Related Discussions

• Quality Management – AASB

• Apr 07, 2021

• At its meeting on April 7, 2021, the AASB discussed matters related to its proposed exposure draft addressing conforming amendments to other Canadian standards, resulting from the January 2021 approval of Canadian Standard on Quality Management 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements. The AASB is expected to approve an exposure draft by the end of May 2021.

• Quality Management– AASOC

• Feb 25, 2021

• At its meeting on February 25-26, 2021, the AASOC considered whether the AASB followed due process with proper regard for the public interest in developing and approving Canadian Standards on Quality Management (CSQM 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements, CSQM 2, Engagement Quality Reviews, CAS 220, Quality Management for an Audit of Financial Statements, and related conforming amendments). After discussing the project, the AASOC concluded that the AASB had followed due process with proper regard for the public interest in developing and approving the Canadian Standards on Quality Management.

• Quality Management – AASB

• Jan 21, 2021

• At its meeting on January 21, 2021, the AASB unanimously approved: (i) Canadian Standard on Quality Management (CSQM) 1, Quality Managements for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements; (ii) CSQM 2, Engagement Quality Reviews; (iii) CAS 220, Quality Management for an Audit of Financial Statements; and (iv) related conforming amendments to other CASs. CSQM 1 is effective as follows: (a) Firms are required to design and implement their system of quality management for audits or reviews of financial statements or other assurance engagements by December 15, 2022. They are required to be evaluated within one year following December 15, 2022. (b) Firms are required to design and implement their system of quality management for related services engagements by December 15, 2023. They are required to be evaluated within one year following this date. The system of quality management is required to be performed within one year following December 15, 2023. CSQM 2 is effective for: (a) audits and reviews of financial statements and other assurance engagements for periods beginning on or after December 15, 2022; and (b) related services engagements beginning on or after December 15, 2023. CAS 220 is effective for audits of financial statements for periods beginning on or after December 15, 2022. In approving CSQM 1 and CSQM 2, the AASB considered whether to re-expose new or revised Canadian amendments. The deferral of the effective dates of CSQM 1 and CSQM 2 for related services engagements responds to stakeholder concerns heard during consultation. The Board concluded that re-exposure would likely not result in any new information that would change its decision on this matter. Once the AASOC confirms that the AASB followed due process with proper regard for the public interest, CSQM 1, CSQM 2, CAS 220, and related conforming amendments to other CASs will be issued in the CPA Canada Handbook – Assurance in May 2021.

• Quality Management – AASOC

• Dec 15, 2020

• At its meeting on December 15, 2020, AASB Director Eric Turner provided the AASOC with an update on the AASB’s work related to the quality management standards and Canadian considerations, including that (i) re the effective date, the AASB considered several options and concluded that it would be appropriate to defer the effective date for all related services engagements by one year, to December 15, 2023; (ii) re implementation challenges, the AASB concluded that implementation guidance related to monitoring and remediation is critical for the standard’s successful implementation. The Board will promote the suite of quality management standards through audit and assurance alerts, provincial body newsletters, and webinars. It will work in conjunction with CPA Canada’s Research Guidance and Support team to develop implementation guidance. The Board will also work with the CPA provincial bodies to develop training and guidance to assist third parties in monitoring firms and inspecting engagements; and (iii) re approval, the AASB will consider approving CSQM 1, CSQM 2, and the revisions to CAS 220 at its January 2021, meeting and will request AASOC’s due process confirmation at its February 25-26, 2021 meeting.

• Quality Management - AASB

• Nov 30, 2020

• At its meeting on November 30/December 1, 2020, the AASB discussed Canadian specific issues related to the adoption of International Standard on Quality Management (ISQM) 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements, as Canadian Standard on Quality Management (CSQM) 1.Key issues discussed included: (i) the scope and effective date of CSQM 1; and (ii) the different forms of implementation guidance that can be developed to address implementation challenges. The AASB expects to approve final CSQM 1, CSQM 2, Engagement Quality Reviews, and CAS 220 (Revised), Quality Management for an Audit of Financial Statements, at its January 2021 meeting.

• Engagement Quality Reviews – IAASB

• Sep 14, 2020

• At its meeting on September 14-23, 2020, the IAASB approved ISQM 2 as a final standard, which will be effective on December 15, 2022. Once the Public Interest Oversight Board’s confirmation that due process was followed is received, the Board will formally release the standard. The Board also received an update on the approval of the proposed revisions to the IESBA Code addressing the objectivity of engagement quality reviewers and acknowledged the coordination efforts between the two Boards.

• Quality Management at the Engagement Level – IAASB

• Sep 14, 2020

• At its meeting on September 14-23, 2020, the IAASB approved ISA 220 (Revised), which will be effective for audits of financial statements for periods beginning on or after December 15, 2022. Once the Public Interest Oversight Board’s confirmation that due process was followed is received, the Board will formally release the standard. In finalizing the standard, the Board focused on clarifying the engagement partner’s responsibilities, the scalability of the standard, and the linkages with ISQM 1.

• Quality Management at the Firm Level – IAASB

• Sep 14, 2020

• At its meeting on September 14-23, 2020, the IAASB approved ISQM 1 as a final standard. Firms will be required to design and implement systems of quality management in compliance with ISQM 1 by December 15, 2022. Once the Public Interest Oversight Board’s (PIOB) confirmation that due process was followed is received, the Board will formally release the standard. In finalizing ISQM 1, the Board considered how to enhance the focus on the public interest and consistent performance of quality engagements in the context of the objective of the standard, and discussed clarifications relating to human resources and external communications. The Board also suggested a number of areas that should be emphasized in the basis for conclusions.

• Quality Management – AASB

• Sep 09, 2020

• At its meeting on September 9-10 and 23, 2020, the AASB discussed, and provided input to the IAASB members from Canada on issues related to: (i) proposed International Standard on Quality Management (ISQM) (formerly International Standard on Quality Control) 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements; (ii) proposed ISQM 2, Engagement Quality Reviews; and (iii) proposed ISA 220 (Revised), Quality Management for an Audit of Financial Statements. Key issues discussed included the placement of material relating to the public interest and whether it is best suited in the objective or introductory section in ISQM 1 and ISA 220; and material relating to human resources, including definitions and using the words “personnel” and “individuals” throughout ISQM 1 and ISA 220. The AASB also discussed the results of a case study workshop that field tested the proposed requirements in ISQM 1. The feedback will assist the Board in making an informed decision about the scope of proposed Canadian Standard on Quality Management (CSQM) 1, and its potential applicability to related services engagements. The IAASB approved final ISQM 1, ISQM 2, and ISA 220 (Revised) at its September 2020 meeting. The AASB plans to continue its discussions of key matters relating to the Canadian equivalent standards, including the scope of proposed CSQM 1, at its meeting in December 2020. The Board expects to approve the Canadian standards at its January 2021 meeting.

• Quality Management at the Firm Level – IAASB

• Jun 15, 2020

• At its meeting on June 15-19, 2020, the IAASB discussed revisions to certain areas of proposed ISQM 1, including the firm’s risk assessment process, resources, relevant ethical requirements, monitoring and remediation, and the evaluation of the system of quality management. The Board also discussed external communications, in particular the firm’s communication with those charged with governance when performing an audit of financial statements of a listed entity. The Board supported the proposals, and encouraged the ISQM 1 Task Force to further simplify the approach to human resources, in particular the application material explaining the firm and engagement team responsibilities in addressing the competence and capabilities of individuals assigned to the engagement team. The Board also provided varying comments on external communications, although was generally supportive of the direction proposed by the ISQM 1 Task Force. The ISQM 1 Task Force will present a full draft of proposed ISQM 1 for IAASB approval via videoconference in September 2020.

• Quality Management at the Engagement Level – IAASB

• Jun 15, 2020

• At its meeting on June 15-19, 2020, the IAASB discussed amendments to proposed ISA 220 (Revised) to clarify how to treat component auditors that are not directly engaged by the firm. The ISA 220 Task Force will present a full draft of proposed ISA 220 (Revised) for IAASB approval via videoconference in September 2020.

• Engagement Quality Reviews – IAASB

• Jun 15, 2020

• At its meeting on June 15-19, 2020, the IAASB was updated by the ISQM 2 Task Force about the Task Force’s proposed revisions to the IESBA Code addressing the objectivity of EQRs. The Board agreed that the proposed revisions to the IESBA Code addressing the objectivity of appropriate reviewers align with the provisions relating to the objectivity of EQRs in proposed ISQM 2. The ISQM 2 Task Force will present a full draft of proposed ISQM 2 for IAASB approval via videoconference in September 2020.

• Quality Management - AASB

• Jun 08, 2020

• At its meeting on June 8-9, 2020, the AASB provided input to the IAASB members from Canada on issues related to the IAASB’s project to revise standards for quality management at the firm and engagement level, including engagement quality reviews. Issues discussed related to proposed ISQM 1 included: (i) revising the definition of “quality risk” to include the concept of “reasonable possibility”; (ii) replacing all references to “factors” with “conditions, events, circumstances, inactions or actions”; (iii) clarifying the risk assessment process through practical examples in the application material; and (iv) encouraging the adoption of the suite of quality management standards as a package. Issues discussed related to proposed ISQM 2 included: (i) aligning the IAASB provisions related to the objectivity of the engagement quality reviewer and proposed revisions to the IESBA Code addressing objectivity of appropriate reviewers. Issues discussed related to ISA 220 (Revised), included: (i) revising the engagement resources section in ISA 220 (Revised) to account for circumstances where engagement team resources may not be assigned by the firm, but rather obtained directly; and (ii) providing a general illustrative example of a situation when resources may not be assigned by the firm, other than that of a group audit engagement. The AASB also discussed a one-year deferral of the standards’ effective date to December 15, 2022. This would account for COVID-19’s impact on firm activities. The IAASB expects to approve final proposed ISQM 1, ISQM 2, and ISA 220 (Revised) at its September 2020 meeting. The AASB expects to approve the Canadian equivalent standards at its January 2021 meeting.

• Quality Management at the Engagement Level – IAASB

• Mar 16, 2020

• At its meeting on March 16-20, 2020, the IAASB discussed a draft of proposed ISA 220 (Revised). The IAASB discussed the guidance on the engagement team and how the requirements between those that are the sole responsibility of the engagement partner and those which the engagement partner is permitted to assign to another engagement team member are distinguished. The IAASB also discussed a illustrative example that was prepared by the Task Force to show that the proposed requirements are appropriate for larger, more complex engagements. The ISA 220 Task Force will consider the comments received and will present revised proposals via videoconference on April 1, 2020.

• Engagement Quality Reviews – IAASB

• Mar 16, 2020

• At its meeting on March 16-20, 2020, the IAASB discussed a draft of proposed ISQM 2. The IAASB supported the ISQM 2 Task Force’s proposed revisions on the scope of engagements subject to an engagement quality (EQ) review. The IAASB also reaffirmed its broad support for a mandatory cooling-off period to address objectivity for individuals moving into the role of EQ reviewer after serving as the engagement partner. The ISQM 2 Task Force will consider the comments received and will present revised proposals via videoconference on April 1, 2020.

• Quality Management at the Firm Level – IAASB

• Mar 16, 2020

• At its meeting on March 16-20, 2020, the IAASB discussed a full draft of proposed ISQM 1. The IAASB particularly focused on the identification and assessment of quality risks, external communications, findings and deficiencies, the inspection of completed engagements, service providers, and the annual evaluation of the system of quality management. The IAASB also discussed the meaning of the effective date of proposed ISQM 1. The IAASB broadly supported the proposals and encouraged the ISQM 1 Task Force to further simplify the identification and assessment of quality risks, clarify the definition of deficiencies, and enhance the standard to encourage communication externally. With respect to the evaluation of the system of quality management, the IAASB also suggested adopting a less binary conclusion about the system of quality management to encourage a positive approach to evaluating the system. The ISQM 1 Task Force will present certain sections of proposed ISQM 1 to the IAASB via videoconference on April 8, 2020.

• Quality Management – AASB

• Mar 09, 2020

• At its meeting on March 9-10, 2020, the AASB provided input to the IAASB members from Canada on issues related to the IAASB’s project to revise standards for quality management at the firm and engagement level, including engagement quality reviews. Issues discussed related to proposed ISQM 1 included: (i) whether a service provider should be considered as a resource and, therefore, subject to the same requirements as internal firm resources; (ii) renaming quality risk considerations introduced in December 2019, including conditions and circumstances, actions and inactions, and events; (iii) whether the standard should include examples of how larger firms may apply the requirements, and to examples for smaller firms, in order for firms to compare and contrast; (iv) whether specified responses should be included within each component or together in a separate section of the standard; and (v) whether the reference to transparency reports should be in the requirements of the standard or the application material. Issues discussed related to proposed ISQM 2 included: (i) the cooling-off period for the engagement quality reviewer; and (ii) how the firm identifies engagements that should be subject to an engagement quality review. Issues discussed related to proposed ISA 220 (Revised), included: (i) the definition of “engagement team”; (ii) links to proposed ISA 600 (Revised) and proposed ISQM 1; and (iii) how the standard addresses scalability. The IAASB expects to approve final proposed ISQM 1, ISQM 2, and ISA 220 (Revised) at its June 2020 meeting. The AASB expects to approve the Canadian equivalent standards at its September 2020 meeting.

• Quality Management – AASOC

• Feb 03, 2020

• At its meeting on February 3-4, 2020, the AASOC was advised re this project that: (i) in 2016, the IAASB undertook a project to revise the quality control standards at the firm and engagement level. The revisions to the standard were made to strengthen and improve the standard’s requirements and to focus on identifying, assessing, and responding to quality risks in a broad range of engagement circumstances. The AASB proposed that Canada adopt the same scope as the international standard and, thereby, extend quality control standards to related services engagements, not just assurance engagements as is currently the case; and (ii) at its January 2020 meeting, the AASB noted that it was unable to obtain sufficient feedback from stakeholders on the proposed change in scope. The Board discussed the extent of additional consultations needed to assist it in making an informed decision on this matter. It agreed to hold a workshop(s) in the spring or summer 2020 to allow practitioners to identify implementation challenges and provide the Board with some feedback on the new standard.

• Quality Management – AASB

• Jan 23, 2020

• At its meeting on January 23-24, 2020, the AASB decided to conduct additional consultations to assist it in making an informed decision about the scope of proposed CSQM 1. Staff will conduct these consultations in the spring and early summer of 2020.

• Engagement Quality Reviews – IAASB

• Dec 09, 2019

• At its meeting on December 9-13, 2019, the IAASB generally supported the ISQM 2 Task Force’s revised proposals on the scope of engagements subject to an engagement quality (EQ) review and on a mandatory cooling-off period of two-years, or longer if required by relevant ethical requirements, to address objectivity for individuals moving into the role of EQ reviewer after serving as the engagement partner. The Board also generally supported proposals on other matters, including the EQ reviewer’s evaluation of the exercise of professional skepticism by the engagement team, and considerations for an EQ review of a group audit engagement. The ISQM 2 Task Force will consider the comments received in preparing a revised full draft of proposed ISQM 2 for discussion at the March 2020 IAASB meeting.

• Quality Management at the Firm Level – IAASB

• Dec 09, 2019

• At its meeting on December 9-13, 2019, the IAASB continued to discuss the key issues highlighted by respondents to the Exposure Draft of ISQM 1 including the scalability, complexity and prescriptiveness of the standard, appropriate tailoring of the system of quality management for their circumstances and the making sure the standard that can be applied in all circumstances. The Board supported the changes to the structure of the standard, adjusting the quality objectives and responses in the components to be more streamlined and the revisions to the drafting and presentation of the standard to simplify and improve the readability of the standard. The Board also agreed with proposed revisions to the firm’s risk assessment process, including introducing factors to consider in identifying and assessing quality risks. The Board supported the ISQM 1 Task Force’s proposals to embed a risk-based approach in the monitoring and remediation component, improve the selection of engagements for inspection such that it is more risk-based, and further clarify the framework for evaluating findings and identifying deficiencies.

• Quality Management at the Engagement Level – IAASB

• Dec 09, 2019

• At its meeting on December 9-13, 2019, the IAASB generally supported the ISA 220 Task Force’s proposals to clarify the engagement team definition, to make clear that the engagement team can ordinarily depend on the firm’s system of quality management, and to better deal with large, complex audit engagements. The Board also discussed professional skepticism, the stand-back provision and the documentation requirements. The ISA 220 Task Force will consider the comments received in preparing a revised full draft of proposed ISA 220 for discussion at the March 2020 IAASB meeting.

• Quality Management – AASB

• Dec 02, 2019

• At its meeting on December 2-3, 2019, the AASB provided input to the IAASB members from Canada on issues related to the IAASB’s project to revise standards for quality management at the firm and engagement level, including engagement quality reviews. Issues discussed related to ISQM 1 included: how the standard should address quality risk considerations; whether responses to quality risks should be included in one section versus within each component; and the factors to be considered in determining an appropriate cyclical basis for selecting completed engagements for inspection. Issues discussed related to ISQM 2 included: whether the objective is sufficiently outcome based; how the firm should identify engagements that should be subject to an engagement quality review; and the cooling-off period of the engagement quality reviewer. Issues discussed related to ISA 220 (Revised) included: whether the definition of engagement team should include component auditors; whether the proposed standard should include application material on evolving audit delivery models; and clarifying which requirements must be performed by the engagement partner and those where other members of the engagement team can assist the engagement partner. The AASB will continue to discuss these and other issues at future meetings.

• Engagement Quality Reviews – IAASB

• Sep 16, 2019

• At its meeting on September 16-20, 2019, the IAASB received an overview of the comment letters on the Exposure Draft of ISQM 2 and discussed the ISQM 2 Task Force’s initial drafting to address the key issues presented on the scope of engagements subject to an engagement quality (EQ) review, and on matters relating to objectivity and cooling-off period. The Board generally supported the ISQM 2 Task Force’s proposals on the scope of engagements subject to an EQ review and to address objectivity for individuals moving into the role of EQ reviewer after serving as the engagement partner.

• Quality Management at the Engagement Level – IAASB

• Sep 16, 2019

• At its meeting on September 16-20, 2019, the IAASB discussed the comment letters received on the Exposure Draft of ISA 220 (Revised) and the ISA 220 Task Force’s proposals for addressing the key issues respondents raised. The Board supported the fundamental principle that the engagement partner has overall responsibility for managing and achieving quality and being sufficiently and appropriately involved in the engagement. The Board also supported clarifying the requirement addressing circumstances when the engagement partner assigns procedures or tasks to other engagement team members, the principles underpinning the proposed engagement team definition and proposals to address scalability of the requirements to audits of larger or more complex entities.