Summer is officially here and I am so happy about that. I think of the next few months as an opportunity to recharge and take time to enjoy family and friends, and golf. That allows me to reset so I can start to plan for the rest of the year. Knowing what needs to get done, and a plan on how to approach it all not only helps get things done but also relieves stress. There is a lot to plan for as the effective date of standards we have been reading about will soon be upon us. Read on…
Planning for Revised CAS 315 Implementation
Revised CAS 315 is effective for upcoming December 2022 year ends. There may be significant changes to your audit files so never too early to start planning. A few tips to get going . . .
Assign an individual(s) to oversee this project. Someone needs to own the process as more than just updating a few template forms.
Then that person(s) should…
- Read the revised standard; always a good starting point.
- Take stock of the current firm templates and then link these to revised templates. The PEG forms have changed significantly so be aware if you use these.
- Select pilot engagements to implement the revised requirements early to help understand where barriers might exist and where you already have client information so not an issue.
- Determine the rollout and training schedule for your firm.
I believe the most significant area of change for most will be related to understanding IT. The revised standard has an enhanced focus on assessing your client’s IT systems and general controls and risks, even if an off the shelf program is used. While this was in the extant standard, it was an area not well documented. Definitely something to pay attention to earlier rather than later.
CPA Canada issued an Implementation Tool focusing on selected new requirements and certain other requirements in CAS 315.
Talking to Your Clients about Revised CAS 315
In addition to planning internally for CAS 315 changes, you should also think about communicating these changes to your client as they will see changes and wonder what is going on.
The challenge is how to explain the changes in the Standard in a way your client will understand. CPA Canada has issued another helpful briefing specifically geared to management and TCWG. Use this publication to get the conversation going with your clients.
A further question for you that is not in the Briefing. Does the revised Standard open the door to fee discussions? More time will be incurred and is this an opportunity for you? Something to think about.
Responsibilities Related to Fraud
As auditors, we have a responsibility related to fraud in engagements. We often think “it won’t occur in my clients” but it does. And, it is often where, or who, it would be least expected.
CAS 240 (ISA 240) deals with the auditor’s responsibilities related to fraud. Our objectives are:
- To identify and assess the risk of material misstatement due to fraud (Where can fraud occur?)
- To obtain sufficient appropriate evidence (What are you going to do about it?)
- To respond appropriately to identified fraud or suspected fraud (Now what?)
- The standard reinforces the continued use of the “fraud lens”. An excellent publication from the IAASB further expands on the responsibilities related to fraud and explains the interrelationship between CAS (ISA) 240 and other auditing standards.
Think about it like this. CAS (ISA) 315 requires auditors to identify and address the risk of material misstatement in an audit. CAS (ISA) 240 then takes that a step further and focuses on the risk related to fraud. It is important thought process as it can, and does, happen. Even in your clients. Trust me. I have been there.
Take a moment to read this worthwhile publication. You may even want to bring this to your next team planning meeting to have on hand when you discuss the risks of fraud at your clients. Enlightened staff are better able to incorporate professional skepticism into all they do, no matter their level.
Eat the Ugly Frog First
There is a lot going on these days. New quality management standards. Revised CAS 315. Accounting standards. Reviewing implementation of the compilation standards. It is important to have a strategy to get things done.
It was Mark Twain that said if you eat a live frog first thing in the morning, the day can only get better. An article from DeskTime is very helpful in providing guidance on getting things done and recommends putting tasks into one of four categories:
1. Things you don’t want to do, and don’t need to.
2. Things you don’t want to do, but need to.
3. Things you want to do, and need to.
4. Things you want to do, but don’t need to.
The second category is the frog. You have a task – reviewing a file, talking to a client, reading a new standard – that you don’t necessarily want to do, but you have to in order to move things forward and just get it done. So do it. Eat the frog.
And, I say, if you have two frogs, eat the ugly one first. 🐸🐸
CPA Canada CSQM 1 Webinar
Implementing the requirements of CSQM 1 should slowly be making its way up your priority list. There will come a time when you have to put pen to paper but there are things you can do to get ready before actually doing that. CPA Canada recently held a free webinar on the new standard. The session was a discussion with practitioners who shared their experiences to-date in developing a system of quality management and applying the requirements of the new quality management standards.
Bonus: Qualifies for one hour of verifiable CPD. Stay tuned for upcoming ASK KSA workshops to assist you with implementation. We have you covered, so enjoy the summer.
I wish you a wonderful long weekend. Enjoy whatever you have planned. Then in the coming weeks you can start to plan for the fall months. One of your biggest tasks is CSQM implementation but as noted above, we have you covered. I will be hosting workshops in a city near you this fall.
In the meantime, reach out anytime. I am here to help you save time and provide peace of mind.
Kirsten S. Albo, FCPA, FCA