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Deloitte’s Digest An overview of standard-setting activities
April 30, 2015
At a time when it has become a difficult task to keep up to date with the
recent developments in standard-setting activities, the Deloitte Digest
presents a useful single source of reference for current financial
reporting developments.
Table of Contents
Summary by standard ............................................................................................................................................. 1
Abbreviations, a list of most commonly used acronyms ....................................................................................... 33
Additional resources .............................................................................................................................................. 34
Contacts, our experts network is available for your questions .............................................................................. 35
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 1
Summary by standard From time to time, standard-setters and regulators issue new rules and standards that affect your financial reporting. This document briefly describes these pronouncements and other regulatory and professional developments and indicates their effective date, transition application and entities affected. At the time of publication, the external links included in this page were active. However, if the documents on the hosting site have been subsequently modified, moved or archived, these external links may no longer work. If you need to locate a specific document and/or external site listed on this page that is no longer active, please contact us.
Table of contents
Summary by standard ............................................................................................................................................. 1
AASB CSAE 3000, Attestation Engagements Other than Audits or Reviews of Historical Financial Information, and CSAE 3001, Direct Engagements UPDATED ................................................................ 4
AASB Section 7170, Auditor’s Consent to the Use of the Auditor’s Report in Connection with Business Acquisition Reports NEW ........................................................................................................ 5
CPA Canada Alert - CAS 610, Using the Work of Internal Auditors to Provide Direct Assistance on the Audit ............................................................................................................................................... 6
CPAB 2014 Annual Report .................................................................................................................. 7
CPAB 2014 All Firm Inspections Report .............................................................................................. 8
CPAB 2014 Inspections Report: Highlights for Audit Committees ...................................................... 9
CPAB Exchange: Comprehensive Review of the Auditor – What Audit Committees are Saying NEW
........................................................................................................................................................... 10
CPAB Exchange: Industry Insights - Retail NEW ................................................................................. 11
CPAB Summary of November 2014 Audit Quality Symposium ........................................................ 12
CPAB Special Report 2015: Auditing in Foreign Jurisdictions .......................................................... 13
IAASB Strategy for 2015–2019 and Work Plan for 2015–2016 UPDATED ............................................ 14
IESBA Changes to the Code of Ethics for Professional Accountants Addressing Certain Non-Assurance Services Provisions for Audit and Assurance Clients NEW ............................................... 15
Proposed standards ........................................................................................................................................ 16
AASB Association .............................................................................................................................. 17
IAASB/AASB Addressing Disclosures in the Audit of Financial Statements UPDATED ......................... 18
AASB/IAASB Auditor’s Responsibilities Relating to Other Information UPDATED ................................. 20
AASB/IAASB ISRE 2400 (Revised), Review Engagements; CSRE 2400, Engagements to Review Historical Financial Statements ......................................................................................................... 22
IAASB Information-Gathering Survey on Quality Control .................................................................. 24
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 1
AASB/IAASB Proposed International Standards on Auditing, ISA 800 (Revised) and ISA 805 (Revised) UPDATED ............................................................................................................................... 25
AASB/IAASB Reporting on Audited Financial Statements: Proposed New and Revised International Standards on Auditing (ISAs) UPDATED ................................................................................................ 26
AASB Auditor's Consent to the Use of a Report of the Auditor Included in an Offering Document .. 28
IESBA Proposed Changes to Certain Provisions of the Code Addressing the Long Association of Personnel with an Audit or Assurance Client UPDATED ........................................................................ 29
CPA Canada Proposed Revisions to the CPA Auditor Independence Standards in respect of addressing a Breach of the Standards and Contingent Fees ............................................................ 30
Projects ........................................................................................................................................................... 31
AASB Special Reports – Assurance on Compliance with Agreements, Statutes and Regulations UPDATED ................................................................................................................................................ 32
Abbreviations, a list of most commonly used acronyms ....................................................................................... 33
Additional resources .............................................................................................................................................. 34
Contacts, our experts network is available for your questions .............................................................................. 35
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 2
Final standards
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 3
Final standards
Canadian assurance standards
AASB CSAE 3000, Attestation Engagements Other than Audits or Reviews of Historical Financial Information, and CSAE 3001, Direct Engagements UPDATED Effective date: Effective for attestation and direct engagements where the assurance report is dated on or after June 30, 2017
Standard: CSAE 3000, Attestation Engagements Other than Audits or Reviews of Historical Financial Information, and CSAE 3001, Direct Engagements
Transitional provisions:
Effective for attestation and direct engagements where the assurance report is dated on or after June 30, 2017
Published by: AASB
Last updated: April 2015
Applicable to: All auditors
Recent activities Most recently, at its meeting on April 14, 2015, the AASB unanimously approved limited consequential amendments to CSAE 3416, Reporting on Controls at a Service Organization, resulting from recently approved CSAE 3000. The AASB decided that the amendments do not affect requirements nor change the substance of CSAE 3416 and, therefore, exposure is not necessary. The amendments are expected to be issued in conjunction with issuance of CSAE 3000 in June 2015. At its meeting on March 9-10, 2015, the AASB approved CSAE 3000, Attestation Engagements Other than Audits or Reviews of Historical Financial Information, and CSAE 3001, Direct Engagements.
In summary
Overview The CSAEs will replace Section 5025, Standards for Assurance Engagements Other than Audits of Financial Statements and Other Historical Financial Information, and other umbrella assurance standards. In approving the new Sections, the AASB concluded that: (i) changes made in finalizing CSAE 3000 were not significantly different from the proposals in the ED and, therefore, no re-exposure is necessary; and (ii) there were significant changes made to CSAE 3001 in finalizing it, but these changes were made in response to comments raised on exposure and re-exposure would not likely provide significant new information; therefore the AASB decided not to re-expose CSAE 3001. The final standards will be effective for attestation and direct engagements where the assurance report is dated on or after June 30, 2017 and are expected to be issued to the CPA Handbook – Assurance in June 2015.
Available resources and links • AASB Decision Summary (March 2015) • AASB ED (June 2014) • AASB Project Summary
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 4
Final standards
Canadian assurance standards
AASB Section 7170, Auditor’s Consent to the Use of the Auditor’s Report in Connection with Business Acquisition Reports NEW Effective date: Effective for an auditor’s consent to the use of an auditor’s report in a business acquisition report issued on or after June 1, 2016
Standard: Section 7170, Auditor’s Consent to the Use of the Auditor’s Report in Connection with Business Acquisition Reports
Transitional provisions:
The new standard will be effective for an auditor’s consent to the use of an auditor’s report in a business acquisition report issued on or after June 1, 2016
Published by: AASB
Last updated: March 2015
Applicable to: All auditors
Recent activities At its meeting on March 9-10, 2015, the AASB approved new Section 7170, Auditor’s Consent to the Use of the Auditor’s Report in Connection with Business Acquisition Reports.
In summary
Overview Section 7170 will replace Section 7500, Auditor’s Consent to the Use of the Auditor’s Report in Connection with Designated Documents. In approving the new standard, the AASB concluded that changes made in finalizing the standard were not significantly different from the proposals in the ED and, therefore, no re-exposure is necessary. The final standard will be effective for an auditor’s consent to the use of an auditor’s report in a business acquisition report issued on or after June 1, 2016 and is expected to be issued to the CPA Canada Handbook – Assurance in June 2015.
Available resources and links • AASB Decision Summary (March 2015) • AASB ED (October 2014) • AASB Project Summary
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 5
Final standards
Canadian assurance standards
CPA Canada Alert - CAS 610, Using the Work of Internal Auditors to Provide Direct Assistance on the Audit Issued: February 2015
Standard: CPA Canada Alert - CAS 610, Using the Work of Internal Auditors to Provide Direct Assistance on the Audit
Transitional provisions:
Not applicable
Published by: CPA Canada
Last updated: March 2015
Applicable to: All auditors
Recent activities In February 2015, CPA Canada issued this Alert to raise awareness about the requirements pertaining to the use of internal auditors to provide direct assistance on the audit in accordance with CAS 610, Using the Work of Internal Auditors, which is effective for audits of financial statements for periods ending on or after December 15, 2014.
In summary
Overview The Alert reminds auditors of related requirements and application and other explanatory material in the CPA Canada Handbook — Assurance and provides potential actions to assist auditors in complying with the requirements. The Alert specifically covers: (i) determining whether internal auditors can be used to provide direct assistance for purposes of the audit; (ii) determining the nature and extent of work that can be assigned to internal auditors providing direct assistance; (iii) using internal auditors to provide direct assistance; and (iv) documentation. It does not, however, address all aspects relating to CAS 610, and other CASs that contain additional requirements auditors must comply with.
Available resources and links • CPA Canada website material, including the Alert
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 6
Final standards
Canadian assurance standards
CPAB 2014 Annual Report Issued: March 31, 2015
Standard: CPAB 2014 Annual Report
Transitional provisions:
Not applicable
Published by: CPAB
Last updated: March 2015
Applicable to: Auditors of reporting issuers
Recent activities On March 31, 2015, CPAB issued its 2014 Annual Report (the Annual Report).
In summary
Overview The Annual Report notes the activities of the CPAB during 2014 including that (i) at December 31, 2014, 290 audit firms were registered with CPAB (2013:296); and (ii) during 2014, in total CPAB inspected 42 firms (2013:49) and 174 engagement files (2013:195), including: (a) 4 Big Four firms – 98 files; (b) 4 National/network firms - 32 files; (c) 6 Large regional firms – 27 files; (d) 16 Other firms – 15 files; and (e) 12 firms re follow up inspections – 2 files. Audit firms who voluntarily participate in the March 2014 Protocol for Audit Firm Communication of CPAB Inspection Findings to the Audit Committee share significant file-specific inspection findings with their clients’ audit committees. A significant inspection finding is a significant deficiency in the application of generally accepted auditing standards related to a material financial balance or transaction stream where the audit firm must perform additional audit work to support the audit opinion and/or is required to make significant changes to its audit approach. During 2014. CPAB identified a total of 32 files containing significant inspection findings in the 174 engagement files examined.
Available resources and links • CPAB 2014 Annual Report (March 2014)
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 7
Final standards
Canadian assurance standards
CPAB 2014 All Firm Inspections Report Issued: March 31, 2015
Standard: CPAB 2014 All Firm Inspections Report
Transitional provisions:
Not applicable
Published by: CPAB
Last updated: March 2015
Applicable to: Auditors of reporting issuers
Recent activities On March 31, 2015, CPAB issued its 2014 All Firm Inspections Report (the Report).
In summary
Overview The Report notes that, overall, results for all firms inspected in 2014 improved over 2013, largely due to the effectiveness of action plans implemented by the Big Four firms beginning in 2012, and later on by the 10 other annually inspected firms. The five key inspection themes for all firms, as reported by CPAB in November 2014 in respect of the Big Four firms, are (i) understanding and evaluating internal controls; (ii) auditing complex accounting estimates; (iii) auditing in foreign jurisdictions; (iv) executing professional skepticism; and (v) applying professional judgment. The Report also notes the following four themes, which were also identified in the Big Four firms but were more prevalent among the other firms inspected in 2014: (i) journal entry testing; (ii) decommissioning obligations; (iii) use of management’s experts; and (iv) materiality. Although the quality of audits is improving, CPAB believes that there is still more to be done if firms are to deliver consistent, sustainable high quality audits over the long term.
Available resources and links • CPAB 2014 All Firm Inspections Report (March 2015)
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 8
Final standards
Canadian assurance standards
CPAB 2014 Inspections Report: Highlights for Audit Committees Issued: March 31, 2015
Standard: CPAB 2014 Inspections Report: Highlights for Audit Committees
Transitional provisions:
Not applicable
Published by: CPAB
Last updated: March 2015
Applicable to: Audit committee members of reporting issuers and their auditors
Recent activities On March 31, 2015, CPAB issued its 2014 Inspections Report: Highlights for Audit Committees (the Summary).
In summary
Overview The Summary contains highlights of CPAB’s 2014 All Firm Inspections Report that is of particular interest to audit committee members. The Summary notes that the audit quality of the Big Four firms, as a group, continues to progress, in large part by augmenting their action plans and embedding them into their annual cycle of continuous improvement. While not all Big Four firms are in exactly the same place when it comes to implementation or results, CPAB’s inspections indicate that, overall, these firms are taking appropriate action. The Summary also notes that the 10 other annually inspected firms have worked to address audit quality gaps through action plans. Inspection results for the 4 national/network firms generally improved in 2014. While progress is being made, not all of these firms are where they need to be when it comes to audit quality - there is still more work to do. Challenges exist among 3 of the 6 large regional firms whose results declined overall. These firms vary in terms of how far along they are in implementing their action plans, leaving some with more work to do than others. Their audit quality initiatives are not where they need to be and are not having the timely impact CPAB has seen in other firms. CPAB plans to monitor the implementation, sustainability and effectiveness of their action plans in 2015.
Available resources and links • CPAB 2014 Inspections Report: Highlights for Audit Committees (March 2015)
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 9
Final standards
Canadian assurance standards
CPAB Exchange: Comprehensive Review of the Auditor – What Audit Committees are Saying NEW Effective date: Issued in April 2015
Standard: CPAB Exchange: Comprehensive Review of the Auditor – What Audit Committees are Saying
Transitional provisions:
Not applicable
Published by: CPAB
Last updated: April 2015
Applicable to: All auditors of listed entities
Recent activities On April 2, 2015, the CPAB released its Comprehensive Review of the Auditor – What Audit Committees are Saying.
In summary
Overview In this document, CPAB speaks with audit committee chairs about observations and lessons learned on performing or planning to perform a comprehensive review. In 2013, the Enhancing Audit Quality initiative, jointly undertaken by CPA Canada and the CPAB, examined how to enhance audit quality in light of global regulatory developments. As part of this initiative, the Independence and Role of the Audit Committee Working Groups concluded that a comprehensive review of the external auditor by the audit committee at least every five years was an effective approach to addressing threats arising from long tenure of the audit firm.
Available resources and links • CPAB Comprehensive Review of the Auditor – What Audit Committees are Saying
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 10
Final standards
Canadian assurance standards
CPAB Exchange: Industry Insights - Retail NEW Effective date: Issued in April 2015
Standard: CPAB Exchange: Industry Insights - Retail
Transitional provisions:
Not applicable
Published by: CPAB
Last updated: April 2015
Applicable to: All auditors of listed entities in the retail industry
Recent activities On April 2, 2015, the CPAB released its Industry Insights – Retail.
In summary
Overview The CPAB’s Industry Insights – Retail is part of CPAB’s Industry Insight series for audit committees, and provides an overview of common areas of focus for an audit of a company operating in the retail industry. The document notes the following common areas of audit focus in the retail industry: (i) internal controls including information technology; (ii) supplier / vendor incentives, rebates and discounts; (iii) inventory; and (iv) impairment.
Available resources and links • CPAB Industry Insights – Retail (April 2015)
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 11
Final standards
Canadian assurance standards
CPAB Summary of November 2014 Audit Quality Symposium Issued: February 20, 2015
Standard: CPAB Summary of November 2014 Audit Quality Symposium
Transitional provisions:
Issued February 20, 2015
Published by: CPAB
Last updated: February 2015
Applicable to: All auditors
Recent activities On February 20, 2015, the CPAB issued a summary of its November 2014 Audit Quality Symposium, which brought together directors, business leaders, policy makers, audit firm leaders, regulators and academics from Canada and around the world.
In summary
Overview In CPAB’s view, four fundamental areas for action came from the discussion at this third symposium: (i) the comprehensive review and audit quality indicators provide an opportunity to support audit committees in their oversight of the auditor and to enhance the focus on audit quality; (ii) there is an opportunity to improve audit quality through increasing the transparency of issues included in the auditor’s report; (iii) there are opportunities for the value and relevance of the audit to be enhanced; and (iv) there are changes coming to the audit industry that need to be actively managed to ensure its long term sustainability.
Available resources and links • CPAB Summary of November 2014 Audit Quality Symposium (February 2015)
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 12
Final standards
Canadian assurance standards
CPAB Special Report 2015: Auditing in Foreign Jurisdictions Issued: March 31, 2015
Standard: CPAB Special Report 2015: Auditing in Foreign Jurisdictions
Transitional provisions:
Not applicable
Published by: CPAB
Last updated: March 2015
Applicable to: Auditors of reporting issuers with operations in foreign jurisdictions
Recent activities On March 31, 2015, CPAB issued Special Report 2015: Auditing in Foreign Jurisdictions (the Special Report).
In summary
Overview The Special Report is a summary of the results of CPAB’s inspections of audits in 2014 of companies with operations in foreign jurisdictions. During 2014, CPAB inspected the audit files of 30 reporting issuers with operations in foreign jurisdictions, to assess progress since the 2011 inspections. The scope encompassed a variety of foreign jurisdictions including China, Mexico, Africa, and South America. Files selected for review included audits performed by the national accounting firms, as well as other regional and local audit firms registered with CPAB. Overall, a general improvement in quality was noted compared to 2011. Although progress has been made, CPAB believes continued attention is required to ensure that audits of these entities appropriately identify and respond to significant risks, especially those that are unique to the foreign jurisdiction. Areas of attention include: (i) identifying and responding to country specific risks; (ii) understanding laws and regulations and addressing the risk of fraud; (iii) determining the appropriate use of the work of component auditors; and (iv) CPAB’s access to component auditor working papers.
Available resources and links • CPAB Special Report 2015: Auditing in Foreign Jurisdictions (March 2015)
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 13
Final standards
Canadian assurance standards
IAASB Strategy for 2015–2019 and Work Plan for 2015–2016 UPDATED Issued: December 17, 2014
Standard: IAASB Strategy for 2015–2019 and Work Plan for 2015–2016
Transitional provisions:
Issued December 17, 2014
Published by: IAASB
Last updated: April 2015
Applicable to: All auditors
Recent activities Most recently, at its teleconference meeting on April 29, 2015, the IAASB had a preliminary discussion in respect of its planned efforts to improve audit quality under the agenda item “Responding to Calls to Improve Audit Quality”. On April 29, 2015, the IAASB posted to its website a detailed listing of its outreach activities for the period January 1, 2015 – April 29, 2015. This is part of the extensive outreach program contemplated in its five-year Strategy for 2015–2019. At its meeting on March 16-20, 2015, the IAASB discussed three new projects to enhance the ISAs, namely in respect of (i) Quality Control; (ii) Financial Institutions; and (iii) Group Audits, The first stage will involve the issue of a combined Discussion Paper (DP) covering all of these three topics for public comment. The IAASB plans to review a draft of the DP at its meeting in June 2015. On December 17, 2014 the IAASB issued its Strategy for 2015–2019 and Work Plan for 2015–2016.
In summary
Overview The IAASB’s five-year Strategy is underpinned by three strategic objectives that reflect a continued focus on International Standards on Auditing as the basis for high-quality audits, the importance of the IAASB’s standards for other services to address emerging needs of stakeholders, and the Board’s intention to strengthen collaboration with others to address public interest matters relevant to its work. These objectives will guide the Board’s work throughout the five-year period. With respect to its Work Plan, the IAASB intends, in 2015, to complete projects underway, including addressing financial statement disclosures and updating its standards governing audits of special purpose financial statements to incorporate enhancements from its Auditor Reporting project. For further details refer to the IAASB’s At A Glance Summary below.
Available resources and links • IAASB Outreach Activities January 1, 2015 to April 29, 2015 (April 2015) • IAASB Press Release (December 2014) • IAASB At A Glance Summary (December 2014) • IAASB Strategy for 2015 - 2019 (December 2014) • IAASB Work Plan for 2014 – 2015 (December 2014)
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 14
Final standards
Canadian assurance standards
IESBA Changes to the Code of Ethics for Professional Accountants Addressing Certain Non-Assurance Services Provisions for Audit and Assurance Clients NEW Issued: April 2015
Standard: Changes to the Code of Ethics for Professional Accountants Addressing Certain Non-Assurance Services Provisions for Audit and Assurance Clients
Transitional provisions:
The changes are intended to be effective April 15, 2016, with early adoption permitted.
Published by: IESBA
Last updated: April 2015
Applicable to: All auditors
Recent activities On April 14, 2015, the IESBA released Changes to the Code of Ethics for Professional Accountants Addressing Certain Non-Assurance Services Provisions for Audit and Assurance Clients, together with a Basis of Conclusions document.
In summary
Overview The changes enhance the independence provisions in the Code of Ethics for Professional Accountants (the Code) by, in particular, no longer permitting auditors to provide certain prohibited non-assurance services to public interest entity (PIE) audit clients in emergency situations, and ensuring that they do not assume management responsibility when providing non-assurance services to audit clients. Of particular note, the revisions include the removal of provisions that permitted an audit firm to provide certain bookkeeping and taxation services to PIE audit clients in emergency situations, as these were susceptible to being interpreted too generally. The revisions also include corresponding changes to the Code’s non-assurance services provisions with respect to other assurance clients.
Available resources and links • IESBA Press Release (April 2015) • Changes to the Code of Ethics for Professional Accountants Addressing Certain Non-
Assurance Services Provisions for Audit and Assurance Clients (April 2015) • IESBA Basis of Conclusions (April 2015) • IEASBA Project Summary
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 15
Proposed standards
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 16
Proposed standards
Canadian assurance standards
AASB Association Comment period ends July 10, 2015
Proposed standard:
Canadian Standard on Association 5000 - Association, which would replace existing Section 5020, Association
Proposed effective date:
Subject to comments received, the AASB proposes that CSOA 5000 would effective as of, and would be applicable to a practitioner’s consent provided on or after, June 1, 2016. Earlier adoption would be permitted.
Published by: AASB
Last updated: March 2015
Applicable to: Applicable audit/accounting firms
Recent activities On March 9, 2015, the AASB issued an ED of a proposed new standard, Canadian Standard on Association (CSOA) 5000 - Association, which would replace existing Section 5020, Association.
In summary
Overview The fundamental principles underlying proposed CSOA 5000 are consistent with those underlying Section 5020. However, certain aspects of proposed CSOA 5000 may differ significantly from some practitioners’ interpretations of Section 5020, including the following: (i) scope; (ii) re use of the practitioner’s name or communication in connection with accompanying information (related to : obtaining an understanding of the intended use of consent; obtaining a basis to consent to the use of the practitioner’s name or communication in connection with accompanying information; material misstatement of accompanying information; and communicating the practitioner’s involvement with accompanying information or, when applicable, communicating there has been no involvement;) (iii) re use of the practitioner’s communication in another language (related to: becoming aware of the use of the practitioner’s communication in another language; obtaining a basis to consent to the use of the practitioner’s communication in another language; and notification if the practitioner does not consent to the use of the practitioner’s communication in another language;); (iv) becoming aware of information to which the practitioner had attached a communication that has been subsequently issued without the practitioner’s communication; and (v) issuing consent if the practitioner has expressed an adverse conclusion or disclaimed a conclusion.
Available resources and links • AASB ED (March 2015) • AASB Project Summary
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 17
Proposed standards
Canadian assurance standards
IAASB/AASB Addressing Disclosures in the Audit of Financial Statements UPDATED Comment periods end: IAASB - September 11, 2014; AASB – August 15, 2014
Proposed standard:
Proposed changes to the International Standards on Auditing (ISAs) to clarify expectations of auditors when auditing financial statement disclosures.
Proposed effective date:
These amendments to the ISAs are to be effective for periods ending after December 15, 2016, with earlier adoption permitted. The AASB expects to issue the relevant Handbook material in Q1/2016.
Published by: IAASB & AASB
Last updated: April 2015
Applicable to: All entities
Recent activities Most recently, at its meeting on March 16-20, 2015, the IAASB approved amendments to 10 ISAs in order to enhance these standards with respect to the audit of financial statement disclosures. Consistent with the new auditor reporting standards, these amendments are to be effective for periods ending after December 15, 2016, with earlier adoption permitted. On May 14, 2014, the IAASB issued for public comment proposed changes to the International Standards on Auditing (ISAs) to clarify expectations of auditors when auditing financial statement disclosures. At its meeting on April 22, 2014, the AASB approved an equivalent ED that proposes no Canadian amendments to the IAASB’s ED. The AASB’s ED was issued on June 9, 2014.
In summary
Overview The proposals include new guidance on considerations relevant to disclosures—from when the auditor plans the audit and assesses the risks of material misstatement, to when the auditor evaluates misstatements and forms an opinion on the financial statements. “Addressing financial reporting disclosures has always been an integral part of an audit of financial statements in accordance with the ISAs. Over the past decade, however, financial reporting disclosure requirements and practices have evolved, and disclosures now provide more decision-useful information that is often more narrative and subjective in nature,” notes IAASB Chairman Prof. Arnold Schilder. “This gives rise to challenges from an auditing point of view, and the proposals enhance certain areas in the ISAs to support the proper application of the standards’ requirements.” The IAASB’s work has been informed by the feedback to its January 2011 Discussion Paper, The Evolving Nature of Financial Reporting: Disclosure and Its Audit Implications. The Board has also benefited from liaison and outreach with stakeholders, including accounting standard setters, which are also actively exploring initiatives relating to disclosures. The IAASB acknowledges that many of the issues around disclosures cannot be solved by the IAASB alone, and that collaboration and cooperation between many interested stakeholders is necessary to further enhance the public’s confidence in financial statement disclosures. “Public confidence in financial reporting can be damaged when there are poor quality disclosures, including excessive or immaterial disclosures that may obscure understanding of important matters. This can result, for example, when disclosures are prepared and audited relatively late in the financial reporting process,” notes IAASB Technical Director James Gunn. “One of the key areas addressed in the Board’s proposals, therefore, is additional guidance to help establish an appropriate focus by the auditor
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 18
on disclosures and encourage earlier auditor attention on them during the audit process, including disclosures where the information is not derived from the accounting system.”
Available resources and links • AASB ED (June 2014) • IAASB Press Release (May 2014) • IAASB ED (May 2014) • IAASB Project Summary • AASB Project Summary
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 19
Proposed standards
Canadian assurance standards
AASB/IAASB Auditor’s Responsibilities Relating to Other Information UPDATED Original ED: Comment period ends (i) on February 8, 2013 re the AASB; and (ii) March 14, 2013 re the IAASB Re-ED: Comment period ends on (i) on July 4, 2014 re the AASB; and (ii) July 18, 2014 re the IAASB
Proposed standard:
Amendments to ISA 720/CAS 720, The Auditor’s Responsibilities Relating to Other Information in Documents Containing Audited Financial Statements
Proposed effective date:
The IAASB approved the amendments to ISA 720 at its meeting on December 1-5, 2014. ISA 720 (Revised) is intended by the IAASB to be effective for audits of financial statements for periods ending on or after December 15, 2016. An ED of proposed CAS 720 (Revised) is expected to be issued by the AASB in Q3/2015 and the relevant Handbook material issued in Q1/2016. Given that the reporting requirements in ISA 720 (Revised) will result in significant changes to the auditors’ report, the AASB is of the view that CAS 720 (Revised) should have an effective date consistent with the new and revised auditor reporting standards. Accordingly, the AASB intends to obtain stakeholder input as to whether to defer the effective date of CAS 720 (revised) to align it with the effective date of the CASs impacted by the new and revised auditor reporting standards project.
Published by: IAASB and AASB
Last updated: April 2015
Applicable to: All entities
Recent activities Most recently, at its meeting on April 14, 2015, the AASB discussed issues related to the adoption of ISA 720 (Revised) as CAS 720 (Revised), including possible limited amendments to the ISA wording to deal with circumstances particular to Canada. The AASB will continue to discuss issues and review an ED of proposed CAS 720 (Revised) at its June 2015 meeting, with a goal of issuing the ED in Q3/2015 and the relevant Handbook material in Q1/2016. Given that the reporting requirements in ISA 720 (Revised) will result in significant changes to the auditors’ report, the AASB is of the view that CAS 720 (Revised) should have an effective date consistent with the new and revised auditor reporting standards. Accordingly, the AASB intends to obtain stakeholder input as to whether to defer the effective date of CAS 720 (revised) to align it with the effective date of the CASs impacted by the new and revised auditor reporting standards project. On April 8, 2015, the IAASB published ISA 720 (Revised), together with (i) a Basis of Conclusions prepared by the IAASB staff and (ii) an At a Glance document which explains the main changes from the extant ISA. At its meeting on March 9-10, 2015, the AASB discussed issues related to the adoption of ISA 720 (Revised), as CAS 720 in Canada. This included discussion of what Canadian amendments, if any, should be made to the requirement for the auditor’s report on financial statements of a listed entity to identify other information expected to be obtained after the date of the auditor’s report. The AASB tentatively agreed that Canadian amendments should be proposed to limit the application of this requirement to documents required by Canadian securities legislation to be filed concurrently with the financial statements. The AASB also agreed to propose other Canadian amendments to provide further guidance on which documents particular to Canada are within the scope of CAS 720, and to address relevant ethical requirements in Canada. The AASB decided that these proposed Canadian amendments are a significant change from
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those identified in the Re-ED and, therefore, should be exposed for public comment to Canadian stakeholders. At its meeting on December 1-5, 2014, the IAASB approved the amendments to ISA 720 following a discussion of issues, including scope, documentation requirements, work effort requirements and reporting requirements. At its meeting on April 22, 2014, the AASB approved a similar Re-ED that proposes certain Canadian amendments to the IAASB’s Re-ED. The AASB’s Re-ED was issued for public comment on May 23, 2014. On April 18, 2014, the IAASB issued for public comment a revised ED (the Re-ED) of its proposed changes to ISA 720. The Re-ED 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. The IAASB approved an ED to revise ISA 720 at its September 17-21, 2012 meeting. This ED was issued for comment on November 14, 2012 with a request for comments by March 14, 2013. The AASB approved a similar ED of changes to CAS 720 at its meeting on December 3-4, 2012. This ED was issued for comment on December 20, 2012 with a request for comments by February 8, 2013.
In summary
Overview The proposed changes to CAS 720 include: (i) expansion in the scope of the standard; (ii) expansion of the objectives of the standard; and (iii) expansion of the auditor’s work effort under the standard. In addition, the AASB proposes to make a Canada only amendment to the proposed ISA 720 by adding a paragraph to refer to compliance with Section 7150. The AASB is of the view that an auditor who has already complied with Section 7150 needs not also performs the procedures set out in CAS 720 (Revised). Therefore, subject to further consideration based on input from Canadian stakeholders, the AASB is proposing to include the following additional guidance in a Canadian-only paragraph: “C3A If the auditor agrees to consent to the use of the auditor’s report on audited financial statements included in an offering document, the auditor will have complied with the requirements of CAS 720 (Revised) by complying with the requirements in Section 7150.” Paragraphs 7150.16 and 7150.18(a) set out the requirements related to reading the other information, and responding to material inconsistencies and misrepresentations identified. In the view of the AASB, compliance with these requirements would result in similar practice as compliance with the procedures set out in paragraphs 10 to 15 of CAS 720 (Revised).
Available resources and links • IAASB Press Release (April 2015) • ISA 720 (Revised) (April 2015) • IAASB Basis of Conclusions (April 2015) • IAASB At a Glance document (April 2015) • AASB Re-ED (May 2014) • IAASB Re-ED (April 2014) • AASB ED (December 2012) • IAASB Press Release (November 2012) • IAASB ED (November 2012) • IAASB Project Summary • AASB Project Summary
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Proposed standards
Canadian assurance standards
AASB/IAASB ISRE 2400 (Revised), Review Engagements; CSRE 2400, Engagements to Review Historical Financial Statements Comment period (i) of the AASB’s ITC ended on April 11, 2011 (ii) of the AASB’s ED ends on December 11, 2013
Proposed standard:
A new standard, CSRE 2400, Engagements to Review Historical Financial Statements, to replace existing standards for review engagements
Proposed effective date:
In September 2012, the AASB decided that it should adopt ISRE 2400, Engagements to Review Financial Statements, as a Canadian standard with some Canadian amendments to address significant issues particular to Canada. The AASB approved an ED at its meeting on April 8-9, 2013, which was issued for comment on June 27, 2013. The AASB currently expects to issue a re-exposure draft in May 2015 with a response date of July 10, 2015
Published by: IAASB and AASB
Last updated: February 2015
Applicable to: All entities
Recent activities Most recently, at its meeting on February 5, 2015, the AASB approved a re-exposure draft of a proposed Canadian Standard on Review Engagements (CSRE) 2400, Engagements to Review Historical Financial Statements, to replace existing standards for review engagements. The re-exposure draft is expected to be issued in May 2015 and will have a response date of July 10, 2015. On September 27, 2013, the AASB extended the comment deadline to December 11, 2013 from October 11, 2013 to allow sufficient time for consultation with stakeholders. On June 27, 2013, the AASB issued its ED for comment by October 11, 2013. At its meeting on April 8-9, 2013, the AASB approved an ED of a proposed new Canadian Standard on Review Engagements [CSRE 2400, Engagements to Review Historical Financial Statements], to replace existing standards for review engagements. At its September 10-11, 2012 meeting, the AASB discussed the future direction of its project to revise standards for review engagements in Canada and the key issues that will need to be addressed. The AASB decided that the most appropriate approach is to adopt ISRE 2400, Engagements to Review Financial Statements, as a Canadian standard with some Canadian amendments to address significant issues particular to Canada. At its June 2012 meeting, the IAASB approved for issue a revised version of ISRE 2400, Engagements to Review Historical Financial Statements. ISRE 2400 (Revised) is effective for reviews of financial statements for periods ending on or after December 31, 2013. In February 2011, the AASB issued this ITC to urge Canadian stakeholders to provide input on the IAASB’s ED that proposes to revise ISRE 2400, Engagements to Review Historical Financial Statements.
In summary
Overview In June 2009, the AASB approved a project to revise or replace the review engagement standards for financial statements and other historical financial information including: Section 8100, General Review Standards, Section 8200, Public Accountant’s Review Of Financial Statements, and Section 8500, Reviews Of Financial Information Other Than Financial Statements (the 8000 series). The purpose of the project is to (i) improve the robustness of the standards by reflecting current practice; and (ii)
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appropriately address the needs expressed and issues raised by practitioners and other Canadian stakeholders. For similar reasons, the IAASB is also currently undertaking a project to revise its standard for review engagements, ISRE 2400, Engagements to Review Historical Financial Statements, and has recently issued an ED that proposes to revise ISRE 2400. The purpose of the IAASB’s ED is to help practitioners around the world who perform review engagements to improve the robustness of the standard by reflecting current practice, to converge towards the use of a globally accepted benchmark for review engagements, and to facilitate development of practice in jurisdictions that currently do not have national standards in this area. Responses from Canadian stakeholders to this ITC will be an important source of information to the AASB in making a decision on whether to adopt the ISRE. The ITC includes specific questions on which the AASB is seeking input on from interested stakeholders. To assist stakeholders in considering these questions, the Appendix to the ITC compares key aspects of the IAASB’s ED and the equivalent 8000 series of Canadian standards. The AASB intends to continue to monitor the development of the proposed ISRE 2400 (Revised) and the IAASB’s discussions and decisions. Any proposed revisions to, or replacement of, the existing Canadian review engagement standards would be made by the AASB following its due process, including an ED that would be publicly exposed for comment by Canadian stakeholders.
Available resources and links • AASB ED (June 2013) • AASB Project Summary • ISRE 2400 (Revised), Engagements to Review Historical Financial Statements • IAASB Basis for Conclusions document (September 2012) • AASB ITC • IASB Project Summary
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Proposed standards
Canadian assurance standards
IAASB Information-Gathering Survey on Quality Control Comment period ends March 27, 2015
Proposed standard:
Information-Gathering Survey on Quality Control
Proposed effective date:
Not applicable
Published by: IAASB
Last updated: February 2015
Applicable to: Applicable audit/accounting firms
Recent activities On February 19, 2015, the IAASB issued a survey in connection with its new quality control initiative as outlined in the IAASB’s Strategy for 2015-2019 and the IAASB’s Work Plan for 2015-2016.
In summary
Overview The purpose of the survey is to inform the scoping of the proposed quality control project, specifically with respect to issues encountered by small- and medium-sized practices in complying with the requirements of International Standard on Quality Control (ISQC) 1, Quality Control for Firms That Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements, and of International Standard on Auditing (ISA) 220, Quality Control for an Audit of Financial Statements.
Available resources and links • IAASB Press Release (February 2015) • IAASB Survey Form (February 2015)
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Proposed standards
Canadian assurance standards
AASB/IAASB Proposed International Standards on Auditing, ISA 800 (Revised) and ISA 805 (Revised) UPDATED Comment period ends: AASB - March 31, 2015; IAASB - April 22, 2015
Proposed standard:
Consequential amendments to ISA 800, Special Considerations—Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks, and ISA 805, Special Considerations—Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement, resulting from the new and revised auditor reporting standards.
Proposed effective date:
Consistent with the new auditor reporting standards, the IAASB’s ED proposes that these amendments to ISA 800 and ISA 805 be effective for periods ending after December 15, 2016, with earlier adoption permitted. In light of the nature of the matters being considered by it with regard to the new auditor reporting standards, the AASB believes that the effective date of the standards when adopted by the AASB will be later than the date selected by the IAASB.
Published by: IAASB and AASB
Last updated: April 2015
Applicable to: All entities
Recent activities Most recently, at its meeting on April 14, 2015, the AASB discussed comments received on its ED. The AASB also discussed a draft response letter to the IAASB’s ED. The AASB currently expects to finalize the relevant Handbook material in Q1/2016. On March 2, 2015, the AASB issued an ED to Canadian stakeholders which proposes to adopt the revisions to ISA 800 and 805 issued by the IAASB with no Canadian amendments. The IAASB ED was issued on January 22, 2015. At its meeting on December 1-5, 2014, the IAASB approved an ED of consequential amendments to ISA 800, Special Considerations—Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks, and ISA 805, Special Considerations—Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement, resulting from the new and revised auditor reporting standards.
In summary
Overview The IAASB agreed to limit its proposals to reporting in the above engagements, and thus does not intend to substantively change the underlying premise of audits of financial statements to which ISA 800 and ISA 805 apply.
Available resources and links • AASB ED (March 2015) • IAASB Press Release (January 2015) • IAASB ED (January 2015)
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Proposed standards
Canadian assurance standards
AASB/IAASB Reporting on Audited Financial Statements: Proposed New and Revised International Standards on Auditing (ISAs) UPDATED Comment period ends: AASB – November 1, 2013, IASSB - November 22, 2013
Proposed standard:
Reporting on Audited Financial Statements: Proposed New and Revised International Standards on Auditing (ISAs)
Proposed effective date:
The new and amended IASs are intended by the IAASB to be effective for periods ending after December 15, 2016, with earlier adoption permitted. In light of the nature of the matters being considered in the invitation to comment as well as the time required to undertake the invitation to comment process, the AASB believes that the effective date of the standard when adopted by the AASB will be later than the date selected by the IAASB.
Published by: IAASB and AASB
Last updated: April 2015
Applicable to: All entities
Recent activities Most recently, at its meeting on April 14, 2015, the AASB unanimously approved an ITC on implementation considerations related to adopting the ISAs on auditor reporting as CASs. The ITC is expected to be issued in Q3/2015 with the relevant Handbook material issued in Q1/2016. On April 22, 2015, a publication, Auditor Reporting – Illustrative Key Audit Matters, prepared by the IAASB’s Auditor Reporting Implementation Working Group, was published. The publication is intended to illustrate how the concept of Key Audit Matters may be applied in practice in accordance with ISA 701. At its meeting on March 9-10, 2015, the AASB discussed issues related to the adoption in Canada of revisions to the ISAs dealing with auditor reporting. The AASB intends to adopt the revised ISAs but decided that it will issue an ITC to ask questions of Canadian stakeholders related to the above issues. On January 15, 2015 the IAASB issued its new and revised auditor reporting standards. In addition, on January 30, 2015, the IAASB issued (a) Auditor Reporting – Key Audit Matters, a publication prepared by the Auditor Reporting Implementation Working Group which is intended to assist in understanding key aspects of Key Audit Matters as set out in ISA 701; and (b) Auditor Reporting on Going Concern, a publication also prepared by the Auditor Reporting Implementation Working Group which provides an overview of how the new auditor’s report will address going concern as set out in ISA 570. At its meeting on November 24-25, 2014, the AASB discussed issues related to the adoption in Canada of these revisions to the ISAs in respect of auditor reporting. The AASB debated (i) whether a phased-in approach for certain listed entities would be appropriate;(ii) whether the Canadian effective date should be later than that for the ISAs; (iii) how the approach to auditor reporting taken by other national standard setters, including the U.S. PCAOB and the Australian Auditing and Assurance Standards Board may affect the AASB’s decisions; and (iv) whether consultations dealing with specific important issues should be held with Canadian stakeholders to obtain views on how and when the revisions should be implemented in Canada. The AASB will continue to discuss issues related to the adoption of the auditor reporting revisions in Canada at its January 2015 meeting. At its meeting on September 15-19, 2014, the IAASB approved the following new and amended standards relating to the revised auditor’s report (to be effective for periods ending after December 15, 2016, with earlier adoption permitted), subject to approval by the Public Interest Oversight Board: ISA 700 (Revised), Forming an Opinion and Reporting on Financial Statements; ISA 701, Communicating Key Audit Matters in the Independent Auditor's Report; ISA 260 (Revised), Communication with Those Charged with Governance; ISA 570 (Revised), Going Concern; ISA 705 (Revised), Modifications to the
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Opinion in the Independent Auditor’s Report; ISA 706 (Revised), Emphasis of Matter Paragraphs and Other Matter paragraphs in the Independent Auditor's Report; and conforming amendments to other ISAs. At its meeting on March 17-21, 2014 the IAASB (i) reviewed a summary and analysis of the 138 responses received to date in respect of the ED; (ii) received an update of recent regulatory developments including with respect to the PCAOB; and (iii) discussed the way forward in respect of this project. On September 30, 2013, the AASB issued for comment an ED, similar to the IAASB’s ED, for comment by November 1, 2013. On July 25, 2013, the IAASB released proposals to enhance the future auditor’s report, namely an ED entitled Reporting on Audited Financial Statements: Proposed New and Revised International Standards on Auditing (ISAs). Of note, the AASB plans to review the draft of a similar Canadian ED at its meeting on July 30, 2013 and to issue the ED for comment in August 2013.
In summary
Overview The IAASB’s ED, Reporting on Audited Financial Statements: Proposed New and Revised International Standards on Auditing (ISAs), responds to calls from investors, analysts, and other users of audited financial statements in the wake of the global financial crisis for the auditor to provide more relevant information in the auditor’s report based on the audit that was performed. “We expect the proposed new and revised standards will result in substantive changes to how auditors contemplate and approach communication to users of their reports—the beneficiaries of a financial statement audit,” explained Prof. Arnold Schilder, IAASB Chairman. “These changes are critical to the perceived value of the financial statement audit and thus to the continued relevance of the auditing profession.” The IAASB’s deliberations on the proposed new and revised ISAs were informed by international research, two public consultations, stakeholder outreach including three public roundtables held in 2012, and the 165 responses to the June 2012 Invitation to Comment: Improving the Auditor’s Report. “The signals from these inputs were clear: Change is essential. There is support for the IAASB’s direction, and for a global solution. Challenges exist, but they can be overcome,” added Prof. Schilder. The ED includes a new proposed ISA entitled Communicating Key Audit Matters in the Independent Auditor’s Report. This proposed ISA directs auditors of financial statements of listed entities to communicate in their report those matters that, in the auditor’s professional judgment, were of most significance in the audit of the financial statements. “The intended outcome of this proposal is more informative audit reports, with information about the audit of the financial statements that is unique and more specific to the entity that has been audited,” noted James Gunn, IAASB Technical Director. Among other enhancements, the IAASB is also proposing requirements for auditors (i) to include specific statements about going concern in their reports, (ii) to make an explicit statement about the auditor’s independence from the audited entity and, for listed entities, (iii) to disclose the name of the engagement partner in the auditor’s report. The ED includes example reports that illustrate the application of the proposed new and revised ISAs in various circumstances.
Available resources and links • IAASB Auditor Reporting – Illustrative Key Audit Matters (April 2015) • IAASB Press Release (January 2015) • IAASB At a Glance: New and Revised Auditor Reporting Standards and Related Conforming
Amendments (January 2015) • IAASB Reporting on Audited Financial Statements – New and Revised Auditor Reporting Standards
and Related Conforming Amendments (January 2015) • IAASB Basis for Conclusions (January 2015) • Auditor Reporting – Key Audit Matters (January 2015) • Auditor Reporting on Going Concern (January 2015)
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Proposed standards
Canadian assurance standards
AASB Auditor's Consent to the Use of a Report of the Auditor Included in an Offering Document Comment period ends May 1, 2015
Proposed standard:
Amendments to Section 7150 with respect to Auditor's Consent to the Use of a Report of the Auditor Included in an Offering Document
Proposed effective date:
Subject to input the AASB receives from Canadian stakeholders, the proposed changes would be effective for an auditor's consent to the use of a report of the auditor in an offering document issued on or after January 1, 2016. Earlier application is permitted.
Published by: AASB
Last updated: March 2015
Applicable to: Canadian CPAs
Recent activities On March 27, 2015, AASB issued an ED that proposes limited amendments to Section 7150.
In summary
Overview The proposed amendments are being made primarily to address the requirements of stock exchanges (recognized by securities regulatory authorities in Canada) for the auditor’s consent to include certain statements. In addition, the AASB is proposing a number of amendments to correct an oversight in the previous drafting of Section 7150, and to improve the clarity of the Section.
Available resources and links • AASB ED (March 2015)
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Proposed standards
Canadian assurance standards
IESBA Proposed Changes to Certain Provisions of the Code Addressing the Long Association of Personnel with an Audit or Assurance Client UPDATED Comment period ends November 12, 2014
Proposed standard:
Proposed Changes to Certain Provisions of the Code Addressing the Long Association of Personnel with an Audit or Assurance Client
Proposed effective date:
Subject to comments received on the ED, the changes to the Code are to be effective for audits of financial statements for years beginning on or after December 15, 2017
Published by: IESBA
Last updated: April 2015
Applicable to: All entities
Recent activities Most recently, at its meeting on April 13-15, 2015, the IESBA continued its discussions to address comments received on the ED, in particular in respect of the rotation of key audit partners. The IESBA will continue these discussions at its July 2015 meeting. At its meeting on January 12-14, 2015, the IESBA considered significant comments received on key aspects of its ED concerning proposed changes to the provisions of the Code addressing the long association of personnel with an audit or assurance client. Among other matters, the IESBA discussed, with respect to audits of public interest entities (PIEs): (i) the length of the time-on period for all key audit partners (KAPs); (ii) the length of the cooling-off period for other KAPs, including the engagement quality control reviewer; (iii) the length of the cooling-off period for the engagement partner; and (iv) the proposed provision that a KAP who at any time during the seven-year time-on period served as an engagement partner be required to cool off for five years. The IESBA will consider significant comments on other aspects of the ED and a revised draft of the pronouncement at its April 2015 meeting. On August 14, 2014, the IESBA issued for public comment proposed changes to certain provisions of the Code of Ethics addressing the long association of personnel with an audit or assurance client.
In summary
The proposed changes include: (i) strengthened general provisions applicable to all audit engagements regarding the threats created by long association; (ii) with respect to partner rotation, an increase in the mandatory “cooling-off” period, from two to five years, for the engagement partner on the audit of a public interest entity; (iii) strengthened restrictions on the type of activities that can be undertaken with respect to the audit client and audit engagement by any former key audit partner during the cooling-off period; and (iv) a requirement to obtain the concurrence of those charged with governance regarding the application of certain exceptions to the rotation requirements
Available resources and links • IESBA Press Release (August 2014) • IESBA ED (August 2014) • IESBA Project Summary
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Proposed standards
Canadian assurance standards
CPA Canada Proposed Revisions to the CPA Auditor Independence Standards in respect of addressing a Breach of the Standards and Contingent Fees Comment period ends May 15, 2015
Proposed standard:
Proposed Revisions to the CPA Auditor Independence Standards in respect of addressing a Breach of the Standards and Contingent Fees
Proposed effective date:
Subject to comments received, the proposed changes will be finalized in 2015. Final proposed changes will then be sent to the provincial CPA bodies with a recommendation for adoption with application for assurance engagements commencing after December 15, 2016, with transitional provisions as appropriate to ensure the public is not prejudiced by the changes.
Published by: Independence Task Force of the Public Trust Committee
Last updated: March 2015
Applicable to: Canadian CPAs
Recent activities In March 2015, the Independence Task Force of the Public Trust Committee issued an ED of proposed revisions to the CPA Auditor Independence Standards.
In summary
Overview The ED addresses the recent amendments adopted by the IESBA in relation to breaches of its Code of Ethics for Professional Accountants (the IESBA Code). It also addresses the IESBA’s approach related to the impact that contingent fees charged to an assurance client have on independence. The objective of the ED is that the ethics standards adopted by the provincial CPA bodies in Canada should be no less stringent than the requirements included in the IESBA Code. For further details, refer to the Explanatory Memo on the CPA Canada website.
Available resources and links • CPA Canada website material
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Projects
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Projects
Canadian assurance standards
AASB Special Reports – Assurance on Compliance with Agreements, Statutes and Regulations UPDATED
Proposed changes:
The objective of this project of the AASB is to revise and update Sections 5800, Special Reports — Introduction, Section 5815, Auditor’s Reports on Compliance with Agreements, Statutes and Regulations, and Section 8600, Reviews of Compliance with Agreements and Regulations.
Next steps: The AASB currently expects to approve an ED in Q2/2015
Published by: AASB
Last updated: April 2015
Applicable to: All entities
Recent activities Most recently, at its meeting on March 9-10, 2015, the AASB reviewed a draft standard that would replace Sections 5800, Special Reports — Introduction, 5815, Special Reports — Audit Reports on Compliance with Agreements, Statutes and Regulations, and 8600, Reviews of Compliance with Agreements and Regulations. The issues discussed included: (i) whether limited assurance (review) engagements should be dealt with in the same standard or in a separate standard; (ii) how to deal with Section PS 5300, Auditing for Compliance with Legislative and Related Authorities in the Public Sector, which addresses situations similar to those addressed by the draft standard; and (iii) whether the practitioner should be required to include in the report a statement alerting readers to the fact that the engagement has a specific purpose and that the report may not be suitable for another purpose. The AASB will continue to discuss issues on this proposed standard, with a goal of approving an ED in Q2/2015. At its January 2012 meeting, the AASB approved a project proposal to redraft in the clarity format and, if appropriate, revise Section 5800, Special Reports — Introduction, Section 5815, Special Reports — Auditor’s Reports on Compliance with Agreements, Statutes and Regulations, and Section 8600, Reviews of Compliance with Agreements and Regulations.
In summary
Overview Public accountants are often asked to provide assurance on an entity’s compliance with statutes, regulations and agreements. Section 5800, Special Reports — Introduction, Section 5815, Special Reports — Audit Reports on Compliance with Agreements, Statutes and Regulations, and Section 8600, Reviews of Compliance with Agreements and Regulations, were written several years ago. They need to be updated and drafted in the clarity format. This project is also related to the Other Reporting Where No Assurance Is Provided project, which involves developing a new Related Services Standard to address requests from third parties where no assurance is provided by the practitioner. Available resources and links
• AASB Project Summary
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Abbreviations, a list of most commonly used acronyms AASB Auditing and Assurance Standards Board AASOC Auditing and Assurance Standards Oversight Council AcSOC Accounting Standards Oversight Council AcSB Accounting Standards Board ASC Alberta Securities Commission AMF Autorité des marchés financiers BCSC British Columbia Securities Commission CAS Canadian Auditing Standard CPAB Canadian Public Accountability Board CPRB Canadian Performance Reporting Board CSA Canadian Securities Administrators DP Discussion Paper DTI Deposit-taking Institution ED Exposure Draft EIC Emerging Issues Committee FAQ Frequently Asked Questions FRE Federally Regulated Entities FRFI Federally Regulated Financial Institution OSC Ontario Securities Commission OSFI Office of the Superintendent of Financial Institutions Canada IAS International Accounting Standard IASB International Accounting Standards Board IAASB International Auditing and Assurance Standards Board IESBA International Ethics Standards Board for Accountants IFAC International Federation of Accountants IFRIC International Financial Reporting Interpretations Committee IFRS International Financial Reporting Standard IIROC Investment Industry Regulatory Organization of Canada IPSAS International Public Sector Accounting Standard IPSASB International Public Sector Accounting Standards Board ISA International Standard on Auditing ITC Invitation to Comment NFPO Not-for-profit Organization PSAB Public Sector Accounting Board RFI Request for Information SOP Statement of Principles
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Additional resources The following Deloitte resources will assist you in maintaining your financial literacy throughout the year. To obtain more information about any of these resources, please communicate with your Deloitte partner or one of our contacts listed at the end of the publication. Thought Leadership Centre for Corporate Governance This Web site is specifically designed to help board members with their responsibilities. It provides the latest information on regulatory and legislative developments, accounting and financial reporting, board roles and responsibilities, and best practices. (www.CorpGov.Deloitte.ca) Financial Reporting Assessment Tools Comprehensive assessment tools to help management and Directors determine whether or not their organizations’ financial statements and other financial filings meet all of the continuous disclosure obligations. (http://www.corpgov.deloitte.com/site/CanEng/self-assessments-tools-and-other-resources/financial-reporting-tools/)
Clearly IFRS guides A series of practical guides for adopting and implementing IFRS. (http://www.iasplus.com/en/tag-types/member-firms/canada/clearly-ifrs)
Financial reporting insights A bi-weekly communication covering all financial reporting frameworks used in Canada. (http://www.corpgov.deloitte.com/site/CanEng/deloitte-periodicals/financial-reporting-insights)
Deloitte Update Our new live webcast series featuring our professionals discussing critical issues that affect your business. (http://www.corpgov.deloitte.com/site/CanEng/financial-reporting/deloitte-update/)
Acknowledgement This Digest is the result of the efforts of the following team of Deloitte professionals: Editor: Chantal Rassart, CPA, CA, CPA (Illinois)
Contributing Editor: Michael Morrow, CPA, CA
Technical Editors: Anthony Bonanno, CPA, CA Nicole Deschamps, CPA, CA Elaine Hultzer, CPA, CA Kiran Kullar, CA Julia Suk, CPA, CA Nura Taef, CPA, CA
© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 34
Contacts, our experts network is available for your questions
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Digests are available at www.deloitte.com/ca/standards. Click here to subscribe to our publication alerts. This document serves merely as a summary; for more detailed information, readers should consult the original document. No measures should be taken without prior consultation with your professional advisor. Publication date April 30, 2015. This page does not reflect changes made by standard-setting bodies after this date. We would like your opinion on this publication. Please take a few minutes to complete this online survey and share your feedback with us.
Québec Ginette Nantel (Montréal) 514-393-7118 [email protected]
Alberta Paul Borrett (Edmonton) 780-421-3655 [email protected].
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Ontario Elizabeth M. Abraham (GTA) 416-643-8008 [email protected]
Don Newell (Calgary) 403-298-5948 [email protected]
British Columbia Albert Kokuryo 604-640-3232
Allan Faux (GTA Private company services) 416-643-8758 [email protected]
Mark Morrison (SWO) 519-967-7713 [email protected]
Lynn Pratt (Ottawa) 613-751-5344 [email protected]
Shirley Wolff 604-640-3022 [email protected]
Atlantic Brian Groves 709-758-5225 [email protected]
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© Deloitte LLP and affiliated entities Deloitte’s Digest – April 2015 35
