New and Proposed Changes to Assurance Sections for the Two Years Ended
NEW AND AMENDED STANDARDS DATE ISSUED EFFECTIVE DATE Preface to the CPA Canada Handbook Assurance (Amendment) CAS 501 Audit Evidence Specific Considerations for Selected Items (Amendment) December 2016 April 2016 Effective for audits of financial statements for periods ending on or after December 1, 2016. New joint policy statement effective for inquiry letters dated on or after December 1, 2016. CSAE 3000 Attestation Engagements Other Than Audits or Reviews of Historical Financial Information (New) July 2015 Effective for reports dated on or after June 30, 2017. CSAE 3001 Direct Engagements (New) July 2015 Effective for reports dated on or after June 30, 2017. S.7150 Auditor s Consent to the Use of a Report of the Auditor Included in an Offering Document (Amendment) S.7170 Auditor s Consent to the Use of the Auditor s Report in Connection with Business Acquisition Reports (New and Amendment) November 2015 July 2015/October 2016 Effective for an auditor s consent to the use of a report of the auditor in an offering document issued on or after January 1, 2016. Effective for an auditor s consent to the use of the auditor s report in a business acquisition report issued on or after June 1, 2017. CSRS 4460 Reports on Supplementary Matters Arising from an Audit or a Review Engagement (New) June 2014 Effective for reports dated on or after April 1, 2016. This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon the 2
EXPOSURE DRAFTS DATE ISSUED EFFECTIVE DATE Use of the Practitioner s Communication or Name The Auditor s Responsibilities Relating to Other Information: Canadian Amendments Reports on Compliance with Agreements, Statutes and Regulations Engagements to Report on Summary Financial Statements Responding to Non-compliance or Suspected Non-compliance with Laws and Regulations Reporting on Audited Financial Statements: Special Considerations Addressing Disclosures in the Audit of Financial Statements Reporting on Audited Financial Statements March 2016 November 2015 September 2015 August 2015 August 2015 March 2015 June 2014 September 2013 Proposed to be effective for a practitioner s consent provided on or after June 1, 2017. Proposed to be effective for responsibilities relating to other information for periods ending on or after December 15, 2017. Proposed to be effective for engagements to report on compliance with specified provisions of agreements, statutes or regulations where the report is issued on or after June 30, 2017. Earlier adoption will be permitted. Proposed to be effective for engagements to report on summary financial statements for periods ending on or after December 15, 2017. Proposed to be effective for periods ending on or after December 15, 2018. Proposed to be effective for periods ending on or after December 15, 2017. Earlier adoption will be permitted. Proposed to be effective for periods ending on or after December 15, 2017. Earlier adoption will be permitted. Proposed to be effective for periods ending on or after December 15, 2017, except for CAS 701. CAS 701 is proposed effective for periods ending on or after December 15, 2017 for TSXlisted entities and December 15, 2018 for all other entities. This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon the 3
New and Amended Standards Preface to the CPA Canada Handbook Assurance (Amendment) In December 2016, the Auditing and Assurance Standards Board (AASB) issued an amendment to the Preface to the CPA Handbook Assurance to identify International Standards on Auditing (ISAs) which are effective for audits of financial statements for periods ending on or after December 15, 2016 that have not been adopted as Canadian Auditing Standards (CASs). The amendment is effective for audits of financial statements for periods ending on or after December 1, 2016. CAS 501 Audit Evidence Specific Considerations for Selected Items (Amendment) In April 2016, the Auditing and Assurance Standards Board (AASB) issued an amendment to Canadian Auditing Standard (CAS) 501. CAS 501 has been amended to include a new appendix Joint Policy Statement Concerning Communications with Law Firms Regarding Claims and Possible Claims in Connection with the Preparation and Audit of Financial Statements (Joint Policy Statement). The Joint Policy Statement replaces the existing Joint Policy Statement and AuG-46 Communications with Law Firms under New Accounting and Auditing Standards. The new Joint Policy Statement: Includes an expanded scope that also applies to communications regarding claims and possible claims involving the entity's in-house legal counsel who is representing or advising the entity with respect to claims and possible claims; Excludes guidance relating to a specific financial reporting framework; Clarifies the communication protocols and timelines for issuance of the inquiry and response letters; Includes new guidance with respect to the auditor's role to review the inquiry letter prior to sending it to the law firm; Includes new guidance on updated response letters; and Includes new guidance relating to format and content of the inquiry and response letter. The new Joint Policy Statement is effective for inquiry letters dated on or after December 1, 2016. CSAE 3000 Attestation Engagements Other Than Audits or Reviews of Historical Financial Information (New) In July 2015, the Auditing and Assurance Standards Board (AASB) issued new Canadian Standard on Assurance Engagements (CSAE) 3000. CSAE 3000 is adopted from the International Standard on Assurance Engagements (ISAE) 3000 Assurance Engagements Other Than Audits or Reviews of Historical Financial Information, which was issued in December 2013 by the International Auditing and Assurance Standards Board, modified in limited circumstances, where considered necessary, to meet unique Canadian circumstances. CSAE 3000 provides guidance related to planning, performing and reporting on attestation engagements other than audits or reviews of historical financial information. An attestation engagement is an assurance engagement in which a party other than the practitioner measures or evaluates the underlying subject matter against the criteria. The objectives of the practitioner in conducting an attestation engagement are to: Obtain either reasonable assurance or limited assurance, as appropriate, about whether the subject matter information is free from material misstatement. Express a conclusion regarding the outcome of the measurement or evaluation of the underlying subject matter through a written report that conveys either a reasonable assurance or a limited assurance conclusion and describes the basis for the conclusion. To communicate further as required by CSAE 3000 and any other relevant CSAEs. This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon the 4
This new CSAE, with CSAE 3001 Direct Engagements, replaces: s.5025 Standards for Assurance Engagements Other Than Audits of Financial Statements and Other Historical Financial Information s.5030 Quality Control Procedures for Assurance Engagements Other Than Audits of Financial Statements and Other Historical Financial Information s.5049 Use of Specialists in Assurance Engagements Other Than Audits of Financial Statements and Other Historical Financial Information s.5050 Using the Work of Internal Audit in Assurance Engagements Other Than Audits of Financial Statements and Other Historical Financial Information CSAE 3000 is effective for attestation engagements where the assurance report is dated on or after June 30, 2017. CSAE 3001 Direct Engagements (New) In July 2015, the Auditing and Assurance Standards Board (AASB) issued new Canadian Standard on Assurance Engagements (CSAE) 3001. CSAE 3001 provides guidance related to planning, performing and reporting on direct engagements. A direct engagement is an assurance engagement in which the practitioner evaluates the underlying subject matter against applicable criteria and aims to obtain sufficient appropriate evidence to express, in a written direct assurance report, a conclusion to intended users other than the responsible party, about the outcome of that evaluation. The objectives of the practitioner in conducting a direct engagement are to: Obtain either reasonable assurance or limited assurance, as appropriate, about whether the underlying subject matter conforms, in all significant respects, with the applicable criteria. Express a conclusion regarding the outcome of the measurement or evaluation of the underlying subject matter through a written report that conveys either a reasonable assurance or a limited assurance conclusion and describes the basis for the conclusion. To communicate further as required by CSAE 3000 and any other relevant CSAEs. This new CSAE, with CSAE 3000 Attestation Engagements Other Than Audits or Reviews of Historical Financial Information, replaces: s.5025 Standards for Assurance Engagements Other Than Audits of Financial Statements and Other Historical Financial Information s.5030 Quality Control Procedures for Assurance Engagements Other Than Audits of Financial Statements and Other Historical Financial Information s.5049 Use of Specialists in Assurance Engagements Other Than Audits of Financial Statements and Other Historical Financial Information s.5050 Using the Work of Internal Audit in Assurance Engagements Other Than Audits of Financial Statements and Other Historical Financial Information CSAE 3001 is effective for direct engagements where the assurance report is dated on or after June 30, 2017. S.7150 Auditor s Consent to the Use of a Report of the Auditor Included in an Offering Document (Amendment) In November 2015, the Auditing and Assurance Standards Board (AASB) issued amendments to s.7150. The amendments made relate to: The auditor s consent requirements of certain stock exchanges regulated by a Canadian securities regulatory body to include statements that were not previously contemplated. Other minor clarifying improvements. The amendment to s.7150 related to the auditor s consent requirements of certain stock exchanges is effective for an auditor s consent to the use of a report of the auditor in an offering document issued on or after January 1, 2016. All other amendments are effective immediately on inclusion in the Standard. This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon the 5
S.7170 Auditor s Consent to the Use of the Auditor s Report in Connection with Business Acquisition Reports (New and Amendment) In July 2015, the Auditing and Assurance Standards Board (AASB) issued s.7170, which replaces s.7500 Auditor s Consent to the Use of the Auditor s Report in Connection with Designated Documents. The new Section sets out requirements relating to: The auditor s responsibilities in responding to requests to consent to the use of the auditor s report on the audited financial statements of the acquired business that are to be included in a business acquisition report issued by the acquirer. The format and content of the auditor s consent. This new Section, as issued in July 2015, was effective for an auditor s consent to the use of the auditor s report in a business acquisition report issued on or after June 1, 2016. In October 2016, the effective date of this Section was deferred by one year to June 1, 2017. CSRS 4460 Reports on Supplementary Matters Arising from an Audit or a Review Engagement (New) This new Canadian Standard on Related Services (CSRS) pertains to engagements to report on supplementary matters arising from an audit or a review engagement to a third party (previously referred to as derivative reporting). CSRS 4460 sets out requirements relating to: Acceptance of the engagement, including circumstances when acceptance is prohibited. Performance of the engagement. Reporting, including the content of the practitioner's report. Under CSRS 4460, a public accountant is required to perform procedures, using professional judgment, to issue a stand-alone report on a supplementary matter, except when required by law, regulation or agreement to include a report related to the supplementary matter within the report on the financial statements or other historical financial information. No audit opinion or review conclusion is expressed on the supplementary matter, and the public accountant should only accept the other reporting responsibility when the related review or audit engagement has been accepted. As a result of the issuance of CSRS 4460, editorial changes have been made to s. 9100 Reports on the Results of Applying Specified Auditing Procedures to Financial Information Other than Financial Statements, AuG-17 Transactions or Conditions Reportable under the Well-being Reporting Requirement in Federal Financial Institutions Legislation and AuG-18 Criteria for Reports Issued under Subsection 295(5) of An Act Respecting Trust Companies and Savings Companies in Quebec while AuG-13 Special Reports on Regulated Financial Institutions has been withdrawn. CSRS 4460 is effective for reports dated on or after April 1, 2016. This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon the 6
Exposure Drafts Use of the Practitioner s Communication or Name In March 2016, the Auditing and Assurance Standards Board (AASB) issued a Re-exposure Draft (Re-ED) that proposes to replace s. 5020 Association with new Canadian Standard on Association (CSOA) 5000 Use of the Practitioner s Communication or Name. This project involves the redrafting of s. 5020 in the clarity format and making revisions to clarify a practitioner s responsibilities regarding matters relating to the use of a practitioner s name or report. The fundamental principles proposed for the new CSOA 5000 in the Re-ED are consistent with those in the original ED titled Association. The changes in the Re-ED mainly deal with improving the understandability and clarity of the requirements of this CSOA in response to stakeholders comments. CSOA 5000 is proposed to be effective for a practitioner s consent provided on or after June 1, 2017. A consequential amendment of proposed CSOA 5000 relates to the effective date of s. 7170 Auditor s Consent to the Use of the Auditor s Report Included in a Business Acquisition Report. S. 7170 was issued by the AASB in July 2015 and relates to the auditor s responsibilities regarding the use of their report in a business acquisition report. Given the inter-relationship between s. 7170 and CSOA 5000, the AASB proposes to defer the effective date for s. 7170 by one year to June 1, 2017. The Auditor s Responsibilities Relating to Other Information: Canadian Amendments In November 2015, the Auditing and Assurance Standards Board (AASB) issued an Exposure Draft (ED) that proposes to amend International Standard on Auditing (ISA) 720 (Revised) The Auditor s Responsibilities Relating to Other Information before adopting it as Canadian Auditing Standard (CAS) 720. The AASB is proposing to make the following Canadian amendments to ISA 720 (Revised) in adopting it as CAS 720: Clarify the documents within (and outside) the scope of CAS 720. Amend references to relevant ethical requirements. Enhance the description of the auditor s responsibilities relating to other information expected to be obtained after the date of the auditor s report in the illustrative reports. The proposed amendments reflect the input obtained from stakeholders in response to the May 2014 Re-ED issued by the AASB on this topic which significantly modified the positions taken in the original 2012 ED. The effective date is proposed to be the same as that for the new and revised CASs arising from the auditor reporting project, which is proposed to be for audits of financial statements for periods ending on or after December 15, 2017. Earlier application will be permitted. Reports on Compliance with Agreements, Statutes and Regulations In September 2015, the Auditing and Assurance Standards Board (AASB) issued an Exposure Draft (ED) that proposes to issue new Canadian Standard on Assurance Engagements (CSAE) 3530 Reports on Compliance with Agreements, Statutes and Regulations and replace the following Sections: s.5800 Special Reports Introduction s.5815 Special Reports Auditor s Reports on Compliance with Agreements, Statutes and Regulations s.8600 Reviews of Compliance with Agreements and Regulations This project involves redrafting these Sections in the clarity format and making revisions to align with the new umbrella assurance standards CSAE 3000 Attestation Engagements Other Than Audits or Reviews of Historical Financial Information and CSAE 3001 Direct Engagements which were issued in July 2015. This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon the 7
The proposed effective date for CSAE 3530 is for engagements to report on compliance with specified provisions of agreements, statutes or regulations where the practitioner s report is issued on or after June 30, 2017. Earlier adoption will be permitted. Engagements to Report on Summary Financial Statements In August 2015, the International Auditing and Assurance Standards Board (IAASB) issued an Exposure Draft (ED) that proposes amendments to International Standard on Auditing (ISA) 810 (Revised) Engagements to Report on Summary Financial Statements. The Auditing and Assurance Standards Board (AASB) is proposing to adopt with appropriate amendments, if any, the proposed changes by the IAASB and apply them to the existing Canadian Auditing Standard (CAS) 810. The proposed changes are intended to explain how the enhancements resulting from the new and revised auditor reporting standards apply to an engagement to report on summary financial statements. The proposed amendments are summarized as follows: The auditor must draw attention, in a CAS 810 report, to additional information included in the auditor s report on the audited financial statements, and describe these matters and the effects thereof, if any, on the summary financial statements. This includes a requirement to describe the material uncertainty related to going concern or the uncorrected material misstatement of the other information and the effects thereof, if any, on the summary financial statements. Requirement for CAS 810 reports to include a reference to the communication of key audit matters in the auditor s report on the audited financial statements. Alignment of the layout of the CAS 810 illustrative auditor s reports in a manner consistent with those in CAS 700 (Revised) Forming an Opinion and Reporting on Financial Statements. The changes are proposed to be effective for engagements to report on summary financial statements for periods ending on or after December 15, 2017. Responding to Non-compliance or Suspected Non-compliance with Laws and Regulations In August 2015, the Auditing and Assurance Standards Board (AASB) issued an Exposure Draft (ED) that proposes to adopt with appropriate amendments, if any, the limited changes proposed by the International Auditing and Assurance Standards Board (IAASB) to a number of Canadian Auditing Standards (CSAs), the Canadian Standard on Quality Control (CSQC) 1 Quality Control for Firms that Perform Audits and Reviews of Financial Statements and Other Assurance Engagements, Canadian Standard on Assurance Engagements (CSAE) 3416 Reporting on Controls at a Service Organization, and proposed Canadian Standard on Review Engagements (CSRE) 2400 Engagements to Review Historical Financial Statements. The affected CASs include: CAS 220 Quality Control for an Audit of Financial Statements CAS 240 The Auditor s Responsibilities Relating to Fraud in an Audit of Financial Statements CAS 250 Consideration of Laws and Regulations in an Audit of Financial Statements CAS 260 Communication with those Charged with Governance CAS 450 Evaluation of Misstatements Identified During the Audit The proposed amendments clarify the expectations of auditors relating to non-compliance or suspected noncompliance with laws and regulations. The changes are proposed to be effective for periods ending on or after December 15, 2018. Reporting on Audited Financial Statements: Special Considerations In March 2015, the Auditing and Assurance Standards Board (AASB) issued an Exposure Draft (ED) that proposes to adopt with appropriate amendments, if any, the proposed changes by the International Auditing and Assurance Standards Board (IAASB) to International Standard on Auditing (ISA) 800 Special Considerations Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks and ISA 805 Special Considerations Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon the 8
Statement. The proposed changes would be applied to the corresponding Canadian Auditing Standards (CAS), CAS 800 and CAS 805 and result from the significant revisions to the auditor reporting standards. The ED addresses the voluntary communication of key audit matters, the reporting of material uncertainties related to going concern and uncorrected material misstatements of other information, and naming the engagement partner in the auditor s report, as relevant, for CAS 800 and 805. The effective date for the amendments to CAS 800 and 805 is proposed to be the same as that for the new and revised CASs arising from the auditor reporting project, which is proposed to be for audits of financial statements for periods ending on or after December 15, 2017. Earlier adoption will be permitted. Addressing Disclosures in the Audit of Financial Statements In June 2014, the Auditing and Assurance Standards Board (AASB) issued an Exposure Draft (ED) that proposes amendments to a number of Canadian Auditing Standards (CASs) to clarify the expectations of auditors when auditing financial statement disclosures and provide additional guidance to assist auditors in addressing the practical challenges arising from the evolving nature of disclosures. The following provides an overview of the proposed changes: Clarifying the Meaning of Disclosures: Proposed Change to CAS 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Canadian Auditing Standards Clarifies that the term financial statements includes all disclosures subject to audit as found in the related notes, on the face of the financial statements or incorporated by cross-reference as allowable by some financial reporting frameworks. Guiding Auditors to Address Audit Considerations Relating to Disclosures Early in the Audit: Proposed Changes to CAS 210 Agreeing the Terms of Audit Engagements, CAS 260 Communication with Those Charged with Governance and CAS 300 Planning an Audit of Financial Statements Provides additional guidance to encourage earlier auditor attention on disclosures during the audit process. Identifying, Assessing and Responding to Risks of Material Misstatement Disclosure Considerations: Proposed Changes to CAS 240 The Auditor s Responsibilities Relating to Fraud in an Audit of Financial Statements, CAS 315 Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and its Environment, CAS 320 Materiality in Planning and Performing an Audit and CAS 330 The Auditor s Responses to Assessed Risks Provides new application material to assist auditors in assessing and responding to the risks of material misstatement, including at the assertion level, for disclosures whether due to fraud or error. Integrates the relevant assertions relating to disclosures with the assertions about classes of transactions and events and account balances. Clarifying and Elaborating Expectations of Auditor when Evaluating Misstatements and Forming on Opinion: Proposed Changes to CAS 450 Evaluation of Misstatements Identified During the Audit and CAS 700 Forming an Opinion and Reporting on Financial Statements. Provides new application material related to the accumulation and evaluation of the effect of misstatements in both quantitative and non-quantitative disclosures. Provides new guidance to assist auditors in effectively and consistently evaluating the financial statements overall. The effective date for the revised CASs is proposed to be the same as that for the new and revised CASs arising from the auditor reporting project, which is proposed to be for audits of financial statements for periods ending on or after December 15, 2017. Earlier application will be permitted. This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon the 9
Reporting on Audited Financial Statements In September 2013, the Auditing and Assurance Standards Board (AASB) issued an Exposure Draft (ED) that proposes new and revised standards dealing with auditor reporting on financial statements. The objective of the proposed changes is to provide more relevant information to financial statement users based on the audit that was performed. The Canadian Auditing Standards (CASs) comprising the proposed new auditor reporting standards are: CAS 260 Communication with Those Charged with Governance (amended) CAS 570 Going Concern (amended) CAS 700 Forming an Opinion and Reporting on Financial Statements (amended) CAS 701 Communicating Key Audit Matters in the Independent Auditor s Report (new) CAS 705 Modifications to the Opinion in the Independent Auditor s Report (amended) CAS 706 Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor s Report (amended) Conforming amendments to other CASs The following summarizes the significant changes being proposed: For a listed entity, inclusion of key matters within the auditor s report that, in the auditor s professional judgment, were of most significance in the audit of the financial statements. Separate section for going concern that includes the auditor s conclusion on the appropriateness of management s use of the going concern assumption in preparing the financial statements and an explicit statement as to whether the auditor has identified material uncertainties that may cast doubt on an entity s ability to continue as a going concern. Disclosure of the engagement partner s name within the auditor s report for audits of financial statements of listed entities except in rare circumstances where such disclosure is expected to result in a significant security threat to the individual. Enhanced descriptions of the responsibilities of management, the auditor and those charged with governance. Requirement for the auditor to specify ethical requirements including those established by different sources to which the auditor is subject. In June 2015, the AASB issued an Invitation to Comment to seek input on the proposed effective dates and other implementation considerations. The proposed effective dates are planned as follows: All CASs comprising the new auditor reporting standards other than CAS 701 will be effective for audits of financial statements for periods ending on or after December 15, 2017. CAS 701 will be effective for audits of financial statements of TSX-listed entities for periods ending on or after December 15, 2017, and for audits of financial statements of other entities for periods ending on or after December 15, 2018. This communication contains a general overview of the topic and is current as of. The application of the principles addressed will depend upon the 10
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