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Auditing Standards in Response to the IESBA’s Project Addressing Non-Compliance with Laws and Regulations (including Proposed Amendments to CAS 250) [Completed]

Effective date:

CAS 250 (Revised) will be effective for audits of financial statements for periods ending on or after December 15, 2018.

Included in the CPA Canada Handbook - Assurance:

March 2017

Last up­dated:

January 2018

Overview

The IAASB proposed limited amendments to its ISAs resulting from the proposed changes to the International Ethics Standards Board for Accountants (IESBA) Code of Ethics addressing non-compliance with laws or regulations.

The focus of the IAASB’s Exposure Draft was proposed amendments to CAS 250, Consideration of Laws and Regulations in an Audit of Financial Statements, with less extensive changes proposed to seven other standards. The amendments, which were limited in nature, did not explicitly duplicate in detail all the specific requirements in the IESBA Code of Ethics for Professional Accountants (the Code), as this allowed for flexibility when ethical codes other than the Code are applied. Rather, the IAASB’s proposals sought to acknowledge the enhancements that will be made by the IESBA in the Code and clarify and emphasize key aspects of the IESBA’s proposals in the IAASB’s ISAs.

In October 2016, the AASB approved revisions to CAS 250, Consideration of Laws and Regulations in an Audit of Financial Statements, and conforming amendments to other standards, related to adoption of the IAASB’s limited amendments to address non-compliance with laws or regulations. The AASB concluded that changes made in finalizing the standards were not significantly different from the proposals in the Exposure Draft and, therefore, no re-exposure is necessary. The amendments will be effective for financial statement periods ending on or after December 15, 2018 and were included in a Handbook in March 2017. Other than the amendment noted, the CAS contains no amendment to the ISA wording.

The IESBA Code has not been adopted in Canada. Canadian public accountants follow rules of professional conduct/code of ethics issued by various professional accounting bodies. To the extent that they do not conflict, revisions that the IAASB makes to the ISAs will be reflected in the equivalent Canadian standards with limited Canadian-specific amendments, if any are necessary.

 

Other developments

January 2018

On January 3, 2018, the IESBA published NOCLAR Overview.

March 2017

On March 1, 2017, the AASB released the Basis for Conclusions, which summarizes the process followed in developing revisions to 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 material is expected to be issued in Q1/2017.

On October 5, 2016, the IAASB released ISA 250 (Revised), Consideration of Laws and Regulations in an Audit of Financial Statements , and conforming amendments to other International Standards, which respond to new requirements in the IESBA’s Code of Ethics for Professional Accountants addressing non-compliance with laws and regulations (NOCLAR). ISA 250 (Revised) will be effective for audits of financial statements for periods beginning on or after December 15, 2017. Amendments to the IAASB’s International Standards for other services have a similar effective date.

July 2016

On July 14, 2016, the IESBA released a new standard, Responding to Non-Compliance with Laws and Regulations. The standard sets out a first-of-its-kind framework to guide professional accountants in what actions to take in the public interest when they become aware of a potential illegal act, known as non-compliance with laws and regulations, or NOCLAR, committed by a client or employer.

March 2016

The AASB currently expects to issue the final Canadian standards in Q4/2016.

December 2015

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

August 2015

On August 21, 2015, the AASB issued an Exposure Draft that proposes to adopt limited changes to international standards necessary to resolve actual or perceived inconsistencies or to clarify key aspects of proposed revisions to the IESBA Code of Ethics. Comments to the AASB are requested by September 30, 2015.

July 2015

On July 23, 2015, the IAASB issued an Exposure Draft, Proposed Amendments to the IAASB’s International Standards—Responding to Non-Compliance or Suspected Non-Compliance with Laws and Regulations, to propose limited amendments to the IAASB’s ISAs in response to the IESBA’s May 2015 Re-Exposure Draft. Comments to the IAASB are requested by October 21, 2015.

May 2015

On May 6, 2015, the IESBA issued a Re-exposure Draft, Responding to Non-Compliance with Laws and Regulations. Comments to the IESBA are requested by September 4, 2015.

 

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