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