One more special update. You will have received an email from Knotia yesterday about the 2020 PEG release. This is so important I wanted to bring it to your attention and highlight a few key changes. Read on…
There have been two substantial updates to professional standards this year: CAS 540 Auditing Accounting Estimates and Related Disclosures and CSRS 4200 Compilation Engagements. The PEG 2020 update reflects changes to these standards as well as many other changes. See further details below about the release which will take place in two phases this year. The Practice Aids and Volume 1 are now available on Knotia. Volume 2, case studies and other content will be available in October. Highlights of the significant changes are:
Compilation Engagements, CSRS 4200:
As a reminder, the standard is effective for compiled financial information for periods ending on or after December 14, 2021, with early application permitted.
New practice aids are available. These include checklists, reports, and letters. You will want to consider what, if any, forms will be used in your practice.
A new section was created for all resources related to the new compilation engagements standard. This includes a new chapter in Volume 1 (Chapter 45), new chapters in Volume 2 (Chapters 35 – 38).
Stay tuned for training I will be putting on in September (dates to be determined shortly). The course will focus on implementation of the new standard and things you can do now, including developing an action plan between now and the effective date. The training will be an online live three-hour session (qualifies for verifiable CPD hours). Each session (several to be offered) will be limited to 10 participants to allow for interactive discussion and questions to help you save time and achieve peace of mind.
Practice Aids (Checklists):
Before fully implementing the 2020 versions, you will want to ensure you understand the changes as bringing in the new form overwrites existing data. The What’s New Section goes through each form in detail outlining whether changes are Major, Moderate or Minor and what practice aids are new.
Major changes have been made to various forms to include the new requirements from revised CAS 540, Accounting Estimates and Related Disclosures.
Moderate changes also been made to the Financial Reporting Framework (FRF) forms to reflect the changes to the ASPE standards relating to Section 3856, Financial Instruments.
Volume 1 and 2:
Updates in both volumes reflecting the changes made to CAS 540, Auditing Accounting Estimates and Related Disclosures.
On Knotia, the introduction chapters have been separated out as a stand-alone section. Additionally, the volumes are provided as a PDF, making searching for individual topics easier.
Volume 3: Case Studies (new Section coming)
Case studies have been reorganized to provide easy access to the material. Grouped by audit and review each case study includes written explanations along with the related filled-in forms
The details of the updates have been summarized by the PEG on Knotia in the What’s New Section. CLICK HEREto access Knotia (you will have to log in). I have also attached the What’s New document to this email to save you time so you do not have to go searching for it. If you have any questions about the implementation of the updated 2020 PEG forms, reach out at anytime. I am here to help. Enjoy the rest of the month!!
Best Regards, Kirsten S. Albo, FCPA, FCA President
The CPA Canada Standards and Guidance Collection (the “Handbook”) was updated this month. Unlike many previous releases which did not include noteworthy changes, this time there were many significant amendments and revisions.
The amendments related to the deferral of effective dates, discussed in my May 2020 Update. Ensure you stay up top of when the new standards are effective as certain revisions have significant impact, the most being Financial Instruments and the classification of Redeemable Shares. This could have a substantial impact on your client’s financial statements. It is a good thing this has been deferred a year as gives more time to consider the impact and discuss such with your clients and their bankers.
Lots of changes taking place. To access each of the links above, you will need to log onto Knotia. The details are worth reading. The other release that will be occurring is the 2020 PEG updates. This will also be an important release as the updates will checklists for the new compilation standard 7CSRS 4200 and CAS 540 Accounting Estimates among other editorial updates. Once the new checklists are released, I will be reviewing them in detail and sending out another special update on critical changes I think you should be aware of. Call me with any questions you may have. This definitely is a busy summer but I am here to help you save time and achieve peace of mind.
Best Regards, Kirsten S. Albo, FCPA, FCA President
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.