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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.

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CPAB Responds to the ISSB’s Exposure Drafts

Aug 08, 2022

On August 8, 2022, the Cana­dian Pub­lic Ac­count­abil­ity Board (CPAB) posted a copy of its response letter in respect of the ISSB’s Exposure Drafts, “General Requirements for Disclosure of Sustainability‐related Financial Information” and “Climate‐related Disclosures”.

CPAB notes that it is supportive of the ongoing work of the ISSB to deliver a comprehensive global baseline of sustainability‐related disclosure standards and the overall objective to require entities to disclose information about significant sustainability‐related risks and opportunities. The reliability of sustainability‐related reporting is important and CPAB supports moving toward assurance requirements for certain of these disclosures. As assurance providers and regulators begin to encounter sustainability‐related disclosures more frequently, CPAB anticipates they may face some challenges in determining whether the entity has complied with the proposals the ISSB has outlined. These challenges are discussed in CPAB’s response.

Re­view the response letter on the CPAB’s web­site.

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ISSB receives global response on proposed sustainability disclosure standards

Aug 05, 2022

On August 5, 2022, the International Sustainability Standards Board (ISSB) issued a press release advising that it has received more than 1,300 comment letters on its two proposed sustainability disclosure standards.

The ISSB has received more than 600 responses to its draft Climate disclosure standard and close to 700 responses to its draft General Requirements disclosure standard. During the 120-day comment period, ISSB representatives participated in more than 400 outreach events, engaging with thousands of stakeholders globally.

A preliminary review of the comment letters confirms feedback originating from jurisdictions spanning six continents. Comments came from a range of stakeholder groups including academics; accountancy bodies and audit firms; investors; preparers; public interest bodies; regulators; and standard-setters.

In accordance with IFRS Foundation's due process, the ISSB will now assess and discuss the comments in its Board meetings. All responses to the consultations are available on the comment letter pages of the projects.

Re­view the press re­lease on the IFRS Foun­da­tion's web­site.

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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.

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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.

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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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IASB concludes agenda consultation by releasing a feedback statement

Jul 29, 2022

On July 29, 2022, the International Accounting Standards Board (IASB) set out its 2022–2026 priorities. The IASB had previously launched its third public consultation on March 30, 2021 to seek broad public input on the strategic direction and overall balance of its future work programme.

 

Background

In the request for views published in March 2021, the Board asked broad questions on the strategic direction and balance of the IASB’s activities; the criteria for assessing the priority of financial reporting issues that could be added to the IASB’s work plan; and financial reporting issues that could be added to the IASB’s work plan. The Board received 124 comment letters and 37 responses to its related online survey.

 

General messages

On the three major areas consulted on, the following general messages were received:

  • Strategic direction and balance of the IASB’s activities. Respondents generally supported the Board’s current strategic direction. They also indicated that the balance of the IASB’s activities is about right, however, there were calls for increasing the efforts on digital reporting and on understandability and accessibility of the standards. Therefore, the IASB will provide for a modest increase in these two areas.
  • Criteria for assessing the priority of financial reporting issues that could be added to the IASB’s work plan. Almost all respondents agreed with the criteria proposed by the Board. Many noted that the criteria were well-balanced and adequate. Some suggested that the IASB rank the criteria or split them into essential and secondary criteria. 
  • Financial reporting issues that could be added to the IASB’s work plan. Most respondents rated potential projects on climate-related risks, cryptocurrencies and related transactions, and intangible assets as high priority. Also high on the list were going concern, pollutant pricing mechanisms, and the statement of cash flows and related. At the end of the list were potential projects on borrowing costs, commodity transactions, employee benefits, expenses — inventory and cost of sales, foreign currencies, government grants, negative interest rates and separate financial statements, inflation, and interim financial statements.

The IASB was also very pleased about the responses received through the survey as they included responses of stakeholders that do not normally respond to consultations. Providing the possibility to reply by way of a survey will also be considered for future consultations as it encouraged a broader stakeholder base to respond.

 

IASB decisions

The comment period on the request for views ended in September 2021. The IASB considered the feedback received from November 2021 to April 2022 and decided:

  • to add to its work plan a maintenance and consistent application project on climate-related risks;
  • to add to the research pipeline projects on:
    1. intangible assets; and
    2. the statement of cash flows and related matters;
  • to create a reserve list of projects that could be added to the work plan only if additional capacity becomes available, which would include projects on:
    1. operating segments; and
    2. pollutant-pricing mechanisms; and
  • not to add to its work plan projects on:
    1. cryptocurrencies and related transactions; or
    2. going concern disclosures.

 

Other feedback

Respondents also commented on:

  • Collaboration with the International Sustainability Standards Board (ISSB). The IASB and the ISSB expect to collaborate to support complementary standard-setting and reporting. The IASB thinks that coordination and resources will be needed to support collaboration with the ISSB alongside the IASB’s existing activities. This would relate to and be reflected in new accounting standards and major amendments to the accounting standards, digital financial reporting, the understandability and accessibility of accounting standards, and stakeholder engagement.
  • Enhancing partnerships with national standard-setters. The IASB's partnership with national standard-setters already supports all of the IASB’s main activities. However, the IASB concluded that the resources of national standard-setters would not enable the IASB to increase the number of projects it could add to its work plan for 2022 to 2026. In the longer term, national standard-setters’ support, particularly during the research phase of a project, could allow for faster completion of projects, however, and thus provide capacity for more projects to be added to the IASB’s work plan as part of future agenda consultations.
  • Priority of matters identified in post-implementation reviews. Respondents suggested, in managing stakeholders’ expectations, it would be helpful if the IASB clearly set out the objectives of a post-implementation review and explained better
    what the outcome of a post-implementation review can be. The IASB has discussed with the Trustees’ Due Process Oversight Committee (DPOC) how to communicate more clearly the objective, process and possible outcomes of a post-implementation review.

 

Additional information

Review the following documents on the IASB's website:

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IFRS 17 Matters for Non-insurance Entities

Jul 28, 2022

Did you know that IFRS 17, Insurance Contracts, can apply to insurance contracts issued by non-insurance entities? With the effective date of this standard fast approaching, non-insurance entities are encouraged to review their contracts to determine whether they are in scope of IFRS 17.

Review the press release and publications on the AcSB's website.

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IOSCO identifies key issues to focus on when evaluating the ISSB standards

Jul 27, 2022

On July 27, 2022, the International Organization of Securities Commissions (IOSCO) released a statement from its recent Board meeting, where they welcomed the strong stakeholder engagement on proposals for a comprehensive global baseline of sustainability disclosures for capital markets. Board members agreed the criteria which IOSCO will use to assess the ISSB standards and have also identified the key issues for IOSCO to focus on.

The Board specifically discussed three key practical issues of proportionality and implementation to be considered:

  • ensuring the proposed standards can truly serve as an effective global baseline under either a voluntary or mandatory regime, including by considering how to provide for the scaling and phasing-in of requirements to accommodate issuers with differing degrees of maturity in sustainability reporting;
  • how the ISSB can best assist implementation by clarifying definitions and providing additional guidance and examples where necessary;
  • how and when to incorporate the proposed industry-based disclosure data points, recognizing on the one hand that industry-specificity is highly valued by investors, while on the other that some data points may initially be challenging for some issuers.

The statement on the IOSCO website notes that the due process for potential endorsement will begin after the ISSB has issued its final standards. It also states that IOSCO has begun work in collaboration with the international standard setters for audit and assurance to promote a common global approach to independent and high-quality assurance of issuers’ sustainability disclosures.

Review the full statement on the IOSCO's website.

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New implementation guide available for identifying and assessing the risks of material misstatement in an audit of financial statements

Jul 27, 2022

On July 27, 2022, the International Auditing and Assurance Standards Board (IAASB) released its "First-Time Implementation Guide for ISA 315 (Revised 2019), Identifying and Assessing the Risks of Material Misstatement".

The guide focuses on the more substantial changes that were made to International Standard on Auditing (ISA) 315 (Revised 2019) and will help stakeholders understand and apply the revised standard as intended.

ISA 315 (Revised 2019) is effective for audits of financial statements for periods beginning on or after December 15, 2021. This publication does not amend or override ISA 315 (Revised 2019), the text of which alone is authoritative. Reading this publication is not a substitute for reading the standard.

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

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