July 2020 Update

July 31, 2020 / Monthly Newsletter

In this Update:  CSRS 4200; Professional Development; Firm Risk Management; ASPE Standards; PSAS Standards;

Greetings,

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.  

ACCESS WEBINAR HERE

Professional Development

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. 

READ COURSE DESCRIPTION HERE

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.   

READ ARTICLE HERE

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.  

READ ARTICLE HERE

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:

  • PS 3280 Asset Retirement Obligations – previous implementation date changed from fiscal years beginning on or after April 1, 2021 to April 2022
  • PS 3450 Financial Instruments/ PS 3041 Portfolio Investments/PS 1201 Financial Statement Presentation/PS 2601 Foreign Currency Translation – previous implementation date changed from fiscal years beginning on or after April 1, 2021 to April 2022 however some public sector organizations may have already adopted these standards
  • PS 3400 Revenue – previous implementation date changed from fiscal years beginning on or after April 1, 2022 to April 2023

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

READ FULL DECISION SUMMARY HERE

READ MAY UPDATE HERE


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. 

Best Regards,
Kirsten S. Albo, FCPA, FCA
President


May 2020 Update

May 29, 2020 / Monthly Newsletter

In this Update:  ASPE Standards, CSRS 4200; SME Accounting; Auditor Considerations

Greetings,

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:

  • Amendments to Section 3051, Investments (related to clarifying guidance related to the cost method also applying to jointly controlled enterprises)
  • Amendments to Section 3465, Income Taxes (related to removing requirement to present FIT as current and non-current when future income taxes method applied and other minor updates)
  • Amendments to Section 3856, Financial Instruments (related to accounting for related party financial instruments, amending risk disclosure requirements and classification of Redeemable Preferred Shares)

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.

READ DECISION SUMMARY HERE

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).

REGISTER HERE

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. 

READ ARTICLE HERE

Auditor Considerations

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. 

READ GUIDANCE HERE


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.

Best Regards,
Kirsten S. Albo, FCPA, FCA
President


February 2020 Update

February 28, 2020 / Monthly Newsletter

In this Update:  CSRS 4200; Dealing with Clients; Questioning Techniques; Growing your Practice

Greetings,

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…

CSRS 4200

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.

READ PRACTITIONERS ALERT HERE                                

READ CLIENT BRIEFING HERE

READ THIRD PARTY BRIEFING HERE

Better Meetings

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”.

READ TIPS HERE

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.  

READ GOOD QUESTIONING TECHNIQUES HERE 

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.  

READ ARTICLE HERE


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. 

Best Regards,
Kirsten S. Albo, FCPA, FCA
President


Special Release: CSRS 4200 In the Handbook!! (and clarification on the effective date)

February 3, 2020 / Special Update

Greetings,

The new Handbook Section CSRS 4200 Compilation Engagements was released on the weekend and is now officially in the Handbook. First and foremost, a point of clarity – the section is effective for periods on or after December 14, 2021, that is effective for fiscal years ending December 31, 2021. I had a typo in my January update. My apologies and thanks to the eagle eyes that pointed this out.

CPA Canada summarized some of the key features, designed to respond to stakeholder input and public interest issues as follows:

  • A scope that sets out which services are compilation engagements. Today, practitioners find it difficult to distinguish a bookkeeping service from a compilation engagement. The new standard clarifies that a bookkeeping service may result in system-generated financial information. Such information is excluded from the scope of the standard if no communication is included or attached to it.
  • Specific engagement acceptance considerations that apply when the compiled financial information is intended to be used by a third party. Currently, practitioners are unclear about whether it is appropriate to accept or continue a compilation engagement when there is a third-party user.
  • Specific required work effort and documentation. The lack of explicit guidance in this area could be a reason for the existing variability in practice.
  • A requirement that compiled financial information includes a note describing the basis of accounting that was applied. Today, users generally lack an understanding of how the compiled financial information was prepared.
  • A new compilation engagement report that is more informative and insightful than the current Notice to Reader. Users are unclear as to the extent of work performed by the practitioner and have asked for greater transparency about those responsibilities.

Even though the standard is not effective for some time, there are a number of activities you can undertake already to be prepared. These include:

  • Read the actual standard and the Basis for Conclusion (both in Knotia).  
  • Read CPA publications and other material issued as these help promote awareness, understanding and effective implementation (two links below of material already issued).
  • Consider how the standard impacts your current engagements.
  • Design an implementation plan – there are certain requirements that may make sense to start implementing in this current year so everything does not hit all at once when effective.
  • Talk to your clients.

Below are links to guidance and information to help you get started. 


Please feel free to reach out at any time for support on implementing the new standards. 

Best Regards,
Kirsten S. Albo, FCPA, FCA
President


January 2020 Update

January 31, 2020 / Monthly Newsletter

In this Update:  Assessing RMM; Mandatorily Redeemable Shares; Audit Estimates; Professional Judgement; Compilation Engagements

Greetings,

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. 

READ PROJECT UPDATE HERE

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.

READ BRIEFING HERE

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.

READ BRIEFING HERE

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. 

READ ARTICLE HERE

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. 

Best Regards,
Kirsten S. Albo, FCPA, FCA
President


Special Update – CSRS 4200

October 10, 2019 / Special Update

A quick mid-month update. It is official. There is a new compilation standard. The AASB approved CSRS 4200 at their meetings held this week.

This news is so recent that I do not have the new standard or details on what was actually approved yesterday. All that I know from my contacts at CPA Canada and the AASB is that the standard has been approved and there are changes from what was in the Exposure Draft. What the changes are, I don’t know; only those who approved the new standard do know at this point.

The new CSRS is expected be in the Handbook in February but the effective date is not yet known. I expect there to be a lot of communication in the coming months so will disseminate and pass onto you in my monthly updates; I will also be building the changes into the courses that I instruct for many of you and your firms.

So all this to say… stay tuned. Changes are confirmed and coming but what they are still to be seen. So, in the meantime, happy Thanksgiving!!!!

Best Regards,
Kirsten S. Albo, FCPA, FCA
President