It is crazy to think we are headed into the last month of the year and instead of slowing down, it seems that things are speeding up. It will be important to be prepared for the upcoming year. This month’s topics focus on the imminent changes to help you prepare, and provides practical things to be thinking about along the way. Read on…
CSRS 4200 Effective Date Imminent!!
The effective date of Compilation Engagements, CSRS 4200 is imminent. Are you ready? What are the final changes you need to put into place?
As December 14, 2021 arrives, here are the final things to be thinking about:
- Updating engagement letters. A new one has to be sent out to EVERY client this year. What is the process for updating and tailoring? When are you going to send?
- Users of the financial statements. Management only or third parties? Remember to tailor the engagement letter accordingly.
- Documenting knowledge of the business. Is your existing documentation good enough or do you need to add details? PEG checklist or memo?
- Basis of accounting note. Has your template been updated? How are you going to tailor for each specific client?
- New report. Has your template been updated for the new compilation engagement report?
- Management’s acknowledgment of their responsibilities. The date of the report is when management acknowledges responsibility. This can be oral or written. How are you going to document this?
Further resources for the final stages:
Audits of Less Complex Entities
This is such an exciting time in our profession. The standard setters are examining audits of less complex entities and proposing changes.
The IAASB has issued an exposure draft on the audits of less complex entities (LCEs). ONE auditing standard is proposed for the audits of less complex entities. But, has it gone far enough in accomplishing what it set out to do?
In Canada a different approach has been taken. The AASB has been following the progression of this issue closely and fully support the initiative of exploring the audits of less complex entities. However, they believe there are more questions to be asked, and answered, before they automatically follow suit.
As a result, a discussion paper on the audits of less complex entities has been released. The AASB Discussion Paper outlines three possible options:
- Separate standard for LCE audit
- Limited targeted revisions to the CAS
- Targeted non-authoritative guidance
What are your views? What would you like to see? Have your voice heard. Response date is December 15, 2021.
Redeemable or Mandatorily Redeemable Shares
We have been discussing this ASPE change for a long time but the effective date (fiscal years beginning on or after January 1, 2021) is finally upon us. That is, December 31, 2021 year ends. NOW!!
There are three criteria that have to be met in order to classify ROMRS shares as equity:
- Retaining control before and after the transaction
- No redemption schedule
- Nothing exchanged other than shares
All shares, even previously issued shared, must be analyzed. If all three criteria are not met then the shares must be classified as a liability (some transition exemptions). This may have an impact on your client’s banking covenants so make sure you perform the analysis early if not already done.
CPA Canada has an excellent guide on the requirements of the standard.
Project Management Best Practices
Implementing the new requirements of CSRS 4200 is not only about updating tools and templates to meet the new requirements of the standard it is also about managing the project. As a result of the new standard you will have changes in documenting, communicating with clients and potentially workflow.
Managing these changes is as critical as updating file templates. Don’t overlook the importance of project management. There is no such thing as the perfect project, project team, or perfect project manager. It is a learning process and the best we can do is pick up little golden nuggets of wisdom from others.
There are many best practice articles related to project management but I like this one especially as is a list of eight best project management practices that are simple and effective that the author has compiled in his time of working with teams, working on teams and managing teams.
While there is a lot going on and it is easy to become overwhelmed, take a breathe and remember, you will get through this. I am so excited about all these changes and look forward to what is to come. And, don’t forget to meet your verifiable CPD hours. There is still time.
Remember, I am here to help you save time and achieve peace of mind. Reach out any time.
Kirsten S. Albo, FCPA, FCA