CPA Ontario 2
Member Support Centre
CPA Ontario Insights
Thought Leadership, Research & CPA Spotlights

Assurance Standards

Stay informed of changes to the selected Canadian assurance and other related services’ standards including webinars, training courses and relevant guidance and resources from standard setting boards.

bookmark

What’s new?

Page last updated on 12/11/24

Insights on Culture and Audit Quality (PCAOB, 2024)
Staff Priorities for 2025 Inspections and Interactions with Audit Committees (PCAOB, 2024)
Audit Committee Communications (PCAOB, 2024)

Revised standard – audits of group financial statements (including the work of component auditors)

The AASB revised CAS 600 to include a more robust risk-based approach to planning and performing a group audit. The revised standard provides detailed guidance for group and component auditors when conducting a group audit.

Effective for audits of group financial statements for periods beginning on or after December 15, 2023, with earlier application permitted.

Revised standards – Quality management

The AASB issued two new standards, quality management for firms (CSQM 1) and engagement quality reviews (CSQM 2), replacing the existing standard, CSQC 1. CSQMs largely mirror the international quality management standards (ISQM 1 and ISQM 2).

The AASB also issued conforming amendments to Other Canadian Standards to avoid inconsistencies with the new and revised quality management standards.

CSQMs will apply to both assurance and related service (i.e., non-assurance) engagements. This is a significant change from CSQC 1, which only scopes in assurance engagements.

The AASB also proposed revisions to the standard on quality management for an audit of financial statements (CAS 220) to clarify and strengthen the key elements of quality management at the engagement level.

CSQM 1 and 2 are effective for audits or reviews of financial statements or other assurance engagements as of December 15, 2022; and effective for related services engagements as of December 15, 2023.

CAS 220 (Revised) is effective for audits of financial statements for periods beginning on or after December 15, 2022.

The conforming amendments will be effective on or after December 15, 2022 except the amendments to the compilation (CSRS 4200) and agreed upon procedures (CSRS 4400) standards, which will be effective for periods beginning on or after December 15, 2023.

Exposure Draft  – Compilation of Future-Oriented Financial Information and Pro Forma

The AASB issued an exposure draft proposing to replace Assurance and Related Services Guideline (AuG) - 16, Compilation of a Financial Forecast or Projection, with a new Canadian Standard on Related Services (CSRS) 4250, Compilations Engagements on Future-oriented Financial Information and Pro Forma. This exposure draft also proposes limited consequential amendments to CSRS 4200, Compilation Engagements. The purpose of proposed CSRS 4250 is to address the inconsistencies in reporting and performance requirements between AuG-16 and the new compilation engagement standard (CSRS 4200) and to also address confusion in relation to the appropriate level of work effort and documentation in a compilation engagement under AuG-16.

Comments are requested by January 7, 2025.

Exposure draft – Proposed Narrow Scope Amendments to ISQMs, ISAs and ISRE 2400 (Revised)

The International Auditing and Assurance Standards Board issued an exposure draft that proposes narrow scope amendments to International Standards on Quality Management (ISQMs), International Standards on Auditing (ISAs) and International Standard on Review Engagements (ISRE) 2400 (Revised), Engagements to Review Historical Financial Statements, as a result of revisions to the definitions of Listed Entity and Public Interest Entity (PIE) in the International Ethics Standards Board for Accountants (IESBA) Code. These proposed revisions have would 1) align definitions and requirements in IAASB standards with new definitions for publicly traded and public interest entities in the IESBA Code and 2) extend the applicability of existing differential requirements for listed entities to meet increased stakeholder expectations in relation to audits of PIEs.

Proposed revisions include extending the scope of the entities included under the International Standards on Quality Management and the International Standards on Auditing such that they will be subject to:

  • Engagement quality reviews; 
  • Providing transparency in the auditor’s report on specific aspects of the audit, including auditor independence, communicating key audit matters, and the engagement partner’s name; and 
  • Communicating with those charged with governance to help them fulfill their responsibility overseeing the financial reporting process, (e.g., communicating about quality management and auditor independence).

The comment period for the IAASB exposure draft is closed.

The IAASB proposes these narrow scope amendments be effective for financial reporting periods beginning at least 18 to 24 months after approval of the final pronouncement.

The Canadian Auditing and Assurance Standards Board (AASB) has issued an exposure draft proposing the deferral of the IAASB’s PIE narrow scope amendments. The comment period for the AASB exposure draft is closed.

Exposure draft – Fraud

The International Auditing and Assurance Standards Board (IAASB) issued an exposure draft to revise International Standard on Auditing (ISA) 240 (Revised), The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements. Proposed revisions to ISA 240 include:

  • Clarifying auditor responsibilities relating to fraud in an audit.
  • Emphasizing professional skepticism to ensure auditors remain alert to possible fraud and exercise professional skepticism throughout an audit.
  • Strengthening identification and assessment of risks of material misstatement due to fraud.
  • Clarifying the auditor’s response to fraud or suspected fraud identified during the audit.
  • Increasing ongoing communication with management and those charged with governance about fraud.
  • Requiring Key Audit Matters related to fraud to be included in the auditor’s report of listed entities to enhance transparency.
  • Enhancing audit documentation requirements about fraud-related procedures.

The comment period is closed. The IAASB proposes that ISA 240 be effective for financial reporting periods beginning at least 18 months after approval of the final pronouncement.

The Canadian Auditing and Assurance Standards Board (AASB) has also issued an exposure draft for Canadian Auditing Standard (CAS) 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements, that proposes no new Canadian amendments to the requirements or application material of proposed ISA 240 (Revised). The comment period is closed. The AASB is proposing aligning the effective date of CAS 240 with the proposed effective date of ISA 240 (Revised).

Exposure draft – Sustainability Assurance

The IAASB issued an exposure draft for International Standard on Sustainability Assurance (ISSA) 5000, General Requirements for Sustainability Assurance Engagements that will:

  • Serve as a comprehensive, stand-alone standard suitable for any sustainability assurance engagements.
  • Apply to both limited and reasonable assurance engagements.
  • Apply to sustainability information reported across any sustainability topic and prepared under multiple frameworks, including the recently released IFRS Sustainability Disclosure Standards S1 and S2.
  • Serve as a profession agnostic standard that can be used by both professional accountant and non-accountant assurance practitioners.

The Comment period for the IAASB exposure draft is closed.

The AASB has also issued an exposure draft for the Canadian Standard on Sustainability Assurance (CSSA) 5000, General Requirements for Sustainability Assurance Engagements. The Comment period for the AASB’s exposure draft is closed. The anticipated approval date for the final CSSA 5000 standard is December 2024.

On November 12, 2024 the IAASB published the final standard on sustainability assurance engagements. A range of guidance and application materials are expected to be published in January 2025.

Exposure draft – Going concern

The IAASB issued an exposure draft proposing the following changes to International Auditing Standard (ISA) 570, Going Concern, aiming to:

  • Promote consistent practice and behavior and facilitate effective responses to identified risks of material misstatement related to going concern.
  • Strengthen the auditor’s evaluation of management’s assessment of going concern, including reinforcing the importance, throughout the audit, of the appropriate exercise of professional skepticism.
  • Enhance transparency with respect to the auditor’s responsibilities and work related to going concern where appropriate, including strengthening communications and reporting requirements.

The Comment period for the IAASB exposure draft is closed.

The AASB has also issued an exposure draft on proposed amendments to CAS 570. The Comment period for the AASB’s exposure draft is closed.

The IAASB and AASB are currently deliberating the feedback received.

New standard  – Less complex entities

In December 2023, the IAASB issued the International Standard on Auditing (ISA) for Audits of Financial Statements of Less Complex Entities (LCE) alongside the Basis for Conclusions. ISA for LCE is  a stand-alone standard designed specifically for smaller and less complex businesses and organizations. Built on the foundation of the ISAs, audits performed using this standard provide the same level of assurance for eligible audits: reasonable assurance.

The ISA for LCE cannot be used for audits of listed entities, entities with public interest characteristics, groups where component auditors are involved (except for limited circumstances) or when otherwise prohibited by jurisdictions.

It is effective for audits of financial statements for periods beginning on or after December 15, 2025, for jurisdictions that adopt or permit its use. Early adoption is permitted.

After careful consideration, the AASB decided not to adopt the ISA for LCE. The Board believes the ISA for LCE would not adequately meet the needs of interested and affected parties in Canada nor serve the Canadian public interest. Following this decision, the AASB will continue to discuss possible alternative options for addressing the unique challenges faced by small and medium-sized entities and practitioners engaged in audits of LCEs.

New project – Compilation of future-oriented financial information and Pro Forma

The AASB approved a new project replacing AuG-16, Compilation of a Financial Forecast or Projection, with a new standard. This is required because of the inconsistencies in reporting and performance requirements between AuG-16 and the new compilation engagement standard (CSRS 4200).

It is anticipated that an exposure draft will be issued in late September 2024.

Additional non-authoritative guidance and complimentary webinar/training

To stay ahead of the curve, find additional non-authoritative guidance to help you navigate the application of assurance and other Canadian standards.

Back to top

Contact us

Have a question? Our professional advisory services team are here to help. Advisors attempt to make first point of contact within 24 hours of receiving an inquiry.

Call: 416 204.3106 or 1 800 387.0735 x4456

Email us

Disclaimer

Certain links on this site take you to other websites, resources or tools maintained by third parties over whom CPA Ontario has no control. CPA Ontario provides these links only as a convenience and is not responsible for the contents of any linked website. CPA Ontario makes no representations or warranties regarding, and does not endorse, any linked website, the contents thereof, the information appearing thereon or any of the products or services described thereon. Links do not imply that CPA Ontario sponsors, endorses or is affiliated or associated with the entity that owns or is responsible for any linked website. If you decide to visit any linked websites, you will do so at your own risk. CPA Ontario bears no responsibility whatsoever for the content, accuracy or security of any websites that are linked (by way of hyperlink or otherwise).