In this Update: COVID-19 Support; Financial Reporting; Testing Inventory; Beneficial Ownership
Wow, the world has changed so much in the past month as we now try to figure out the new normal in these uncertain times. As I read through all the email updates, notices and social media posts, I was almost overwhelmed as there is so much information out there. While there are many changes – in how we work, how we interact with clients, extended deadlines – ironically, it is still business “as usual” for many as the work still needs to get done. This month’s topics focus on resources I believe will be helpful in addressing some of the issues you may be facing in getting that work done. Read on…
CPA Canada COVID-19 Resource Support
CPA Canada is committed to adapting and providing timely and relevant information to their members. They are trying to limit emails being sent out and rather are updating their website for relevant topics. They now have a CPA Canada has a COVID-19 resource page listing resources available to help respond to the challenges that now face us. The resources vary in their nature and their source and include publications from accounting firms, lawyers and lenders. Topics covered include crisis response strategies, cash flow management, corporate governance and protecting employees and work remote arrangements. There are many publications in the list that may be of interest to your firm directly or to your clients.
In response to the fact the majority of inquiries from members relate to tax issues, CPA Canada is offering a tax-focused webinar on April 3, 2020 that will address many of the recent announcements by the Federal Government. Topics will include enhanced wage subsidy and GST deferral among other topics. A great resource to more fully understand the current environment so you can in turn advise your clients.
Financial Statement Disclosure Considerations
Over the past week I have had many practitioners phone me to discuss financial statement disclosures for their clients. While I don’t expect to see wide-sweeping generic disclosures, I believe financial statement disclosures may be required for specific circumstances. Companies might scale back operations, have supply chain impacted, lose customers or shut down altogether in reaction to the uncertain times. Such matters as the going concern presumption, valuation of goodwill, impairment of assets, banking covenant requirements, onerous contract provisions and valuation of inventory are significant and require the use of professional judgement on the impact on the financial statements. Many of the larger firms have published articles on financial statement disclosures and after reading most of them, I feel that Deloitte’s is the most comprehensive and informative. While the article is IFRS related, there are many matters that may also be relevant for those companies using ASPE or ASNPO. Use this as the starting point to think about the specific disclosures needed for your clients. And consult where needed.
Testing Inventory Without a Site Visit
The current situation has made inventory testing a huge challenge for auditors, particularly for client entities with a March 31 year end. An article published by the Journal of Accountancy provides guidance on alternative procedures when one can’t attend an inventory count. A cautionary note, the article refers to standards in the US but many of the issues raised consistent with Canadian accounting standards for ASPE and ASNPO. Please feel free to reach out to discuss this issue further as you consider your auditing requirements related to inventory for your clients.
Beneficial Ownership Rules
In the line of business as usual, one change that may slip through the cracks is changes to the Canadian Business Corporations Act mandating the collection of beneficial ownership information, which came into effect in June 2019. The requirement is to track and record individuals who have significant control of the corporation. “Significant” has been deemed to be 25 % or more of the voting rights or 25% or more of the fair market value of shares. While this is a federal requirement, many provinces have taken steps to also make these changes. Manitoba enacted their rules which become effective April 8, 2020 with other provinces following suit. CPA Canada has written a good article on how CPAs can assist clients in meeting this requirement including building awareness, advising and sharing expertise. It is a worthwhile read to help your clients be prepared and meet the requirement which has a stiff penalty if not met. I have not heard of any delays or changes to this requirement.
You will note that I did not include any links on “tips on working from home” as these types of articles are plentiful. Nor did I include any articles on recent announcements from the government on such things as the Canadian Emergency Response Benefit or the enhanced wage subsidy (other than the link to the Webinar) as these articles are also abundant and it is important to go to the source that is most applicable to your clients. I believe that many small owner-managed companies will be relying on their accountants to help them understand or apply for these programs. It is a time when professionals are needed more than ever – I guess that is why the provincial government has stated that accountants are critical service providers and may remain open. Please feel free to reach out any time, I am here to assist you as you assist your clients.
Kirsten S. Albo, FCPA, FCA
In this Update: CSRS 4200; Dealing with Clients; Questioning Techniques; Growing your Practice
Happy leap day!! Another busy month has just passed by. We continue to move forward with the eventual implementation of new approved standards; CSRS 4200, CAS 540 and the recently approved CAS 315 will keep us busy for the mid- to long-term. In the meantime, there are short-term actions that can be taken to help us get ready for the coming changes to come. This month’s topics relate to actions that can be taken to help us be more prepared. Read on…
As previously reported to you, the new standard on CSRS 4200 was recently approved. CPA Canada has released several publications to support in understanding and implementation of the new handbook section. The most recent of these is the Practitioner Alert helps to understand the changes and how those changes will impact your performance of compilation engagements. Along with this, they issued two other publications to help you in your discussions with clients and third parties. I have started discussions with some firms on ideas on implementation plans; while as the standards are not effective until periods ending on or after December 14, 2021, there are several actions you can take now to be prepared.
With the ever-changing standards and the requirement to have in-depth discussions with your clients, it is important that you hold meetings to provide value and gain information and not just hold a meeting for the sake of meeting. Boomer Consulting has five tips for holding better client meetings. They recognize with CPA firms becoming trusted business advisors, it’s important to ensure that client meetings are operating at an optimal level. They state: “You want to make sure that your team and your client understand what the purpose of each meeting is and ensure that everyone is on the same page before and after the meeting takes place”.
Good Questioning Techniques
Technical knowledge is not the only thing to focus on during these busy months. Soft skills can be just as important and questioning techniques top the list as we work with our clients. With the new standards coming, there are many discussions to hold with your clients. Strong questioning skills help you gather more quality information, help you learn about the business, helps other learn, helps build better relationships and helps to manage problems and people effectively. With that in mind, I thought you might find the article Good Questioning Techniques is an interesting read and may be passed onto your staff to help them develop and learn.
10 Steps for Getting Practice Growth Right
I often hear from firms that they want to grow and expand their client base. When a firm is poised for growth, expansion can help attract new business, offer strong career paths, help you remain relevant to client and enhance the firm’s value. Managing growth isn’t always easy, however, as you confront the challenge of scaling your practice effectively. A noteworthy article from the Journal of Accountancy has tips from experienced CPAs on how to navigate a period of growth and is worth the read.
This is going to be an exciting but busy year. I am now a member of the Audit and Assurance Standards Board (AASB) recently formed Audit of Less Complex Entities Advisory Group which provides guidance and advice to the AASB on the direction of Canadian Auditing Standards in the context of the challenges that small- to mid-sized practitioners face when auditing these types of companies. I look forward to hearing your views which in turn I can pass onto the Advisory Group. I will also pass on any updates back to you that I can during the course of this project. In the meantime, if you have any questions on this project, implementation of CSRS 4200 or any other topics, please do not hesitate to reach out. I am here to help save you time and provide peace of mind.
Kirsten S. Albo, FCPA, FCA
In this Update: Assessing RMM; Mandatorily Redeemable Shares; Audit Estimates; Professional Judgement; Compilation Engagements
Happy New Year!! I know it is a bit late to be saying that but for many, I have not had the chance to wish you all the best in the new year before now. I am very excited about the upcoming year. There are a lot of impending changes that will make it challenging but what is life without a bit of excitement. Read on…
CAS 315 (Revised) Identifying and Assessing RMM Approved in Canada
CAS 315 (Revised) was recently approved at the December 2, 2019 meeting of the AASB. There were no changes from the same International Standard that was approved earlier in the year. CAS 315 will be effective for audits of financial statements for periods beginning on or after December 15, 2021 (that is, effective for fiscal years ending December 31, 2022). The Handbook section itself will be released in the Handbook in May 2020. There will be application material, webinars and other tools released over the next few months to assist with application of the new requirements; I will keep you updated on these sessions as they become available. Of course, I am available to assist in training and implementation.
Section 3856 Retractable or Mandatorily Redeemable Shares (ROMRS) now Effective
The new standard on ROMRS (Section 3856) came into effect on January 1,2020. This standard not only applies to shares issued after January 1, 2020 also to shares issued before then. This means the new standard could be a big deal for your private companies as shares previously classified as equity may now need to be classified as liabilities which may put a company offside on its banking covenants. CPA Canada published an ASPE briefing which provides guidance on the new standard and transition issues. Make sure your clients start talking to banks now if necessary to ensure there are no surprises when the year end statements are issued.
CAS 540 (Revised) Audit Estimates
While you are talking to clients, you may also want to think about the revised auditing standard for estimates. This standard is effective for periods beginning on or after December 15, 2019 (that is, effective for fiscal years ending December 31, 2020) however, depending on the nature of your client’s estimates, it may be helpful to be proactive and think about the impact of the changes in this standard. CPA Canada has published a client briefing document that will help you in your discussions with your clients. This should be an area of focus in training courses for your staff over the upcoming year.
Time to Reinforce Professional Judgment
All of the upcoming changes reminds us that professional judgement is an underlying concept in our daily work. We are often called upon to exercise professional judgment and professional skepticism which may not always be easy. An interesting article from IFAC provides a 6 elements as to how judgment can be evaluated along with an illustration of each action. It is an excellent read and provides food for thought.
CSRS 4200 Canadian Standard on Related Services
As previously communicated the new standard on compilation engagements was approved in October 2019 and is effective for compiled financial information for periods ending on or after December 14, 2021 (that is, effective for fiscal years ending December 31, 2022). The actual standard will be released in the Handbook in February 2020. I will send out a special update upon release along with links to any application guidance. In the meantime, nothing new to report.
All the best in the new year. Don’t forget that today is the CPD Reporting Deadline. A reminder to those I have worked with over the year is that the training time and discussion on standards is all verifiable hours. I look forward to the upcoming year and working with you to implement all upcoming changes, perform efficient and effective engagements and grow your practices. Please feel free to reach out at any time as I am here to assist as needed.
Kirsten S. Albo, FCPA, FCA
In this Update: 10 Great TED Talks on Leadership; Think Like Steve Jobs and Galileo; Succession Planning
The final update of the year. It is amazing to think how quickly 2019 has passed by. There were many standard changes over the past year and there will be many more in 2020. For the next few days however I am not focussed on standards but rather, on family and friends. I hope that you are able to spend quality time with friends, family and other loved ones over the holidays, I know I will be. With that in mind, this month’s update items are very light reads on interesting topics that apply to not only business but everyday life. Read on…
10 Great TED Talks on Leadership
It is not always about the standards. In our business, the soft skills are as, or often more, important than the technical skills. As influential leaders and the extent to which we have to interact with staff, clients and even family and friends, means it is important to understand how we can motivate others. Top leaders often talk about “growing others” and how their actions can inspire and develop their teams. Leaders share these thoughts and provide insights you can use to improve your leadership skills.
Five Ways to Think Like Galileo and Steve Jobs
We must incorporate professional skepticism into our engagements, not only because the standards say we have to but also to ensure we are asking the right questions, challenging our assumptions and arriving at the right conclusions. A thought-provoking article from Psychology today discusses the difference between cynics and skeptics and provides tips on how to develop habits of thinking that challenge what appear to be reliable facts. Be like Galileo and Steve Jobs and test assumptions over human activity leading to greater understanding, innovation and creativity.
I am facilitating a Practitioner Forum Session on the topic of Succession Planning on January 15, 2020. Practitioners are engaged in running practices and servicing clients typically with the focus on immediate upcoming events. However, circumstances may require succession planning to move up the priority list. This may be the result of scheduled events such as retirement or due to unexpected events such as an illness. Planning and preparation will help you move through both these types of events. This session will assist you succession planning transition, emergency preparedness, working with colleagues and requirements under the Code of Conduct. Think today about tomorrow. Please join me for this informative and interactive session.
I am very excited about the upcoming year with all the changes yet to come. 2020 will be a busy year, in the meantime, I want to take this moment to which you all safe and happy holidays. I look forward to working with you in to help save you time and provide you peace of mind. Happy New Year.
Kirsten S. Albo, FCPA, FCA
In this Update: Retractable or Mandatorily Redeemable Shares; ASPE Resources; Practice Inspection Report; Pricing Client Engagements
We are headed into the last month of the year and there are a number of things to think about to get ready for the new year. The more prepared we are, the smoother the work flow which allows us to concentrate on our clients which is always the priority. New accounting standards, upcoming changes in assurance standards and general quality matters all make preparation even more important. The topics below will help you be prepared for the coming months. Read on…
Retractable or Mandatorily Redeemable Shares Issued in a Tax Planning Arrangement
These amendments have been around for awhile but are finally in effect for the upcoming year. Amendments to Section 3856 Financial Instruments provide new conditions in order for retractable or mandatorily redeemable shares issued in a tax planning arrangement to be classified as equity as well as some changes to measurement, presentation and disclosure requirements. The amendments are effective for fiscal years beginning on or after January 1, 2020, that is the upcoming year. Not only do you have to think about new shares issued, there are several transition issues that you will have to address in financial statements. Make sure you spend the time to understand the amendments. The resource tool on this topic from CPA Canada along with the handbook section itself, will help you do that.
ASPE Resource Summary
Speaking of resource tools, CPA Canada publishes many resources and tools on a variety of topics throughout the year, all with the objective to assist practitioners. A recent publication is a summary of all ASPE guidance issued over the past year. It is a great publication to have on hand when you are dealing with specific issues. Topics include financial reporting alerts and ASPE briefings that provide implementation guidance on new and/or amendments to ASPE standards. In the document, there are hot links to the relevant resource so very easy to access. It also includes links to free webinars and other ASPE resources. Keep this publication on hand and access when needed.
Focus on Practice Inspection Report
The provincial bodies are the governing bodies of our self-regulating profession; they promote the highest standards of integrity and expertise to their members. Practice Inspections are a key component of the overall regulatory process. CPA Manitoba’s annual report, Focus on Practice Inspections was released this past October and is very similar to the reports issued in other provinces. The report provides a summary of findings in each of the areas of financial statement presentation, audit engagements, review engagements, special reports and quality control. Detailed common deficiencies are included in Appendix 3. The report also includes other matters for consideration in Appendices 1 and 2. The report is worth the read as it highlights key things to think about in the upcoming year. You may even want share this report with staff so they understand common deficiencies and are then able to address these in your client files. If you need to get ready for an upcoming practice inspection or implement an action plan in response to one, reach out for assistance. I can help you through the process.
How to Price Client Engagements and Increase Firm Profits
With all the upcoming changes, it can be a challenge on how to price engagements. Fees are important and discussions on such are not always easy but we cannot lose sight of the fact that while assisting our clients is of upmost priority, we should be paid fairly for the work that we do. A fantastic article from IFAC covers approaches to fee increases and value pricing. Included in the article strategies for increasing fees and provides food for thought on value pricing.
As we move into the last month of the year, please feel to reach out at any time to help you be prepared for the upcoming year. As one other year-end reminder, check on your CPD hours as December 31, is coming quicker than we think. Reporting deadlines are January 31, 2020. I am delivering in-house PD courses to several firms over the next few weeks but have some availability left in my schedule before the end of the year if needed. Over the coming months I will continue to keep you updated on new standards, including the recently approved CSRS 4200, as more details become known. There are so much to think about but I am always here to help provide you peace of mind and save you time.
Kirsten S. Albo, FCPA,FCA
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
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