Standards for Assurance Engagements

Status: Monitoring IAASB’s activities regarding proposed revisions to ISAE 3000. Revisions to certain standards for assurance engagements approved.

Objective and Scope of this Project
Background
Issues
Activities to Date
Next Steps
Related Information
Contact Information

Objective and Scope of this Project

The objective of this project is to revise the standards for assurance engagements to:

• appropriately reflect current practice;
• appropriately address the needs expressed by the legislative auditing community and other Canadian stakeholders, including providing sufficiently comprehensive guidance to support practitioners; and
• establish a clear interrelationship between upper tier standards for assurance engagements and engagement-specific assurance standards.

The scope of this project is expected to include revising or replacing the following Sections:

• Section 5025, Standards for Assurance Engagements Other than Audits of Financial Statements and Other Historical Financial Information;
• Section 5030, Quality Control Procedures for Assurance Engagements Other than Audits of Financial Statements and Other Historical Financial Information;
• Section 5049, Use of Specialists in Assurance Engagements Other than Audits of Financial Statements and Other Historical Financial Information; and
• Section 5050, Using the Work of Internal Audit in Assurance Engagements Other than Audits of Financial Statements and Other Historical Financial Information.

Background

The AASB has decided to undertake this project now for the following reasons:

• The guidance in these standards is quite old and may not reflect current good practice.
• A 2007 consultation with legislative auditors indicated that the standards are not comprehensive enough to address the needs of these auditors.
• When developing assurance engagement standards on specific topics, such as reporting on internal control over financial reporting and audits of service organizations, significant gaps were identified in the above noted standards when compared to standards for audits of financial statements.

For many of the same reasons, the International Auditing and Assurance Standards Board (IAASB) is undertaking a project to revise International Standard on Assurance Engagements (ISAE) 3000, Assurance Engagements Other than Audits or Reviews of Historical Financial Information, and possibly develop topic-specific assurance standards. The AASB has not decided whether to adopt revised ISAE 3000 and any such topic-specific standards. However, adopting such standards has some appeal because it would enable the AASB to adopt future IAASB assurance engagement standards with minimal amendments should it so wish. The AASB will conduct its own research and monitor the progress of the IAASB’s project. Any decision to adopt international assurance standards would be subject to public comment from Canadian stakeholders. To assist the AASB in making this decision, some of the research activities that will be undertaken include:

• developing a consultation paper that sets out key issues on which the AASB would like stakeholder input; and
• holding roundtable discussions with key stakeholders to solicit their input on key issues.

At each stage of review of the IAASB material, the AASB provides input to the IAASB member nominated by the CICA regarding the international assurance standards project for discussion at the upcoming IAASB meeting.

Issues

Key issues that this project plans to address include:

Adequacy of guidance

• Is the guidance in Sections 5025, 5030, 5049 and 5050 adequate for the purposes of assurance engagements (other than audits of financial statements and other historical financial information) being performed?
• What is the nature and extent of matters that are common to all assurance engagements (other than audits of financial statements and other historical financial information) that may need to be included in Sections 5025, 5030, 5049 and 5050?

Required expertise in providing assurance

• What assumptions should be made about the knowledge and experience with assurance concepts in general, and with Canadian Auditing Standards (CASs) in particular, of practitioners who use the standards for assurance engagements?

References to existing GAAS

• Should the assurance standards contain references to relevant material contained in generally accepted auditing standards (GAAS) for financial statement audits (for example, CASs) and require practitioners to adapt relevant GAAS requirements to the circumstances of the assurance engagement? Or should the standards be drafted so that they “stand alone” (for example, contain the requirements and supporting guidance to perform an assurance engagement with no need to refer to the other sets of standards such as GAAS)?

Interrelationships between the various levels of assurance engagement standards

• To some extent, revisions to Sections 5025, 5030, 5049 and 5050 will affect existing engagement specific assurance standard. How can the interrelationship of the various levels of assurance standards best be made clear?

Activities to Date

In June 2010, the AASB reviewed analyses of issues and a first read draft of proposed revisions to International Standard on Assurance Engagements (ISAE) 3000, Assurance Engagements Other than Audits or Reviews of Historical Financial Information.

The AASB also reviewed comments received on its Exposure Draft and approved the revisions to certain standards for assurance engagements.

In March 2010, the AASB reviewed the results of the initial consultations with stakeholders (roundtable discussions and survey responses) and discussed its implications for this project. 

The AASB also reviewed analyses of issues and a working draft of ISAE 3000.

In February 2010, the AASB approved an Exposure Draft “Dating of the Practitioner’s Report for Review and Other Assurance Engagements,” seeking comments on its proposals to:

• issue a new Assurance and Related Services Guideline, “Dating of the Review Engagement Report;” and
• revise certain standards for assurance engagements, and applicable Guidelines.

The purpose of the proposed changes is to make concepts related to the dating of the practitioner’s reports on assurance engagements, and matters affected by such dating, consistent, where practicable, with the Canadian Auditing Standards (CASs). For more detailed information related to the proposed new Guideline, please refer to the project summary for Standards for Review Engagements.

In December 2009, the AASB reviewed an analysis of ISAE 3000 High Level Directions Paper.

In September 2009, the AASB discussed issues related to making revisions to the standards for assurance engagements to eliminate inconsistencies between these standards and the Canadian Auditing Standards, which the AASB identified as needing to be made in the short term.

During the months of July and August 2009, an AASB task force was formed consisting of members from the public sector and large firms and a Consultation Paper, including survey questions, was developed.

In June 2009, the AASB reviewed an analysis of ISAE 3000 High Level Issues Paper.  

The AASB approved a project proposal to revise the Canadian standards for assurance engagements.

In March 2009, the AASB reviewed the project proposal to revise ISAE 3000.

IAASB Discussions to Date
Background papers that are the basis of the IAASB’s discussions, along with meeting summaries and audio recordings of the actual discussions, can be accessed on the IAASB’s website by clicking here and then on the date of the meeting at which matters pertaining to a project were discussed.

Next Steps

The following summarizes the AASB’s planned activities.

The AASB’s planned activities beyond this point are dependent on whether or not the AASB decides to adopt revised ISAE 3000 or develop a unique Canadian standard(s) for assurance engagements.

Related Information

• Responses to the AASB on its Exposure Draft are available here.
• Exposure Draft, Dating of the Practitioner's Report for Review and Other Assurance Engagements

Contact Information

Staff contact: Mary Olynik, CA
Phone no.: +1 (416) 204-3312