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


November 2019 Update

December 4, 2019 / Monthly Newsletter

In this Update:  Retractable or Mandatorily Redeemable Shares; ASPE Resources; Practice Inspection Report; Pricing Client Engagements

Greetings,

We are headed into the last month of the year and there are a number of things to think about to get ready for the new year. The more prepared we are, the smoother the work flow which allows us to concentrate on our clients which is always the priority. New accounting standards, upcoming changes in assurance standards and general quality matters all make preparation even more important. The topics below will help you be prepared for the coming months. Read on…

Retractable or Mandatorily Redeemable Shares Issued in a Tax Planning Arrangement

These amendments have been around for awhile but are finally in effect for the upcoming year. Amendments to Section 3856 Financial Instruments provide new conditions in order for retractable or mandatorily redeemable shares issued in a tax planning arrangement to be classified as equity as well as some changes to measurement, presentation and disclosure requirements. The amendments are effective for fiscal years beginning on or after January 1, 2020, that is the upcoming year. Not only do you have to think about new shares issued, there are several transition issues that you will have to address in financial statements. Make sure you spend the time to understand the amendments. The resource tool on this topic from CPA Canada along with the handbook section itself, will help you do that.

READ BRIEFING HERE

ASPE Resource Summary

Speaking of resource tools, CPA Canada publishes many resources and tools on a variety of topics throughout the year, all with the objective to assist practitioners. A recent publication is a summary of all ASPE guidance issued over the past year. It is a great publication to have on hand when you are dealing with specific issues. Topics include financial reporting alerts and ASPE briefings that provide implementation guidance on new and/or amendments to ASPE standards. In the document, there are hot links to the relevant resource so very easy to access. It also includes links to free webinars and other ASPE resources. Keep this publication on hand and access when needed.

READ ASPE RESOURCE GUIDANCE TOOL HERE

Focus on Practice Inspection Report

The provincial bodies are the governing bodies of our self-regulating profession; they promote the highest standards of integrity and expertise to their members. Practice Inspections are a key component of the overall regulatory process. CPA Manitoba’s annual report, Focus on Practice Inspections was released this past October and is very similar to the reports issued in other provinces. The report provides a summary of findings in each of the areas of financial statement presentation, audit engagements, review engagements, special reports and quality control. Detailed common deficiencies are included in Appendix 3. The report also includes other matters for consideration in Appendices 1 and 2. The report is worth the read as it highlights key things to think about in the upcoming year. You may even want share this report with staff so they understand common deficiencies and are then able to address these in your client files. If you need to get ready for an upcoming practice inspection or implement an action plan in response to one, reach out for assistance. I can help you through the process.

READ REPORT HERE

How to Price Client Engagements and Increase Firm Profits

With all the upcoming changes, it can be a challenge on how to price engagements. Fees are important and discussions on such are not always easy but we cannot lose sight of the fact that while assisting our clients is of upmost priority, we should be paid fairly for the work that we do. A fantastic article from IFAC covers approaches to fee increases and value pricing.  Included in the article strategies for increasing fees and provides food for thought on value pricing.

READ ARTICLE HERE


As we move into the last month of the year, please feel to reach out at any time to help you be prepared for the upcoming year. As one other year-end reminder, check on your CPD hours as December 31, is coming quicker than we think. Reporting deadlines are January 31, 2020. I am delivering in-house PD courses to several firms over the next few weeks but have some availability left in my schedule before the end of the year if needed. Over the coming months I will continue to keep you updated on new standards, including the recently approved CSRS 4200, as more details become known.  There are so much to think about but I am always here to help provide you peace of mind and save you time.  

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


October 2019 Update

October 31, 2019 / Monthly Newsletter

In this Update:  CSRS 4200; CAS 315; Redeemable Preferred Shares; Ethical Dilemmas

Greetings,

What a crazy month it has been. The snowstorm that took down so many trees in Winnipeg and beyond, the NHL Heritage Classic game between the Jets and the Flames and the further changes in standards. After many months of what seemed like silence, it has been very busy for the standard setters. This month’s update is a bit more technical in nature as a result of these changes. I want to ensure you stay up to date.  Read on…

CSRS 4200 Compilation Engagements – Standard Approved!!

As noted in my special update earlier this month, the AASB approved Canadian Standard on Related Services (CSRS) 4200, Compilation Engagements on October 7, 2019. CSRS 4200 replaces Section 9200 and is effective for compiled financial information for period ending on or after December 14, 2021. The AASB concluded that the revision to the standard were significantly different from the proposals in the Exposure Draft however they decided not to re-expose the changes as they do not significantly increase the practitioners’ work effort and responsibility.  However, we have not yet seen the actual standard. It is expected CSRS 4200 will be issue in the February 2020 CPA Canada Handbook Assurance Update. I will send a link when available. In the meantime, you may want to participate in the CPA Canada Practitioner’s Pulse Webinar on November 21, 2019 that will discuss the new standard.

ACCESS AASB PROJECT PAGE HERE

SIGN UP FOR CPA PRACTITIONERS PULSE WEBINAR HERE

CAS 315 (Revised)

On September 16, 2019 the IAASB approved the revisions to ISA 315 (Revised) along with conforming changes. The revised ISA will be effective for audits of financial statement for periods beginning on or after December 15, 2021. What this means is that Canada will not be far behind in approving the revisions to CAS 315 (Revised) Identifying and Assessing the Risks of Material Misstatement though Understanding of the Entity and its Environment. The changes are significant and will impact your audit approach and documentation. I expect there will be implementation tools and guidance to come – I will send out links as they are available. In the meantime, if you want to read ISA 315 (Revised), follow the link below.

READ ISA 315 (REVISED) HERE

Redeemable Preferred Shares Issued in a Tax Planning Arrangement

I have spent a lot of time raising awareness of assurance standards but do not want to forget about important accounting standards. With that in mind, I wanted to remind you about amendments to Section 3856 Financial Instruments specifically related to preferred Shares issued in a tax planning arrangement. These changes were approved in back in September 2018; the updates are expected to be in the December 2019 release of the Handbook updates.  In the meantime, here are a number of podcasts recently released to discuss implementation questions. 

ACCESS PODCASTS HERE

Ethical Dilemmas

Ethics continues to be a very hot topic these days with the new CPA PD requirements and the recently released International Code of Ethics for Professional Accountants. I have delivered my Putting Ethics into Practice course to firms and the resulting discussions have been very interesting. In developing the course material, I came across this article which may be of interest to you. Dealing with Ethical Dilemmas with Confidence reminds us that professional ethics is fundamental in our industry. The article points out that the reality of making the right call is often not straightforward and provides a framework for moral prudence.

READ ARTICLE HERE


There is a lot to think about in the upcoming months and I am here to save you time and provide peace of mind on all the upcoming matters as well as day to day other matters. I will be at the Rev Up Your Practice conference in Ottawa this upcoming week and maybe will see you there. In the meantime, enjoy your week and let’s hope the snow holds off just a bit more.

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