| This summary of recently issued Auditing and Assurance Standards Board (AASB) pronouncements has been prepared for information purposes only. Reference should be made to official Handbook material for the text of final AASB pronouncements. |
Status: Preface approved. Objective of this Project
Scope
Background
Issues
Board Discussions to Date
Further Information Objective of this Project The objective of this project is to develop a “Preface to the CICA Handbook – Assurance,” to explain the scope and authority of pronouncements the AASB issues. Scope - This project proposes to develop a new Preface that will replace the following material in the Handbook:
- Introduction to General Standards of Quality Control for Firms Performing Assurance Engagements;
- Introduction to Assurance and Related Services Recommendations;
- Introduction to Assurance and Related Services; and
- Introduction to Assurance and Related Services Guidelines.
Background In early 2006, the AASB obtained significant support from stakeholders for adopting International Standards on Auditing (ISAs), which are to be applied in the audit of financial statements and other historical financial information. ISAs are developed and issued by the International Auditing and Assurance Standards Board (IAASB). The IAASB issued the Preface to the International Standards on Quality Control, Auditing, Review Other Assurance and Related Services to facilitate understanding of the scope and authority of the pronouncements the IAASB issues, including ISAs. The AASB intends that Canadian Auditing Standards (CASs) resulting from the adoption of ISAs will have the same number and name as the related ISAs. The AASB also concluded that it needs to explain in the new Handbook the scope and authority of the pronouncements contained therein. It decided to develop a Preface, based on the IAASB’s Preface, which would be included in the new Handbook when it becomes effective. Issues Standards Other Than CASs
The AASB’s adoption of international standards only addresses ISAs. The AASB may propose to adopt other international standards on a case-by-case basis as the need arises. At a future date after the issuance of the new Handbook, the AASB will decide, after appropriate consultation with stakeholders, whether to adopt other sets of international standards and practice statements in addition to the ISAs. For example, the AASB may adopt all International Standards for Review Engagements. Accordingly, in developing the new Handbook, the AASB will be carrying forward existing standards other than those being withdrawn on the adoption of ISAs. The existing standards will only be amended as necessary to eliminate cross references made to Sections of the Handbook that will be deleted on the adoption of the ISAs as CASs. The Preface, therefore, addresses the scope and authority not only of CASs but also other standards that were issued under the scope and authority set out in Section 5021 of the current Handbook. Compliance with Generally Accepted Auditing Standards
The Preface indicates that CASs are the professional standards with which the practitioner must comply when performing an audit of financial statements in accordance with generally accepted auditing standards. Amendments to Standards of the IAASB
The Preface provides the criteria the AASB follows in deciding whether it is appropriate to make amendments to standards of the IAASB it is adopting and indicates that such amendments are clearly identified in the new Handbook. An Appendix to the Preface contains the criteria used by the AASB in determining whether an amendment is appropriate. Another Appendix provides the nature of, the AASB’s reasons for and the effect, if any, of, each amendment with respect to the ability of a practitioner performing an audit of financial statements in accordance with the CASs to also comply with the ISAs. A further Appendix will explain additional changes made by the AASB that do not affect how a practitioner performs an audit of financial statements, so that the ISAs can be used in the context of the Handbook. Linkages Between the AASB’s and the IAASB’s Pronouncements
The Preface explains the linkages between the AASB’s and the IAASB’s pronouncements. In particular, it explains how the auditor performing a financial statement audit in accordance with CASs may report that the audit was conducted in compliance with ISAs. Effective Date of Standards
In the current Handbook, the effective date is noted beside each Recommendation. For CASs in the new Handbook, the AASB proposes to discontinue this approach and adopt the IAASB practice. The IAASB’s practice is to apply one effective date to the whole standard, including the requirements and application material. When the CASs are issued in the new Handbook, the effective date for engagements to report on information will be for periods ending on or after December 14, 2010. Use of the Term “Practitioner”
The Preface uses the term “practitioner”. In the IAASB’s pronouncements, “practitioner” is defined to mean “professional accountant in public practice”. The AASB proposes to adopt this definition in the new Handbook. Board Discussions to Date In April 2009, the Preface was approved by the AASB by written ballot. In meetings held between October 2008 and March 2009, the AASB considered further issues relating to finalizing the Preface. In September 2008, the AASB reviewed comments received on its Exposure Draft. In December 2007, the AASB approved an Exposure Draft with a comment period ending April 30, 2008. In October 2007, the AASB reviewed a second draft of a proposed Preface.
In September 2007, the AASB reviewed a first draft of a proposed Preface.
In February 2007, the AASB discussed issues concerning the adoption of the recently clarified Preface to the ISAs approved by the IAASB. Further Information Staff contact: Eric Turner, CA
Phone no.: +1 (416) 204-3240 |
