August 2019 Update
In this Update: Standards Updates; PEG Updates; Firm Risk Management; Pricing Client Engagements
Greetings,
The end of August is upon us and it has been a busy month. Summer is winding down (even though I don’t want to admit it) and minds are turning to fall and the planning that it brings. This month’s topics include matters that will help you get ready as you continue to think about upcoming standards changes, new PEG forms, quality management and discussing fees with your clients. Read on…
Standards Updates
No significant news to report but wanted to provide an update so you stay informed; changes are coming, that is a known! Exposure drafts being deliberated as response deadlines have passed. The key topics that will impact your practice include Quality Management (CSQM1 and CSQM 2), Identifying and Assessing Risks of Material Misstatements (CAS 315 Revised) and Compilation Engagements (CSRS 4200). A summary of the status of these is:
- CSQM1/2 – The AASB agreed to perform further consultations with stakeholders on the proposed scope of Canadian Standard on Quality Management (CSQM) 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements, in the fall of 2019. Standards expected in 2020. READ QM UPDATE HERE
- CAS 315 (Revised) – The AASB provided input to the IAASB on issues that are relevant to Canada. The Board will continue to discuss this project at future meetings. There is no proposed timeline on when the final pronouncement is expected but anecdotal evidence suggests early 2020. READ CAS 315 UPDATE HERE
- CSRS 4200 – The AASB is deliberating feedback received on the Exposure Draft. The new standard is being developed and is expected to be approved by the end of 2019 and effective for years ending on or after December 15, 2020. READ CSRS 4200 UPDATE HERE
Other assurance exposure drafts still being deliberated include Key Audit Matters, for public companies, along with Public Sector Auditing Standards and Reporting Controls at a Service Organization. Responses to the Discussion Paper of Less Complex Entities were due this month and are now being deliberated. Finally, accounting exposure drafts on Agriculture and Revenue are still out there.
PEG Updates
This month the 2019 Edition of the Professional Engagement Guide (PEG) was released. I have spent time understanding the changes and would be happy to discuss them further with you to determine what is most efficient and effective to implement in your practice. Key changes include:
- A new chapter on data analytics in Volume 1. New chapters in both Volumes 1 and 2 have been added to provide guidance on assurance engagements to comply with specific requirements. These engagement are effective for reports dated on or April 1, 2019. This guidance covers either attestation or direct compliance engagements where either reasonable or limited assurance is being provided in a written report.
- Sample assurance reports (finally!).
- Some minor and a few major changes to the PEG audit forms, customized review forms for NPOs and new forms related to compliance reporting.
- In addition, an alternative set of review engagement forms has been developed. The idea is to use either all of the new forms, or all of the existing forms. It is not appropriate to mix and match sets.
ACCESS PEG ON KNOTIA HERE (WILL HAVE TO LOG IN)
Ten Steps to Successful Firm Risk Management
Since quality management is top of mind with the CSQM1 and CSQM 2 Exposure Drafts, I thought you may be interested in an article to help you address quality matters in your firm. This is the second article of a risk management series and covers 10 steps for successful risk management. The first article is 8 steps to Establishing a Firm Risk Management program (link within). These articles are a result of discussions at recent IFAC SMP Committee meetings, the committee that is focused on practice management for small- and medium-size practices (SMPs).
How to Price Client Engagements and Increase Firm Profits
With all the changes coming, another topic that is top of mind is how to price engagements and discussing fee increases with your clients. The attached link is the second of a three-part series addressing this critical area; it covers approaches to fee increases and value pricing. The first in the series, the Importance of client Selection and Relationship Management (link within), features client classification and the importance of engagement letters and the third instalment will highlight credit control, collection techniques and dealing with conflict.
Lots to think about in the upcoming months but I am here to assist as needed to save you time and provide peace of mind. But first, enjoy the long weekend. Work will always be there, it is more important to spend time with your family and friends. I know I will this weekend.
Best Regards,
Kirsten S. Albo, FCPA, FCA
President
