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Auditor Reporting – Key Audit Matter Reporting and Other Considerations (Possible Amendments to CAS 700) [ED]

Comment period ends on May 15, 2019

Next Steps:

The AASB will review the responses to the Exposure Draft from stakeholders in Q3/2019

Last up­dated:

April 2019

Overview

Users of audited financial statements have asked auditors to provide more information in their reports about significant matters in the financial statements, as well as about the conduct of the audit.

In early 2017, the AASB unanimously approved enhanced auditor reporting standards and, in late 2018, the AASB made amendments to CAS 700, Forming an Opinion and Reporting on Financial Statements, requiring auditors to communicate key audit matters in the auditor’s report for audits of complete sets of general purpose financial statements of entities listed on the Toronto Stock Exchange (TSX), other than entities that are required to comply with National Instrument 81-106, Investment Fund Continuous Disclosure. Such requirements will be effective for periods ending on or after December 15, 2020.

By not requiring reporting of key audit matters by all listed entities, the AASB acknowledged that certain listed entities, such as venture issuers, are granted certain regulatory relief by securities regulators. Until auditor reporting evolves, it is difficult to conclude on the costs and benefits of reporting on key audit matters by such entities.  

On January 31, 2019, the AASB issued an Exposure Draft proposing revisions to CAS 700, relating to the communication of key audit matters (KAM) in the auditor’s report. In it, the AASB proposes to expand the requirements for auditors to communicate KAM for audits of complete sets of general purpose financial statements so that they apply to:

  • all entities listed on the TSX, TSXV, NEO and CSE; and
  • all entities required to comply with NI 81-106

The Exposure Draft comment period ends on May 15, 2019.

For further details, refer to the project on the AASB website.

 

Other de­vel­op­ments

April 2019

In April 2019, the AcsB issued the Basis of Conclusions in respect of its amendments re paragraph 46 of CAS 700 to the CPA Canada Handbook – Assurance.

January 2019

On January 31, 2019, the AASB issued an Exposure Draft proposing revisions to CAS 700, relating to the communication of key audit matters (KAM) in the auditor’s report.

In January 2019, the AASB staff updated the status of this project to indicate that the AASB expects to issue an Exposure Draft in Q1/2019.

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