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Chartered Accountants of Canada Auditing and Assurance Standards Board / Conseil des normes de vérification et de certification

Auditing and Assurance Standards Board
Decision Summary
August 18, 2010

This summary of decisions of the Auditing and Assurance Standards Board (AASB) has been prepared for information purposes only. Decisions reported are tentative and reflect only the current status of discussions on projects and other matters, which might change after further deliberations by the AASB. Decisions to publish exposure draft and Handbook material are final only after a formal voting process.

For more detailed information about AASB projects, please refer to the project summaries under Projects.

 

Using the Work of Internal Auditors

The AASB reviewed and approved an exposure draft of revised Canadian Auditing Standard (CAS) 610, Using the Work of Internal Auditors, and related proposed changes to certain paragraphs in CAS 315, Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and its Environment, that deals with the external auditor’s consideration of the internal audit function. The exposure draft notes that the AASB is proposing no Canadian amendments to the proposed International Auditing and Assurance Standards Board (IAASB) exposure draft of ISA 610 (Revised) and ISA 315 (Revised). It is expected the exposure draft will be posted later this month with a response date of October 6, 2010.

Due Process

The AASB discussed possible changes to and clarifications of its due process for setting standards and other authoritative guidance. These matters will be discussed further at the AASB’s September 2010 meeting.

Reporting on Information Encountered During the Financial Statement Audit (Derivative Reporting)

The AASB discussed and approved a project proposal to develop a new Related Services Standard dealing with how auditors can properly respond to requests to communicate matters of interest to an entity’s stakeholders regarding matters that have come to the auditor’s attention during a financial statement audit. There is an increasing demand by regulators and others for these types of communications. The AASB concluded that guidance is needed to help ensure that the nature and limitations of such communications is made clear to users.

The Auditor’s Responsibilities Relating to Other Information in Documents Containing Audited Financial Statements

The AASB discussed an issue related to CAS 720, The Auditor’s Responsibilities Relating to Other Information in Documents Containing Audited Financial Statements. It was noted that a document containing audited financial statements could be issued long after the date of the auditor’s report. CAS 720 is not explicit in stating that the documents that fall within its scope would need to be prepared within the same timeframe as the financial statements and with the intention of being made available to the auditor prior to the date of the auditor’s report. The AASB noted that the IAASB is now in the process of revising ISA 720 and this matter will be addressed. Any revisions will be reflected in CAS 720. The AASB also noted that paragraph 10 of CAS 560, Subsequent Events, is clear in stating that the auditor has no obligation to perform any audit procedures regarding the financial statements after the date of the auditor’s report.