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The Auditing and Assurance Standards Board (AASB) recently made available a revised CICA Handbook – Assurance containing new Canadian auditing standards and a quality control standard for firms. Making the standards available now allows auditors and users to begin familiarizing themselves with the new Canadian Auditing Standards, to communicate future changes to their clients and to allow for the planning and implementation process to begin. Some limited changes will be made to the standards over the next few months; however, they will not be of a substantive nature. What’s New The new Handbook contains thirty-six final International Standards on Auditing (ISAs) adopted as Canadian Auditing Standards (CASs) for audits of financial statements for periods ending on or after December 14, 2010. It also contains the International Standard on Quality Control 1 adopted as Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance Engagements, or CSQC 1, on December 15, 2009. These new auditing and quality control standards for firms virtually completes the AASB’s initial adoption of the full set of high-quality, international standards. Given the timeline to adopt the international standards, the new Handbook delivers many benefits and meets the AASB’s commitment to transition to the new auditing standards in 2010. Structure of the New Handbook The CICA Handbook – Assurance is separated into Parts I and II. Part I is made up of all of the Preface to the Handbook, CASs, CSQC 1, and all other Sections and Guidelines referred to as Other Canadian Standards (OCSs), which have been retained and carried forward from the existing Handbook. Part II consists of the existing standards and guidance in effect prior to the effective date of the CASs and CSQC1. Auditors may choose to implement aspects of the CASs before their effective date, provided that those auditors still comply with all of the existing standards and guidance. Integration Issues It has always been the AASB’s intention for the effective date of the CASs and CSQC 1 to be the same as the related ISAs and ISQC. This will allow users to avoid issues that might arise regarding international audits where some auditors would be using the CASs and others the ISAs. In meeting this tight deadline, the AASB has encountered some challenges integrating the CASs into the existing Handbook structure. - Examples of integration challenges include:
- Inconsistencies exist between the CASs and the OCSs relating to certain concepts, such as the date of the auditor’s report.
- Similar terms used in the CASs and the OCSs may be defined differently.
- The CASs and CSQC 1 use American spelling (for example “inquiry” versus “enquiry”), whereas the OCSs use Canadian spelling.
- Cross-references from OCSs to the existing Handbook Sections for audits of financial statements have been changed on replacement of the Sections by the CASs. However, in many cases, it was not possible to make a direct replacement of a cross-reference, for example, because the wording in the CAS was not the same as in the Section being replaced.
The AASB recognized these issues during the adoption process and has developed an operating plan to address them as soon as possible. Next steps for the AASB The AASB is currently undertaking a strategic planning process to consult stakeholders on what the form and content of a future, user-friendly CICA Handbook – Assurance should look like. This process will allow stakeholders to help guide and inform the AASB’s choices going forward. If you are interested in reading more about the new Canadian Auditing Standards and CSQC 1, go to www.aasb.ca. If you would like to sign up for our free email alert service What’s New, click on the Subscribe button on the AASB’s website. |