April 30. Another tax season is officially passed. Knowing how busy this month can be, I wanted to keep this update light. There has been a lot recent activity by the standard setters therefore this month’s updates includes topics I will cover in more detail in the coming months as matters become more relevant but they are important enough to bring to your attention today. Read on…
Exposure Drafts on Quality Management
An exposure draft Canadian Standards for Quality Management (CSQM 1) was issued April 5, 2019. CSQM 1, along with the new Engagement Quality Reviews (CSQM 2), will replace the existing CSQC 1. Why do you care? While there are many changes in the exposure draft which I will provide details on in the next update, the biggest change is CSQM 1 will apply to all assurance and related services including compilation engagements and agreed-upon procedures engagements. CSQC 1 never applied to these types of engagements as CSQM 1 will now. CPA Canada issued an Audit and Assurance Alert further detailing these exposure drafts and the reasons for the changes.
Other Exposure Drafts
The Audit and Assurance Board is still deliberating feedback on comments received on the Exposure Drafts for Compilation Engagements (CSRS 4200), Reporting on Controls at a Service Organization (CSAE 3416) and Identifying and Assessing the Risks of Material Misstatement (CAS 315). Exposure Drafts for Group Audits and Agreed-Upon Procedures Engagements are being drafted. Why do you care? It is important to keep up-to-date on standards. I will provide updates and the impact as these Exposure Drafts are released, re-exposed or become effective the Handbook.
Other Information (CAS 720)
As you turn your attention back to your audit engagements, it is a good time to remind yourself of the new reporting requirements related to Other Information (CAS 720). This topic is getting a lot of attention as it is not always clear what constitutes “other information”. CPA Canada issued further guidance on other information considerations as it is not always just a formal, glossy annual report put out by the organization. Why do you care? It is a subjective area which requires discussions with management and Those Charged with Governance.
Audits of Less Complex Entities (LCE)
The audit of Less Complex Entities has been a topic for discussion for both the IAASB and Canada’s AASB over the past several years; we are finally seeing results from those discussions. This past November, I participated in an outreach session hosted by the AASB to discuss the barriers to effective and efficient audits of less complex entities. I have heard many comments of the challenges faced by small to mid-sized practitioners and was able to pass these on to the AASB directly. The results of this session will be released in a Discussion Paper shortly.
In the meantime, the IAASB has released their Discussion Paper exploring how the IAASB and others could further support auditors working in increasingly evolving environments. The IAASB is asking for feedback on their paper and I plan to respond by the deadline of September 12, 2019. Why do you care? This is an important topic for practitioners who audit smaller (or less complex) clients and more efficient and effective engagements may be the final result of these discussions. It will be interesting to see what comes next.
Lots to think about in the coming months but for now, take a breathe. Rest assured there is time to deal with all of these matters in the coming months and I am here to assist you as needed. In the meantime, enjoy the upcoming weekend.
Kirsten S. Albo, FCPA, FCA