In this Update: CSRS 4200; CAS 315; Redeemable Preferred Shares; Ethical Dilemmas
What a crazy month it has been. The snowstorm that took down so many trees in Winnipeg and beyond, the NHL Heritage Classic game between the Jets and the Flames and the further changes in standards. After many months of what seemed like silence, it has been very busy for the standard setters. This month’s update is a bit more technical in nature as a result of these changes. I want to ensure you stay up to date. Read on…
CSRS 4200 Compilation Engagements – Standard Approved!!
As noted in my special update earlier this month, the AASB approved Canadian Standard on Related Services (CSRS) 4200, Compilation Engagements on October 7, 2019. CSRS 4200 replaces Section 9200 and is effective for compiled financial information for period ending on or after December 14, 2021. The AASB concluded that the revision to the standard were significantly different from the proposals in the Exposure Draft however they decided not to re-expose the changes as they do not significantly increase the practitioners’ work effort and responsibility. However, we have not yet seen the actual standard. It is expected CSRS 4200 will be issue in the February 2020 CPA Canada Handbook Assurance Update. I will send a link when available. In the meantime, you may want to participate in the CPA Canada Practitioner’s Pulse Webinar on November 21, 2019 that will discuss the new standard.
CAS 315 (Revised)
On September 16, 2019 the IAASB approved the revisions to ISA 315 (Revised) along with conforming changes. The revised ISA will be effective for audits of financial statement for periods beginning on or after December 15, 2021. What this means is that Canada will not be far behind in approving the revisions to CAS 315 (Revised) Identifying and Assessing the Risks of Material Misstatement though Understanding of the Entity and its Environment. The changes are significant and will impact your audit approach and documentation. I expect there will be implementation tools and guidance to come – I will send out links as they are available. In the meantime, if you want to read ISA 315 (Revised), follow the link below.
Redeemable Preferred Shares Issued in a Tax Planning Arrangement
I have spent a lot of time raising awareness of assurance standards but do not want to forget about important accounting standards. With that in mind, I wanted to remind you about amendments to Section 3856 Financial Instruments specifically related to preferred Shares issued in a tax planning arrangement. These changes were approved in back in September 2018; the updates are expected to be in the December 2019 release of the Handbook updates. In the meantime, here are a number of podcasts recently released to discuss implementation questions.
Ethics continues to be a very hot topic these days with the new CPA PD requirements and the recently released International Code of Ethics for Professional Accountants. I have delivered my Putting Ethics into Practice course to firms and the resulting discussions have been very interesting. In developing the course material, I came across this article which may be of interest to you. Dealing with Ethical Dilemmas with Confidence reminds us that professional ethics is fundamental in our industry. The article points out that the reality of making the right call is often not straightforward and provides a framework for moral prudence.
There is a lot to think about in the upcoming months and I am here to save you time and provide peace of mind on all the upcoming matters as well as day to day other matters. I will be at the Rev Up Your Practice conference in Ottawa this upcoming week and maybe will see you there. In the meantime, enjoy your week and let’s hope the snow holds off just a bit more.
Kirsten S. Albo, FCPA, FCA
A quick mid-month update. It is official. There is a new compilation standard. The AASB approved CSRS 4200 at their meetings held this week.
This news is so recent that I do not have the new standard or details on what was actually approved yesterday. All that I know from my contacts at CPA Canada and the AASB is that the standard has been approved and there are changes from what was in the Exposure Draft. What the changes are, I don’t know; only those who approved the new standard do know at this point.
The new CSRS is expected be in the Handbook in February but the effective date is not yet known. I expect there to be a lot of communication in the coming months so will disseminate and pass onto you in my monthly updates; I will also be building the changes into the courses that I instruct for many of you and your firms.
So all this to say… stay tuned. Changes are confirmed and coming but what they are still to be seen. So, in the meantime, happy Thanksgiving!!!!
Kirsten S. Albo, FCPA, FCA
In this Update: Standards Update; Public Sector Disclosures; Credit Controls & Fee Collections; Enhancing Culture
This month marked a change in both weather and standards. One can feel a bit of a nip in the air and things are finally starting to move on the standards front. Decisions have been made over this past month, and we can expect a few more next month. While most changes are not imminent, they will come quicker than we think and it will be important to plan so you can keep your practice running effectively and efficiently. Read on…
Standards Update – AASB Decisions
As noted above, decisions were made on standards over the past month. Exposure drafts were finalized, timing was discussed and next steps are under way. The following are highlights from the AASB’s (the Board) September meeting:
Public Sector Compensation Disclosure Amendment Act
A reminder to those who issue these reports. A notice went out mid-year to all publicly-funded bodies reminding these organizations that the threshold for salary disclosures increased from $50,000 to $75,000 effective January 1, 2019. In addition, the notice stated that the publicly-funded bodies are no longer required to have the compensation reports audited. One matter of interest, while the notice says the audit is no longer required, the Act still has this requirement (I am trying to follow up on this discrepancy). Make sure you talk to your clients about the new requirements and the timing of implementation.
NO LINK AS THE LETTER WENT DIRECTLY TO ORGANIZATIONS, NOT THE FIRMS – ASK FOR IT FROM YOUR CLIENTS
Enhancing Firm Credit Control and Fee Collection
I have a sense it is going to be a very busy fall. Changes in standards, fee discussions with clients, updates to quality, meeting professional development requirements – the list goes on. If you are interested in a professional development course tailored to specifically to your firm, let me know. I have a course curriculum that covers everything from standards update, performing efficient and effective engagements and ethics. My fall schedule is starting to feel up so please reach out. I am here as needed to help you save time and provide peace of mind.
Kirsten S. Albo, FCPA, FCA
In this Update: Standards Updates; PEG Updates; Firm Risk Management; Pricing Client Engagements
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…
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:
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.
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:
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.
Kirsten S. Albo, FCPA, FCA
In this Update: Less Complex Entities; Firm Risk Management; Understanding Financial Statements.
We are in the middle of summer and many of you are taking the opportunity to take some well-deserved time off. With that in mind, this month’s update is “summer-lite”. Only a few topics to reflect upon during this slower time of the year. Read on…
Less Complex Entities Discussion Paper
As mentioned in a previous update, the IAASB issued a discussion paper “Audits of Less Complex Entities: Exploring Possible Options to Address the Challenges in Applying the ISAs”. The discussion paper focuses on challenges that have been identified relating to applying the ISAs in the audits of less complex entities and possible actions that could be undertaken to address the identified challenges. Options include scalability of the current standards or even a new set of auditing standards. Because the AASB has committed to adopting the ISAs as CASs, Canadian standard setters are actively involved in this matter.
This is an important topic which may have a significant impact on the audits of small clients. Over the past few months I have participated in webinars, round table discussions and conference calls to provide input. I am preparing a formal response which will incorporate thoughts I have heard from many of you. Auditing small clients efficiently can be a challenge and there are many CASs that just do not make sense.
The IAASB is gathering as much input as they can and has issued a brief survey to obtain information directly from those practitioners who audit less complex entities. The survey has only 6 primary questions and 3 demographic questions so takes less than 5 minutes to complete. You don’t even have to read the discussion paper before taking the survey but I have included the link just in case you want to.
READ IAASB DISCUSSION PAPER HERE
Eight Steps to Establish a Firm Risk Management Program
Summer is a good time to think about monitoring, file inspections and updating your quality assurance manual. However risk management is more than just these things; it is important to establish a risk management “culture” in the firm. This becomes even more critical with the recently issued exposure draft Canadian Standards on Quality Management (see June update). IFAC published a thought-provoking article on this topic highlighting steps to establishing a risk management program along with the benefits it provides.
Understanding Reports on Financial Statements
As a practitioner you understand the differences between an audit, a review and a compilation. However there are many of your clients who may not clearly understand those differences, especially not-for-profit clients with volunteer Board members. CPA Canada issued a good publication to help clients learn about financial statements and the different levels of engagements you can provide. The publication succinctly outlines the concept of applicable financial reporting frameworks, explains the terms assurance and materiality and highlights differences between audits, reviews and compilations. This would be a good tool to provide to new Board members and other clients. One caution, the exposure draft on Compilation Engagements (see June update) most likely will change the Compilation Report in the near future.
In the above topics, I alluded to two important exposure drafts – Canadian Standard on Quality Management and Compilation Engagements. When issued these will have a big impact on your practice however for now, there are no updates but rest assured I will provide information as it is available. For now, enjoy the rest of summer and take advantage of the opportunity to catch up on matters. Whether it is monitoring, file efficiency reviews, file inspection or general consultation, I am here to assist as needed.
Kirsten S. Albo, FCPA, FCA
In this Update: Summary of Upcoming Changes; Support for SMP; Common Technology Mistakes
For many, the focus for the month of June has been completing year end engagements and getting tax returns out the door. Now time to take a breathe and think forward to the next few months; as there are many upcoming changes that will have an impact on your practice, this month’s update focuses on a summary of those changes and resources to support you getting ready for them. Read on…
Summary of upcoming changes
Below are some of the current projects the standard setters are addressing. This is not a comprehensive list but rather the key ones that I think are important to small and mid-sized firms. Within each section I have provided the link to the Financial Reporting and Assurance Standards Canada (FRAS) site which includes further details and a listing of all active and completed projects.
|Standard||Status and Impact|
|CAS 315: Identifying and Assessing Risks of Material Misstatements||Exposure draft issued September 2018 and feedback being considered. Impact: Significant changes to audit approach and documentation.|
|CAS 540: Auditing Accounting Estimates||Final Handbook material issued and standards in effect for periods on or after December 15, 2019. Impact: Minimal impact unless complicated estimates in your clients financial statements.|
|CAS 700 et al: Auditor Reporting||Final Handbook material issued and standards in effect for periods on or after December 15, 2018. Impact: Now issue new auditor’s report.|
|Audits of Less Complex Entities||Discussion paper issued June 2019; response deadline August 14, 2019. Impact: Not sure on this but goal is scalability for small audits so that not as onerous as is today.|
|Quality Management||Exposure draft issued April 2019 and feedback being considered. Impact: New QAM required to address changes and compilations could now be covered by these standards.|
|CSRS 4200: Compilation Engagements||Exposure draft issued September 2018 and feedback being considered. Impact: Significant changes including documentation, accounting framework and report.|
|Public Sector Auditing Standards||Exposure draft for guidance on performance audits currently being developed. Impact: Significant changes but only if you do compliance reporting.|
|CSAE 3000/3001 et al: Assurance on Compliance with Agreements, Statutes and Regulations||Final Handbook material issued and standards in effect for periods on or after April 1, 2019. Impact: New auditor’s reports for special engagements such as compliance, public sector compensation and other government required reporting.|
|Agriculture||Exposure draft issued July 2018 and feedback being considered. Impact: Significant changes for farming clients.|
|Contributions – Revenue Recognition and Related Matters||Public outreach since January 2016 and is continuing. Impact: Not sure since a long way away from being finalized.|
I am happy to discuss any of the changes above further with you if you have additional questions.
Resource Roundup: Implementation Support for Small- and Mid-Sized Practices
Keeping up to date with standards poses unique challenges for small- to mid-sized practices (SMPs), especially as the changes are coming fast and furious (see topic above). Canadian Standards are basically now driven by what is happening with International Standards. I am here to help keep up to date on standards and will provide you updates as the changes are announced. The International Federation of Accountants (IFAC) is another great sources of information and tools. To support SMPs, IFAC has developed extensive implementation support for international standards and offers an extensive suite of material. The link below is to a nice summary of available information.
12 Common Technology Mistakes You Should Avoid
Not only can it be difficult keeping up with standards, keeping up with technology creates its own challenges. A recent article in the Journal of Accountancy addressed several questions such as could your company survive a data breach or could your company withstand a server crash? The author identified 12 common technology mistakes and offers recommendations for avoiding them. I found the article very interesting and more importantly, very practical.
I hope you had a nice long weekend and were able to take advantage of the beautiful weather we had. While the summer months typically slow down, it is also a good time to ensure you are prepared for the next few months. This is a good time to undertake such activities such as planning, completing file reviews and monitoring. I have recently joined the CPA Canada PEG Task Force Committee. Over the past few years I have had conversations with many of you about the PEG and now have the opportunity to bring those views forward. Stay tuned in for future updates. I am here to support you as needed, feel free to contact me at any time.
Kirsten S. Albo, FCPA, FCA