In this Update: Standards Updates; PEG Updates; Firm Risk Management; Pricing Client Engagements
The end of August is upon us and it has been a busy month. Summer is winding down (even though I don’t want to admit it) and minds are turning to fall and the planning that it brings. This month’s topics include matters that will help you get ready as you continue to think about upcoming standards changes, new PEG forms, quality management and discussing fees with your clients. Read on…
No significant news to report but wanted to provide an update so you stay informed; changes are coming, that is a known! Exposure drafts being deliberated as response deadlines have passed. The key topics that will impact your practice include Quality Management (CSQM1 and CSQM 2), Identifying and Assessing Risks of Material Misstatements (CAS 315 Revised) and Compilation Engagements (CSRS 4200). A summary of the status of these is:
Other assurance exposure drafts still being deliberated include Key Audit Matters, for public companies, along with Public Sector Auditing Standards and Reporting Controls at a Service Organization. Responses to the Discussion Paper of Less Complex Entities were due this month and are now being deliberated. Finally, accounting exposure drafts on Agriculture and Revenue are still out there.
This month the 2019 Edition of the Professional Engagement Guide (PEG) was released. I have spent time understanding the changes and would be happy to discuss them further with you to determine what is most efficient and effective to implement in your practice. Key changes include:
Ten Steps to Successful Firm Risk Management
Since quality management is top of mind with the CSQM1 and CSQM 2 Exposure Drafts, I thought you may be interested in an article to help you address quality matters in your firm. This is the second article of a risk management series and covers 10 steps for successful risk management. The first article is 8 steps to Establishing a Firm Risk Management program (link within). These articles are a result of discussions at recent IFAC SMP Committee meetings, the committee that is focused on practice management for small- and medium-size practices (SMPs).
How to Price Client Engagements and Increase Firm Profits
With all the changes coming, another topic that is top of mind is how to price engagements and discussing fee increases with your clients. The attached link is the second of a three-part series addressing this critical area; it covers approaches to fee increases and value pricing. The first in the series, the Importance of client Selection and Relationship Management (link within), features client classification and the importance of engagement letters and the third instalment will highlight credit control, collection techniques and dealing with conflict.
Lots to think about in the upcoming months but I am here to assist as needed to save you time and provide peace of mind. But first, enjoy the long weekend. Work will always be there, it is more important to spend time with your family and friends. I know I will this weekend.
Kirsten S. Albo, FCPA, FCA
In this Update: Exposure Drafts (Quality Management & Others); Other Information (CAS 720); auditing Less Complex Entities
April 30. Another tax season is officially passed. Knowing how busy this month can be, I wanted to keep this update light. There has been a lot recent activity by the standard setters therefore this month’s updates includes topics I will cover in more detail in the coming months as matters become more relevant but they are important enough to bring to your attention today. Read on…
Exposure Drafts on Quality Management
An exposure draft Canadian Standards for Quality Management (CSQM 1) was issued April 5, 2019. CSQM 1, along with the new Engagement Quality Reviews (CSQM 2), will replace the existing CSQC 1. Why do you care? While there are many changes in the exposure draft which I will provide details on in the next update, the biggest change is CSQM 1 will apply to all assurance and related services including compilation engagements and agreed-upon procedures engagements. CSQC 1 never applied to these types of engagements as CSQM 1 will now. CPA Canada issued an Audit and Assurance Alert further detailing these exposure drafts and the reasons for the changes.
Other Exposure Drafts
The Audit and Assurance Board is still deliberating feedback on comments received on the Exposure Drafts for Compilation Engagements (CSRS 4200), Reporting on Controls at a Service Organization (CSAE 3416) and Identifying and Assessing the Risks of Material Misstatement (CAS 315). Exposure Drafts for Group Audits and Agreed-Upon Procedures Engagements are being drafted. Why do you care? It is important to keep up-to-date on standards. I will provide updates and the impact as these Exposure Drafts are released, re-exposed or become effective the Handbook.
Other Information (CAS 720)
As you turn your attention back to your audit engagements, it is a good time to remind yourself of the new reporting requirements related to Other Information (CAS 720). This topic is getting a lot of attention as it is not always clear what constitutes “other information”. CPA Canada issued further guidance on other information considerations as it is not always just a formal, glossy annual report put out by the organization. Why do you care? It is a subjective area which requires discussions with management and Those Charged with Governance.
Audits of Less Complex Entities (LCE)
The audit of Less Complex Entities has been a topic for discussion for both the IAASB and Canada’s AASB over the past several years; we are finally seeing results from those discussions. This past November, I participated in an outreach session hosted by the AASB to discuss the barriers to effective and efficient audits of less complex entities. I have heard many comments of the challenges faced by small to mid-sized practitioners and was able to pass these on to the AASB directly. The results of this session will be released in a Discussion Paper shortly.
In the meantime, the IAASB has released their Discussion Paper exploring how the IAASB and others could further support auditors working in increasingly evolving environments. The IAASB is asking for feedback on their paper and I plan to respond by the deadline of September 12, 2019. Why do you care? This is an important topic for practitioners who audit smaller (or less complex) clients and more efficient and effective engagements may be the final result of these discussions. It will be interesting to see what comes next.
Lots to think about in the coming months but for now, take a breathe. Rest assured there is time to deal with all of these matters in the coming months and I am here to assist you as needed. In the meantime, enjoy the upcoming weekend.
Kirsten S. Albo, FCPA, FCA