In this Update: CSRS 4200; Professional Development; Firm Risk Management; ASPE Standards; PSAS Standards;
Here it is already at the end of July. It seems that only last week I was waiting for March to end. Where does time go? And why does it go so quickly? Unfortunately, I don’t have the answers to these questions so have decided to focus on the future and what needs to be done to manage a practice in an efficient and effective manner. The theme for this month is being prepared. Read on…
CSRS 4200 Compilation Engagements (CSRS 4200)
The new compilation standard is effective for periods ending on or after December 14, 2021. While that may seem like a long time away, in fact, it is only 18 months from now. Talk about time moving quickly, the effective date will be here quicker than you think but there are many things you can start now to get ready. CPA Canada recently hosted a Practitioners Pulse Webinar on CSRS 4200 and the real-life experiences of three practitioners who have implemented the standard and their experiences in doing so. They had very practical responses to the questions posed on implementation. It is worth spending an hour of your time listening to this one.
I believe it is critical to develop a project management plan over the next 18 months as the new standard could have a significant impact on your practice. I will be delivering an online training course to help practitioners learn how to implement the new standard in an effective and efficient manner through recognizing where business decisions are required, determining the approach to meeting requirements and developing an action plan between now and the effective date. There will be several sessions available starting mid-September. Stay tuned for details. In the meantime, you can check out a detailed description of the course on my website. I will let you know when dates have been finalized and registration is open.
Risk Management (Firm Risk Management)
Another area to be prepared relates to practice liability. Even though we may prefer not to think of it, it is important to think of risk as we continue to serve clients through these time. As much as we don’t like to think about it, unfortunately claims are a part of business. CPA Professional Liability Plan Inc. believes there will be increased and unique claims risks that will arise over the next months and years. They have a unique perspective in their recent article on this topic which includes issues to consider as you perform engagements.
Withdrawing from an Engagement (Firm Risk Management)
Speaking of business risk and being prepared, no matter how perfect the partnership between a firm and its client may seem, as with all things in business, sometimes the partnership does not work out. This can leave both parties questioning whether a practitioner can withdraw from the engagement. An article from Accounting Today explores several scenarios in which an auditor might withdraw from an audit and the implications of doing so. While the article focuses on audit engagements, the principles are similar for other types of engagement.
Public Sector Accounting Standards Deferral (ASPE Standards, PSAS Standards)
Finally, you have a longer period of time get prepared on certain public sector accounting standards. The Public Sector Accounting Standards Board met late in June/early July to discuss several upcoming changes to accounting standards. Among other topics discussed, they decided to defer the effective date of all upcoming accounting standards by one year. These include:
As a reminder, the May update highlighted the deferral of effective dates for ASPE standards including 3051 Investments, 3465 Income Taxes and 3856 Financial Instruments.
Enjoy your August. There a lot of things to look forward to in the upcoming month, the most exciting of which is the 2020 release of the PEG checklists. Along with the typical revisions and updates, the important documents will be the new checklists related to CSRS 4200 Compilation Engagements and CAS 540 Accounting Estimates. I look forward to reviewing all of the updates in detail and providing my views to you to help you make the business decision on implementation. In the meantime, feel free to reach out any time with any questions. I am here to help save you time and provide peace of mind. Have a great long weekend. I look forward to enjoying the sunny warm days, watering my flowers and golfing, a lot.
Kirsten S. Albo, FCPA, FCA
In this Update: Less Complex Entities; Technology; Dealing with Clients; COVID-19 Challenges
Slowly businesses are ramping up operations, but it seems that practitioners have been busy all along. Despite the extended deadlines, many challenges have been faced, and solved, over the past few months. Standard setters also continue to be busy with interesting discussions including the potential for a new standard for the audits of less complex entities. This month’s thought leadership covers important topics as we continue all to move forward. Read on…
AASB Decision Summary – New Standard for Audits of LCEs?
Exciting news. At their June meeting, the Audit and Assurance Standards Board (AASB) provided input on the IAASB Audits of Less Complex Entities (LCE) Working Group’s proposal to start developing a separate standard on this topic. Matter discussed included the overarching principles to be used when developing a separate set of standards. The IAASB is clearly headed in the direction of setting a separate standard for the audits of LCEs which will have a significant impact on the profession.
I previously communicated that I am a member of the AASB Working Group on the Audit of Less Complex Entities providing insights and recommending solutions to the challenges faced by SMPs in auditing these types of entities. There is a long way to go but I feel we are headed in the right direction. Do you agree with me? Feel free to reach out with your views directly so I can provide further input to the Working Group and the direction we should head.
The other topic of interest at the AASB meeting included discussions on Quality Management. The IAASB project to revise standard for quality management at the firm and engagement level continue. The IAASB expects to approve the final ISQM 1, ISQM 2 and ISA 220 at its September 2020 meeting. In turn, the AASB expects to approve the Canadian equivalent at its January 2021 meeting. However there are several Canadian issues yet to resolve, the main one being if the new standards apply to compilation engagements or not. Stay tuned.
Innovation in Audit: It is not Just About Technology
Auditors love JELLY. Just Exactly Like Last Year. And to hang out with SALY. Same As Last Year. However these can limit our ability to innovate in an audit. Innovation in an audit is more than just changing technology. It is about thinking differently about challenges faced, and thinking about them before you jump into a solution. While it is important to conduct high quality audits, conducting engagements efficiently is just as important. This article from Accounting Today was a thought-provoking read for ideas in how to innovate the audit. File efficiency reviews are another great way to make changes to your engagement process. I would be happy to assist you in performing such a file review to help you avoid JELLY and SALY.
Small and Mid-sized Enterprises (SMEs) Need Small- to Mid-Sized Practitioners (SMPs)
Businesses are ramping up operations however they continue to make hard decisions about their employees and payroll along with other operating decisions. They need the support of accountants whom they know and trust. With candid and empathetic discussions and a flexible approach, SMPs can enable SMEs with the right tools to bridge the gap between crises mode and action mode. An article in Accounting Today focuses on three guiding principles as practitioners help clients navigate disruption.
Reporting and Fraud Risk Arising from Covid-19 Pose Significant Challenges
In response to the current crisis, many organization have had to quickly change working practices and protocols to enable remote working, which present an increased risk of fraud of internal controls can by bypassed as a result. These changes can create challenges for practitioners in conducting engagements. An article published by IFAC highlights the need for auditors to have increased awareness and the importance of exercising professional skepticism. This is an excellent article and well worth the read.
Tomorrow is July 1 and no fireworks this year but I am okay with that. I would rather move forward at a steady pace then take two steps forward and one step back. So, move forward we do. Please feel free to reach out at anytime with any questions you may have to help you save time and achieve peace of mind. In the meantime, enjoy the upcoming month, it is summer you know.
Kirsten S. Albo, FCPA, FCA
In this Update: ASPE Standards, CSRS 4200; SME Accounting; Auditor Considerations
This month flew by for me and I am not quite sure why. Maybe it is because the new routines have become familiar, maybe it is because I am busy with a few special projects or maybe it is just because it has been nice out and I have taken time to enjoy the backyard and my flowers. In the end it doesn’t matter, all I know is I have started focussing on the future once again instead of trying to get by day by day. This month’s updates are also mainly about the future. Read on…
Deferral of Effective Dates for ASPE Standards
At its meeting on April 15, 2020, the Accounting Standards Board (AcSB) made the decision to defer the effective dates of the following amendments effective for years beginning on or after January 1, 2020 by one year to January 1, 2021:
The biggest takeaway from list above is the postponement of the effective date for financial instruments related to the amendments on Redeemable Preferred Shares Issued in a Tax Planning Arrangement. Due to the amendments, it was expected many preferred shares may now have to be classified as liability versus equity. The postponement allows practitioners more time to perform the analysis of classification and clients more time to discuss the impact on covenants with their lenders. Good news all around.
The AcSB is also deferring the effects dates of the new Section 3041, Agriculture and amendments to Section 3400, Revenue, effective for year beginning on or after January 1, 2021 by one year to January 1, 2022. Early adoption of each of the amendments and the new Section continues to be permitted.
CSRS 4200 Guidance
Unlike the accounting standards, there has been no discussion on deferring the effective date for this standard. CPA Canada is hosting a special Practitioner’s Pulse on the new compilation standard. The webinar, to be held in July, will help you learn about the new compilation standard, CSRS 4200 and cover implementation guidance available. Listen to practitioners share practical tips and answer questions on how to implement the new standard. I already have been working with a number of practitioners on implementation as there are many activities you can undertake well in advance of the effective date (periods ending on or after December 14, 2021).
Small Businesses Need Small Accounting Firms
In times like these small businesses turn to their advisors for assistance. It is important to be there for your clients as that is what keeps your firm growing. Business owners are making hard decision about their employees, struggling to maintain ongoing expenses despite losses in revenue and deciphering confusing information about which government programs might be able to help them. With candid and empathetic discussion and a flexible approach, practitioners can enable their clients with the right tools to bridge the gap between crisis mode and action mode. In this article from Accounting Today there are three guiding principles to focus on as you help clients navigate disruption.
Okay, one topic that is back to the current environment but included as it helpful as you complete current engagements. It is hard to keep track of all the guidance, articles and resources to help auditors address the risks in performing their engagements in relation to the impact of COVID-19 operations, financial results, operations and cash flows of organizations. However, CPA Canada’s latest resource does a good job in bringing it all together. This publication covers most of the topics auditors should be thinking about and links to other resources available. Almost a one-stop shop, almost.
This was also a big month in that Revised CAS 315 (Identifying and Assessing the Risk of Material Misstatement) was formally released in the Handbook. The Revised CAS 315 is effective for audits of financial statements for periods beginning on or after December 31, 2021. I will provide you more guidance on this CAS in the coming months but I wanted to bring this to your attention as it is indicative that standards are still changing and it is important to keep up and not fall behind so you do not have to scramble at the last minute to keep up. As they say, slow and steady wins the race. Feel free to reach out any time. I am here to help save you time and provide peace of mind. In the meantime, have a great weekend.
Kirsten S. Albo, FCPA, FCA
In this Update: Dealing with Clients, COVID-19 Support; Standards Update; Reminder
Life continues to change. With the announcements of the province opening, we will slowly move into a “new normal”. I recently read that phrase is in competition for being the highest used phrase of the year – right up there with “flattening the curve”. It will be interesting to watch in the coming months what the new normal entails and how we adapt. Working remotely, social distancing, conducting client meetings, delivering training will all evolve as we settle in. In the meantime, the focus is, and always will be, the client and how we work with them in completing engagements and providing support. This month’s update includes information on things to think about as we move into our new normal. Read on…
5 Steps for Advising Clients
There is so much information to weed through these days, emergency funding options, new working environments, government guidelines, the list goes on. After dealing with the immediacy of your own operations, supporting clients is most likely one of your top priorities. An article from the Journal of Accountancy explores five strategies to navigate advisory, and sometimes difficult, conversations with your clients to help them cope. If there is ever a time when clients needed your guidance, expertise and care, it is now. The strategies are straightforward and may give you useful ideas to help manage through this time.
Areas of Focus Due to COVID-19
Global developments relating to the current situation have impacted the work of auditors. Uncertainty and unpredictability may create risks of material misstatement that are new or heightened. Auditors have to adjust how they obtain sufficient appropriate audit evidence on which to base the audit opinion amid the many challenges they are facing. IFAC has published an Alert that highlights many of the items that auditors need to focus on in a clear and concise manner. The publication refers to ISAs but Canadian auditing standards (CAS) are substantially the same so this is particularly good tool to help you assess risk and document your conclusions.
COVID-19 and Going Concern Impacts
Even though business may now be able to open, COVID-19 related event may cause a deterioration in an entity’s operating results and financial position, affecting its ability to continue as a going concern. An article from CPA Canada provides guidance on learning how to address the challenges that arise from these conditions. Whether the engagement is an audit or a review the issues are the same and must be considered.
Coping with Standards Changes
There have been some delays in the effective date for some US GAAP and IFRS standards. However, for all my research, I have seen no discussion on delays for any Canadian standards. That means throughout all this we still must be cognizant of upcoming new standards. Nothing is imminent but throughout this time we cannot forget about the future. It is a challenge to keep up. The Journal of Accountancy has tips on how to “stay the course” and deliver high quality engagements.
CPA Canada’s COVID-19 information page CPA CANADA COVID RESOURCE PAGE is a good resource for guidance on financial reporting and other issues. FRAS Canada also has an information page FRAS CANADA COVID RESOURCE PAGE although this one is a little more IFRS focussed.
I promise there will come a day when we are not talking about the pandemic and flattening the curve (although in my case, I am eating so much baking I feel like I am “fattening the curve”). In the meantime, whatever challenges you face, remember that I am here as a resource as needed. Feel free to reach out at any time. Take care and stay healthy.
Kirsten S. Albo, FCPA, FCA
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