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The Auditor’s Responsibilities Relating to Other Information in Documents Containing Audited Financial Statements (Amendments to CAS 720) [Completed]

Effective date:

The new and revised auditor reporting standards will be effective for audits of financial statements for periods ending on or after December 15, 2018.

Included in the CPA Canada Handbook – Assurance:

Expected to be included in a Handbook update in mid-2017.

Last up­dated:

June 2017

Overview

The IAASB has, in April 2015, completed a project to revise ISA 720, The Auditor’s Responsibilities Relating to Other Information in Documents Containing Audited Financial Statements, in order to ensure that it continues to be capable of enhancing the credibility of financial statements.

ISA 720 (Revised) specifies appropriate responsibilities of the auditor relating to the range of other information in documents containing audited financial information. Revisions were also made to take into account how such information is disseminated.

The AASB is committed to adopting the ISAs.  Accordingly, amendments made by the IAASB to ISA 720 would be reflected in revisions to CAS 720, The Auditor’s Responsibilities Relating to Other Information in Documents Containing Audited Financial Statements. Further amendments, if any, that the AASB makes to the ISA wording would be in accordance with the AASB’s criteria for such amendments, as set out in Appendix 1 of the Preface to the CPA Canada Handbook – Assurance.

In April 2017, the AASB unanimously approved new and revised CASs relating to auditor reporting, and the auditor’s responsibilities relating to other information. The Board also unanimously approved related conforming amendments to other standards, and amendments to address disclosures in the audit of financial statements.

The Board concluded that changes made in finalizing the standards were significantly different from the proposals in the Exposure Drafts and Invitations to Comment. The significant differences from the proposals are:

  • deferring the effective date for application by one year; and
  • amending the scope of reporting of key audit matters so that such matters are communicated in the auditor’s report only when required by law or regulation or the auditor decides to do so.

Since these changes were made in response to feedback received, the Board unanimously decided not to re-expose the CASs. The new and revised standards will be effective for audits of financial statements for periods ending on or after December 15, 2018 and are expected to be included in the CPA Canada Handbook update in mid-2017.

 

Other developments

June 2017

On June 14, 2017, the AASB released Basis for Conclusions – CAS 720, The Auditor’s Responsibilities Relating to Other Information, which summarizes the process followed in developing this standard and the conclusions reached by the AASB.

October 2016

In October 2016, the AASB staff updated this project to advise that the final CPA Canada Handbook material is expected to be issued in Q2/2017.

December 2015

The AASB expects to issue the final Canadian standard in Q3/2016.

November 2015

On November 24, 2015, the AASB issued an Exposure Draft of proposed Canadian amendments to ISA 720. Stakeholders are encouraged to submit their comments by February 12, 2016. Based on the input the AASB received from Canadian stakeholders, the AASB expressed support for strengthening the auditor’s responsibilities relating to other information. However, the AASB expressed concerns that the changes to ISA 720 proposed in the 2012 Exposure Draft may widen the expectations gap or otherwise cause confusion among users of the auditor’s report, and that the benefits of extending the auditor’s responsibilities may not exceed related costs. Further, the AASB was concerned that the International Auditing and Assurance Standards Board (IAASB)’s proposals would embed within the financial statement audit an unspecified type of separate engagement related to other information. The AASB is proposing to make the following Canadian amendments to ISA 720 (Revised) in adopting it as CAS 720: (i) clarify the documents within (and outside) the scope of CAS 720; (ii) amend references to relevant ethical requirements; and (iii) enhance the description of the auditor’s responsibilities relating to other information expected to be obtained after the date of the auditor’s report in the illustrative reports.

April 2015

On April 8, 2015, the IAASB published a Press Release and ISA 720 (Revised), together with (i) a staff-prepared Basis for Conclusions document; and (ii) a staff-prepared At a Glance document which explains the main changes from the existing ISA.

May 2014

On May 23, 2014, the AASB issued its Re-exposure Draft, The Auditor’s Responsibilities Relating to Other Information. Comments requested by July 4, 2014. 

April 2014

On April 18, 2014, the IAASB issued for comment a Re-exposure Draft, The Auditor's Responsibilities Relating to Other Information, of its proposed changes to ISA 720. The Re-exposure Draft clarifies and strengthens the scope and focus of auditor efforts on information included in entities’ annual reports, other than the audited financial statements, and introduces new auditor reporting responsibilities. Comments requested by July 18, 2014.

December 2012

On December 20, 2012, the AASB issued its Exposure Draft, The Auditor’s Responsibilities Relating to Other Information in Documents Containing or Accompanying Audited Financial Statements and the Auditor’s Report Thereon, for comment.  The Exposure Draft is similar to that of the IAASB. Comments requested by February 8, 2013.

November 2012

On November 14, 2012, the IAASB issued its Exposure Draft, The Auditor’s Responsibilities Relating to Other Information in Documents Containing or Accompanying Audited Financial Statements and the Auditor’s Report Thereon, which provides details of the proposed amendments to ISA 720.  Comments requested by March 14, 2013.

September 2012

In September 2012, the IAASB approved its Exposure Draft to revise ISA 720.

 

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