify the collection and analysis of feedback. Stakeholders are welcome to contribute their perspectives by June 5, 2024.

Access the exposure draft on revisions to ISA 240 on the IAASB’s website.

CPAB Releases 2023 Annual Report

Apr 02, 2024

On April 2, 2024, The Canadian Public Accountability Board (CPAB) released its 2023 annual report, which includes the Regulatory Oversight Report: 2023 Annual Inspections Results. The report outlines themes and insights from their audit quality assessments in 2023.

Inspection results are mixed with inconsistency across all categories of firms. While there was an improvement in the aggregate findings rates at the non-annually inspected firms, the level of findings at many firms remains unacceptably high. CPAB continues to see a strong association between audit quality and robust systems of quality management.

In 2023, CPAB initiated the public release of notable enforcement measures from inspection findings. Additionally, CPAB conducted a public follow-up discussion on regulatory modifications concerning the compulsory sharing of inspection reports with audit committees and the publication of individual firm inspection reports. CPAB anticipates that these adjustments will positively influence audit quality in Canada by offering enhanced transparency to the public regarding our inspection outcomes and the activities of audit firms overseeing Canadian reporting issuers.

Access the 2023 Annual Report on CPAB’s website

Canada’s Reporting and Assurance Oversight Councils Announce Transition to Single Oversight Council

Apr 01, 2024

On April 1, 2024, Canada’s reporting and assurance oversight councils announced the establishment of the Reporting & Assurance Standards Oversight Council (the Oversight Council), an essential step towards enhancing standard-setting efficiency and connectivity in Canada to equip investors with better tools for evaluating companies’ acquisitions.

The Independent Review Committee on Standard Setting in Canada recommended that an effectiveness review be conducted with the assistance of an independent third party to help streamline and harmonize oversight activities and processes. In response to the results, the Effectiveness Review Joint Taskforce and the current oversight councils approved that a single council be created to oversee standard setting for accounting, audit and assurance, and sustainability.  

This decision consolidates the activities of three oversight bodies – the Auditing and Assurance Standards Oversight Council (AASOC), Accounting Standards Oversight Council (AcSOC), and the Canadian Sustainability Standards Board (CSSB) Implementation Committee – streamlining the processes and activities for accounting, audit, assurance, and sustainability standard setting.

The Oversight Council is effective from April 1, 2024, and will focus its initial work on establishing its operations and governance processes. It will begin its formal oversight work on July 1, 2024. The current oversight bodies will conclude their operations on June 30, 2024.

Access the press release on the FRASCanada website.

AASB releases Annual Plan for 2024 - 2025

Apr 01, 2024

On April 1, 2024, the Auditing and Assurance Standards Board’s (AASB) of Canada released its 2024- 2025 annual plan based on the vision, mission, and strategic objectives set out in its 2022-2027 Strategic Plan.

The 2022-2025 Strategic Plan outlines five strategic goals and supporting objectives while the Annual Plan includes specific activities that will support the achievement of these objectives.

The strategic goals for 2022 – 2025 are as follows:

  • Monitor and understand emerging issues in the changing environment to better anticipate standard setting needs.
  • Engage and collaborate with interested and affected parties to understand their needs and expectations.
  • Set high-quality standards and guidance that respond to the evolving needs and expectations of interested and affected parties.
  • Enhance our standard-setting processes and capabilities to develop timelier solutions.
  • Support the effective implementation and application of standards and guidance to enhance consistency and quality in engagement performance.

Access the annual plan on the AASB’s website.

IESBA releases summary of prohibitions for Public Interest Entity Audits

Mar 18, 2024

On March 18, 2024, the Staff of the International Ethics Standards Board for Accountants (IESBA) released a high-level summary of prohibitions in the International Code of Ethics for Professional Accountants, especially about independence for audits of public interest entities (PIEs).

The high-level summary is designed to highlight non-assurance services, relationships, interests or circumstances that are prohibited for PIE audits. It will be a valuable reference to stakeholders, including regulators and audit oversight bodies, audit firms and individual audit practitioners, the corporate governance community, investors, preparers, and educational bodies or institutions.

The high-level summary is not a substitute for reading the Code.

Access the press release and the summary on the IESBA’s website.

CAQ releases statement on PCAOB's NOCLAR Roundtable

Mar 06, 2024

On March 6, 2024, the Center for Audit Quality (CAQ) released a statement regarding the recent roundtable conducted by the PCAOB on its NOCLAR proposal, indicating that the event did not unfold as anticipated.

As per its statement, the CAQ believes that the recent roundtable conducted by the Public Company Accounting Oversight Board (PCAOB) regarding its proposal on company noncompliance with laws and regulations (NOCLAR) fell short of the principles of transparency and accountability essential for effective public policy development.

“Today’s NOCLAR roundtable was a missed opportunity for the PCAOB to further understand the views highlighted in numerous comment letters from engaged stakeholders,” said Julie Bell Lindsay, Chief Executive Officer, CAQ. “Not only did the roundtable surface disagreement as to the actual scope or intention of the proposal, but we are concerned that the lack of diverse stakeholder representation – particularly from investors and audit committees, two important audiences – resulted in dialogue that did not meaningfully address stakeholder concerns. Given the discussion at the roundtable, we believe that the appropriate response is to re-propose the standard, with an economic analysis, to begin to address these concerns.” 

Access the statement on the CAQ website and the roundtable on the PCAOB’s website.

IAASB Announces Revision of ISA 240: Strengthening Auditor Duties Regarding Fraud in Financial Statement Audits

Feb 06, 2024

On February 6, 2024, the International Auditing and Assurance Standards Board (IAASB) announced the revision of the International Standard on Auditing (ISA) 240, the Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements.

This move comes in response to the critical role high-quality audits play in ensuring the smooth functioning of capital markets. Recent international corporate failures and significant accounting restatements have heightened scrutiny on all participants in the financial reporting system, emphasizing the importance of confidence in audits. As fraud remains a focal point, the IAASB seeks to strengthen auditor duties concerning fraud detection and prevention to better serve the public interest and bolster trust in financial reporting.

The changes will:

  • clarify the auditor’s responsibilities about fraud in financial statement audits;
  • strengthen the auditor’s procedures; and 
  • include more detail about fraud in the auditor’s report. 

The proposed revisions are expected to significantly strengthen the IAASB’s standard on auditors’ responsibilities related to fraud by defining the expectations in relation to fraud, delineating more robust procedures, and increasing transparency about the auditors’ responsibilities and fraud-related procedures in the auditor’s report.

Access the explanatory memo on the IASSB’s website.

IAASB proposes strengthening of audit standard related to fraud

Feb 06, 2024

On February 6, 2024, the International Auditing and Assurance Standards Board (IAASB) proposed a significant strengthening of its standard on auditors’ responsibilities relating to fraud.

The proposed revisions define the expectations in relation to fraud, delineate more robust procedures, and increase transparency about the auditors’ responsibilities and fraud-related procedures in the auditor’s report.

Key Changes in the Proposed Revisions include:

  • Clarified auditor responsibilities relating to fraud in an audit.
  • Emphasized professional skepticism to ensure auditors remain alert to possible fraud and exercise professional skepticism throughout an audit.
  • Strengthened identification and assessment of risks of material misstatement due to fraud.
  • Clarified response to fraud or suspected fraud identified during the audit.
  • Increased ongoing communication with management and those charged with governance about fraud.
  • Increased transparency about auditors’ responsibilities and fraud-related procedures in the auditor’s report.
  • Enhanced audit documentation requirements about fraud-related procedures.

Respondents are encouraged to share their insights using the response template by June 5, 2024.

Access the exposure draft and response template on IAASB’s website.

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