February 2022 Update
Greetings,
This month’s update is a mixture of topics to help keep you up-to-date on assurance and accounting standards that are finally effective as of the beginning of this year. It was a flurry of activity leading up to the beginning of the year. Now it is time to settle in and make sure you are implementing the standards correctly. And speaking of flurry, I am looking outside my window and wondering if the snow will ever stop. I sure hope so. Read on…
Accounting Standards Update (AcSB Webinar)
Earlier this month the Accounting Standards Board (AcSB) hosted a webinar on amendments in Part II, III and IV of the CPA Canada Handbook, including topics such as accounting for retractable or mandatorily redeemable shares, not-for-profit combinations, and amendments to pension plan accounting. The recording of this worthwhile session is now available for viewing. Very helpful in keeping up to date on changes, and an opportunity to obtain free verifiable CPD hours. REGISTER FOR WEBINAR RECORDING HERE
CSRS 4200 Implementation
We are well into the year and by now, your first few engagements under the new compilation standard will have been issued. The questions that I am getting about the new standard mainly relate to drafting the basis of accounting and dating of the report. Key things to remember:
Basis of Accounting:
- You can help your client draft the note (we know they need help 😂)
- You do not need a basis of accounting for every item in the financial statements
- Include information to help you conclude the statements are not misleading
- You cannot say “in accordance with ASPE except for …”
- Check out #ASKKSAProTips: BASIS OF ACCOUNTING video for more tips
Dating the report
- The report is dated when management acknowledges responsibility for the financial information
- The acknowledgement can take different forms (writing, email, discussion)
- If acknowledgement via discussion ensure the date and who with is documented
- Consider the workflow of the release of financial information to determine if any changes necessary in your firm
For further guidance, check out the CPA CANADA CSRS 4200 IMPLEMENTATION TOOL
Questions 12 to 14 address the Basis of Accounting along with examples in Appendix C. Questions 19, 24 and 27 address dating of the report and management’s acknowledgement of responsibility.
Revised CAS 540 Auditing Estimates
This standard was effective last year but wanted to bring it to your attention again as you start this year’s engagements. As a result of the file inspections I have completed for clients over the past year, I know it is an area that was either overlooked altogether or not implemented well. Tips to help you this year:
- Identify all estimates whether complex or not
- Understand management’s process for estimates including data used, subjectivity and complexity involved and models used
- Separately assess the inherent risk and control risk for each estimate
- If a significant risk, document design and implementation of relevant control activities
- Consider management bias
- Perform the audit procedures
The CPA CANADA FAQs ON AUDITING ESTIMATES is an excellent tool to help you implement the requirements of the standard effectively and efficiently. And, of course reach out with any questions.
Automated Tools and Techniques: Guidance on using ATT in an audit
New to ATT? Not sure where to start? Trying to figure out what to document when it comes to ATT?
Technology is changing how audits are performed. Automated tools and techniques have been used for many years on the large audits. As clients, even the less complex clients, continue to adapt technology there may be an opportunity to use ATT to conduct and effective, and efficient audits.
The starting point is understanding ATTs and their effect on audit and assurance engagements. Find a summary of Canadian and International resources in CPA Canada’s recent blog post. Very informative with a link to many great tools. A good start in understanding the impact of ATTs in an audit.
Evaluating the Reliability of Data
Continuing with the thought process of using ATT in an audit, how do you consider information reliability when using automated tools and techniques ? What about the information produced by the entity?
Another recent CPA CANADA BLOG is helpful for auditors who use ATT or are want to learn more. It addresses attributes that are relevant in considering or evaluating whether the information you are using in your ATT is reliable and factors that may assist you in assessing the importance of these attributes.
CPD Deadlines – Have You Reported?
The CPD reporting deadline is fast approaching. Depending on the province in which you reside, the deadline could be as soon as tomorrow (!!) or as late as April 15.
ASK KSA PD
Check out these ASK KSA PD course offerings that will not only help you be more effective and efficient but will also help you get a head start on your 2022 CPD requirements. Course topics will help you strengthen both your technical skills and soft skills. Courses are informative, practical and engaging.
The comment period on the exposure draft on the Audit of Less Complex Entities closed January 31, 2022. The IAASB is now working on compiling the feedback to determine next steps. The responses have not yet been made public but will be shortly. My guess is there is a lot of work to do so stay tuned.
And finally. There is still no update on the release of the new PEG forms. The most significant changes will all relate to Revised CAS 315 which is effective for next year’s engagement. I will send a special update once released.
For now focus on your ongoing engagements to ensure you are effective, doing the right work, and efficient, doing the right amount of work. Remember, I am always here to help you save time and achieve peace of mind.
Best regards,
Kirsten S. Albo, FCPA, FCA