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