Reporting on Audited Financial Statements

Transcription

October 7, 2013
Mr. Greg Shields, CPA, CA
Director, Auditing and Assurance Standards
CICA
277 Wellington Street West
Toronto, Ontario M5V 3H2
Subject: Comments from BC Members on the Exposure Draft ““Reporting
Reporting on Audited Financial
Statements” issued September 2013
Dear Mr. Shields:
The Advisory Services Department of the Institute of Chartered Accountants of British Columbia (ICABC)
hosted a roundtable discussion in Vancouver with BC members and Mr. Eric Turner CPA, CA, of CPA Canada
on October 4, 2013 to discuss the AASB Exposure Draft ““Reporting on Audited Financial Statements.” We
have collected the following comments for the AASB’s consideration.
The views expressed in this letter are of those members attending the roundtable discussions and should
s
not
be viewed as representing the views of the Institute, its Council or its staff.
1. Will the introduction of a new key audit matters section in the auditor’s report enhance the usefulness
of the auditor’s report?
•
•
•
•
Inclusion of key audit matters coul
could
d result in a lot of energy expended by management, audit
committee and the auditor that may not be justifiable;
For smaller entities (such as small cap companies), there may not be adequate benefits from the
new auditor reporting to justify the expected iincrease in effort and cost;
Many do not believe the Canadian market place is asking for this additional reporting; and
Some clients will find the added commentary unnecessary as it has the potential to increase the
complexity of the auditors’ report on ma
matters
tters that could be adequately addressed in the notes
no
to
the financial statements.
2. Do the proposals in ISA 701 provide an appropriate framework to guide the auditor in determining key
audit matters on a consistent basis and in describing key audit matters in the auditor’s report?
report
•
Key audit matters may lead users to believe that the matters identified are the only issues which
could leave an incorrect impression of the overall work performed.
3. What are your views with respect to the IAASB’s proposa
proposall that key audit matters apply to listed entities
and be voluntary for auditors of other entities
entities?
•
•
There iss general consensus that key audit matters apply only to listed entities; and
A practitioner suggested that the AASB, post implementation of this sta
standard
ndard if approved, not
consider key audit matters for non
non-listed entities (such as NFPOs).
Private and Confidential
4. What are your views on the illustrative examples of key audit matters in the illustrative auditor’s
report?
•
•
•
•
•
•
The key audit matters may give users the impression tha
thatt more work was done in these areas
which may give
e rise to unintended reliance on the work performed in these areas;
When conclusions are made, these may be misunderstood by the user as providing greater
assurance than is intended;
Key audit matters may, o
over
ver time, become vague and boilerplate reducing the value to users;
The example, “Revenue Recognition Relating to Long Term Contracts
Contracts,”” appears to be similar to
what may be found in an audit manual which may not provide additional value to users;
Some matters, such as material financing, may be too complex to be summarized in an easy to
understand paragraph; and
An alternative suggested is to provide a listing of the higher risk areas and to reference the reader
to the relevant note in the financial sta
statements
tements (ie. provide user with a “roadmap” to better
understand
rstand the financial statements).
5. Do you agree that the IAASB should retain the concepts of Emphasis of Matter and Other Matter
paragraphs, even when the auditor is required to communicate key audit matters?
matters
•
No comments were made on this question.
6. Do you agree with the statements included in the illustrative report relating to going concern?
concern Will
readers understand and appropriately interpret these statements?
•
•
•
•
Concern about the threshold that should be used for material uncertainties. Additional clarity as to
whether the existing standard in this area should remain the same or be revised;
Many felt that the illustrative example is too boiler plate and not useful for users;
The last sentence, “However, neither management nor the auditor can guarantee the Group’s
ability to continue as a going concern,” does not add any meaningful value; and
As the underlying standards relating to going concern have not changed and it appears to be
merely a change
nge in the language used in the auditor’s report, this proposed requirement may not
address the objective of the new standard in which case it may not be needed.
7. What are your views as to the benefits and practical implications of the proposed requirement
requiremen to
disclose the sources of independence and other relevant ethical requirements in the auditor’s report?
•
The value of this disclosure for users is not obvious.
8. What are your views on the proposal to require disclosure of the name of the engagement partner
part
for
audits of listed entities and include a “harm’s way” exemption?
•
•
•
Greater clarity is needed whether it is appropriate to name the engagement partner if he/she is
operating as a limited company;
It is of questionable value to draw a linkage between tthe
he service that is provided (ie. the audit) and
one particular individual (ie. the partner) especially in the case o
off a global audit engagement
where multiple partners and staff have contributed to the audit; and
Naming the engagement partner will not, by itself, result in improved audit quality.
Private and Confidential / Page 2
9. What are your views on the proposal not to mandate the ordering of sections of the auditor’s report in
any way, even when law, regulation or standards do not require a specific order?
•
No comments were made on thi
this question.
10. What are the implications of the proposals on the processes of management and the audit committee
in preparing the financial statements and on the working relationship with the auditors?
•
•
•
•
•
The cost of an audit will increase due to the use of se
senior
nior engagement personnel in drafting key
audit matters, including the engagement partner, engagement quality control reviewer and
potentially the relationship partner
partner;
There are many small venture issuers who are very concerned about increasing audit cost
cos and
may choose to exit the capital market
market;
Differences in opinions may result in audit committee resources being used to negotiate the
language used in the key audit matters
matters;
Many audit committees, especially small venture issuers, many not find value in these additional
disclosures; and
The potential for opinion sshopping may become more common as a result.
11. What other comments do you have on the illustrative auditor’s report, particularly in relation to its
potential benefits and challenges in a Canadia
Canadian context?
•
The proposed changes to the auditor’s report seem to be addressing issues that are more
relevant in other jurisdictions (such as Europe) rather than the Canadian environment.
12. What are your views on whether the AASB should adopt the proposed n
new
ew and revised ISAs within
Canada?
•
General consensus that the AASB should adopt ISAs in Canada.
13. What are your views on the importance of the AASB maintaining its commitment to adopt ISAs as a
CASs in Canada, recognizing that if the AASB does not adopt the proposed new and revised ISAs,
Canadian auditors performing an audit in accordance with the CASs would not be able to also
represent compliance with the ISAs?
•
here is a divergence of opinion with some members supporting a consistent global adoption of
o
There
ISAs and some members believing that ISAs should be modified for the Canadian environment.
For the latter group of members, tthe
he potential to have two audit frameworks,
frameworks one for public entities
and the other for non-public
public entities, may be worth explorin
exploring.
14. Have you any other comments to make on this topic not addressed above?
•
Concerns about whether these new standards, by making audit services more complicated, may
result in preparers (who are not required to obtain an audit) downgrading their assurance
assuranc
requirements to a review or even a notice to reader.
We appreciate the opportunity to provid
provide input to the AASB and
nd trust that you find this feedback from BC
members useful.
Yours very truly,
David Chiang, CPA, CA, CIA, CMC
Senior Director, Member Services
Deloitte LLP
2 Queen Street East
Suite 1200
P.O. Box 8
Toronto ON M5C 3G7
Canada
Tel: 416-874-4424
Fax: 416-874-3889
www.deloitte.ca
October 30, 2013
By email: [email protected]
Auditing and Assurance Standards Board
Toronto Ontario M5V 3H2
Dear Mr. Shields,
Re: Exposure draft: Reporting on Audited Financial Statements – September 2013
We are pleased to respond to the Auditing and Assurance Standards Board’s (AASB) request for
comments on the above-noted exposure draft and provide our thoughts and suggestions herein.
The views expressed in this submission are those of the Canadian member firm of the Deloitte Touche
Tohmatsu Limited global network.
Our global firm Deloitte Touche Tohmatsu Limited will be responding to the International Auditing and
Assurance Standards Board’s (IAASB) exposure draft titled, Reporting on Audited Financial Statements:
Proposed New and Revised International Standards on Auditing. A copy of that response will be
forwarded to the AASB when available.
Responses to the questions contained in the exposure draft
1. What are your views on whether the Auditing and Assurance Standards Board should adopt the
proposed new and revised International Standards on Auditing (ISAs) within Canada?
We support the AASB in adopting the proposed new and revised ISAs as Canadian Auditing
Standards (CASs) as their adoption would follow in the footsteps of the AASB’s adoption of the full
ISA reporting model back in 2009. As outlined in our letter of October 12, 2012 commenting on the
paper developed by the Auditor Reporting Working Group entitled Enhancing Audit Quality:
Canadian Perspectives – The Auditor Reporting Model, we have concerns about the implementation
and impact of some of the new requirements for audit reporting. However, we do not believe that
these concerns and the Canadian environment, even with its multiple financial reporting frameworks,
justify basic requirements for reporting on audited financial statements that differ from the proposed
revised ISA requirements.
The IAASB has recognized the challenges of implementing these new and revised standards such that
their exposure draft of the same name indicates their plan for a post implementation review, which
October 30, 2013
Page 2
may result in revisions to the ISAs. This appears to indicate that concerns about implementation are
shared by stakeholders in other jurisdictions. If the AASB moves forward with adopting these ISAs,
we recommend that consideration be given to conducting a similar post implementation review in
Canada, the findings from which can be shared with the IAASB during their review.
2. What are your views on the importance of the AASB maintaining its commitment to adopt ISAs as
CASs for audits of financial statements and other information in Canada, recognizing that if the
AASB does not adopt the proposed new and revised ISAs, Canadian auditors performing an audit
in accordance with the CASs would not be able to also represent compliance with the ISAs?
We acknowledge and share the AASB’s concerns about the potential consequences of adopting these
new and revised ISAs set forth in their exposure draft, however, we believe they are outweighed by
the potential consequences of not adopting. We believe that it is very important for the AASB to
maintain its commitment to adopt the ISAs as CASs for audits of financial statements and other
information in Canada for all the reasons upon which the AASB based its original decision to do so in
2009. Canadian auditors need to be able to represent compliance with the ISAs, by performing an
audit in accordance with the CASs, due to the global economy in which many Canadian companies
and professional services firms operate. Furthermore, the IAASB is committed to developing highquality, globally accepted standards which is evidenced by the extent of research and consultation that
took place in developing these new and revised ISAs. In adopting we support the move toward global
consistency, in this instance with respect to audit reporting, which benefits all stakeholders.
3. Are there other options that you believe the AASB should consider that may enable the AASB to
maintain its commitment to adopt ISAs as CASs for audits of financial statements and other
information in Canada while minimizing adverse consequences of the proposed new and revised
ISAs? If so, please provide details.
We suggest that in adopting these new and revised ISAs as CASs, the AASB can use the established
criteria for amending ISAs when adopting as CASs to address the needs of the Canadian environment
and/or concerns of Canadian auditors and other stakeholders. For example, to require inclusion in the
audit report of the description of auditor’s responsibilities for the audit of the financial statements
instead of permitting the option provided in revised ISA 700 paragraph A39 to refer to an Appendix
to the auditor’s report which could be located on a website. We believe that excluding the description
of the auditor’s responsibilities for the audit of financial statements in the report itself will only result
in widening the expectation gap between the nature of the assurance that users believe Canadian
auditor’s provide and that which we are able to provide through the ISAs risk-based audit.
Furthermore, the AASB has a significant role to play in supporting Canadian auditors in their
implementation by, for example:
a. communicating the changes to all stakeholders (including Canadian companies, audit committees,
and users) and educating with respect to the intent of the changes;
b. providing application guidance for Canadian auditors that reflects the varied size and complexity
of listed entities in the Canadian environment; and
c. responding to the IAASB’s request for comments during their planned post-implementation
review process to share the Canadian experience of implementation.
We would be pleased to discuss our letter with you or your staff at your convenience. If you have any
questions, please contact Thomas Kay, National Professional Practice Director at 416-874-4424.
October 30, 2013
Page 3
Yours truly,
Thomas Kay, CPA, CA
National Professional Practice Director
Deloitte LLP
Page 2
Eric Turner
CPA Canada
October 31, 2013
where there has been no fraud detected, could attract
undue attention and be potentially misleading.
Do you agree that the IAASB should retain the
concepts of Emphasis of Matter and Other Matter
paragraphs, even when the auditor is required to
communicate key audit matters?
Going Concern
6. Do you agree with the statements included in the
illustrative report relating to going concern? Will
readers understand and appropriately interpret
these statements?
Other proposed requirements
7. What are your views as to the benefits and
practical implication of the proposed requirement
to disclose the sources of independence and other
relevant ethical requirement in the auditor’s
report?
8. What are your views on the proposal to require
disclosure of the name of the engagement partner
for audits of listed entities and include a “harm’s
way” exemption?
9. What are your views on the proposal not to
mandate the ordering of sections of the auditor’s
report in any way, even when law, regulation or
standards do not require a specific order?
10. What are the implications of the proposals on
the processes of management and the audit
committee in preparing the financial statements
and on the working relationship with the auditor?
11. What other comments do you have on the
illustrative auditor’s report, particularly in relation
to its potential benefits and challenges in a
Canadian context?
Overall questions
12: What are your views on whether the AASB
should adopt the proposed new and revised ISAs
within Canada?
13. What are your views on the importance of the
AASB maintaining its commitment to adopt ISAs
Yes.
We disagree with the inclusion of the statement that
neither management nor the auditor can guarantee the
entity’s ability to continue as a going concern.
Additionally, we feel that the inclusion of a going
concern paragraph in all audit reports may confuse
readers and that standard inclusion would fail to
highlight the instance where a going concern issue
exists.
We do not feel that the inclusion of the partner name is
appropriate. Clients are engaging the firm, not the
individual partner.
We do not have any objections to the optional ordering
of sections. However, a standard format increases
comparability, reduces omissions and makes it easier
for users to locate specific items.
In our opinion, the implication is that the proposals
could adversely affect the relationship with
management.
We feel that the majority of the Canadian audit market
would not benefit from these changes and therefore
applying the proposed standards is challenging as they
are relevant for a small number of entities.
See #11 above.
We feel that for large or listed entities it is important to
maintain commitment to adopt ISAs as CASs.
Page 3
Eric Turner
CPA Canada
October 31, 2013
as CASs in Canada, recognizing that if the AASB
does not adopt the proposed new and revised IASs,
Canadian auditors performing an audit in
accordance with the CASs would not be able to also
represent compliance with the ISAs?
Final remarks
14. Have you any other comments to make on this
topic not addressed above?
However, the same level of importance does not
extend to small, private enterprises or Not-for-Profit
engagements.
No.
Yours very truly,
KNV Chartered Accountants LLP
CONSULTATION DE CPA CANADA SUR LES MODIFICATIONS PROPOSÉES AU RAPPORT DE
L’AUDITEUR
LE 15 OCTOBRE 2013
1. L’ajout d’une nouvelle section sur les éléments clés de l’audit accroîtra-t-il l’utilité du
rapport de l’auditeur?
Certains représentants des institutions financières, ainsi que des utilisateurs d’états financiers,
présents lors de la consultation pensent que les ajouts pourraient augmenter la crédibilité du
rapport de l’auditeur; ils jugent les informations intéressantes et pertinentes.
Certains utilisateurs sont d’avis qu’il sera bénéfique que les rapports soient personnalisés de la
sorte, mais craignent qu’avec le temps, les remarques dans les rapports risquent de se
ressembler et d’être redondantes.
En général, les utilisateurs croient que les ajouts leur permettront d’obtenir une meilleure
connaissance des enjeux importants; ils croient que les entreprises auront tendance à vouloir
régler certains problèmes rencontrés avant la publication des états financiers, afin d’éviter des
ajouts au rapport d’audit.
2. Le projet de norme ISA 701 fournit-il un cadre approprié pour aider l’auditeur à déterminer
les éléments clés de l’audit de façon cohérente et à les décrire dans son rapport?
Les auditeurs sont d’avis que beaucoup de place est laissée au jugement du professionnel en
exercice et ils déplorent que l’étendue ne soit pas normée. Ils croient qu’ils auront besoin d’un
certain temps pour s’adapter au niveau d’attentes élevées des utilisateurs.
Ils ont indiqué que le manque de directive claire risque de causer des disparités d’interprétation
en pratique.
Selon eux, l’objectif des ajouts est louable, mais les éléments à communiquer sont déjà couverts
par la NCA 260 et, selon eux, communiqués aux utilisateurs concernés en vertu de cette NCA. Ils
se questionnent à savoir si certaines informations ne devraient pas demeurer confidentielles.
Les participants se questionnent en général sur la suite des événements et des suivis à faire sur
les éléments ajoutés au rapport de l’auditeur. L’exposé-sondage est muet sur le sujet.
Les utilisateurs (surtout les banquiers) indiquent que le manque de clarté des informations
fournies dans les états financiers fait en sorte que l’ajout des éléments dans le rapport les aidera
à mieux comprendre les états financiers. Les auditeurs ont fait remarquer que cette situation
pourrait laisser croire indument que les responsabilités des auditeurs en regard des
informations financières sont accrues. Les auditeurs indiquent que les utilisateurs semblent
avoir besoin d’un « sommaire exécutif », mais que ce n’est pas le rôle qu’on devrait donner au
rapport de l’auditeur.
3. Que pensez-vous des propositions de l’IAASB suivant lesquelles la communication des
éléments clés serait obligatoire pour les entités cotées et laissée au choix de l’auditeur pour les
autres entités?
Plusieurs participants sont d’avis que le rapport annuel des entités cotées contient déjà
suffisamment d’information pour les utilisateurs des états financiers.
Concernant les entités privées, plusieurs sont d’avis que les utilisateurs ont déjà connaissance
des informations par les exigences des NCA 260 et 265 et par le fait qu’ils peuvent obtenir
l’information qu’ils jugent nécessaire eux-mêmes directement de l’entité.
Certains utilisateurs, dont des représentants d’organismes de réglementation, voient une
opportunité qui leur sera offerte de questionner les entités sur les éléments plus à risque; par
contre, certains croient que les paragraphes pourraient être perçus comme des opinions sur
certains points spécifiques.
Toute question laissée au choix de l’auditeur pose un problème d’harmonisation des pratiques
et des informations fournies, dans des circonstances qui pourraient être similaires. Cette
situation pourrait être mal comprise par les utilisateurs.
4. Que pensez-vous des éléments clés de l’audit illustrés dans l’exemple de rapport de
l’auditeur?
Les participants pensent que les exemples fournis peuvent démontrer le niveau de latitude
laissé à la discrétion des auditeurs. Les utilisateurs trouvent rassurants les ajouts au rapport
d’audit concernant des procédures qui pourraient être effectuées au sujet des risques
importants par les auditeurs.
Les auditeurs ne trouvent pas suffisamment clairs les fondements des exemples qui sont
présentés dans les propositions. Ils croient que des exigences minimales devraient être
présentes dans les exigences afin d’éviter des différences marquées dans les interprétations. Ils
sont d’avis que les éléments cités en exemples sont généralement présentés dans les
communications avec les responsables de la gouvernance et que certains utilisateurs pourraient
les exiger.
5. Êtes-vous d’accord avec la proposition de l’IAASB de conserver les paragraphes
d’observations et les paragraphes sur d’autres points, même lorsque l’auditeur est tenu de
communiquer les éléments clés de l’audit?
Les participants sont d’avis que les paragraphes sur d’autres points et les paragraphes
d’observation devraient être maintenus. Ils ont par contre de la difficulté à comprendre
l’objectif de l’ajout de paragraphes sur les éléments clés de l’audit, étant donnée la présence
déjà prévue dans le rapport de l’auditeur des paragraphes d’observation et sur d’autres points.
Ils comprennent mal la distinction entre les types de paragraphes.
Continuité de l’exploitation
6. Êtes-vous d’accord avec les déclarations relatives à la continuité de l’exploitation qui
figurent dans l’exemple de rapport? Ces déclarations seront-elles comprises et interprétées
correctement par les lecteurs?
Les utilisateurs croient que l’information au sujet de la continuité d’exploitation risque d’être
mal comprise et mal perçue en rapport avec la situation réelle de l’entreprise. Ils sont d’avis que
cette information devrait plutôt être incluse dans la section des éléments clés de l’audit, le cas
échéant, plutôt que dans une section distincte.
Les participants à la consultation ont de la difficulté à comprendre l’objectif de cet ajout.
Comme les référentiels comptables utilisés au Canada prescrivent l’ajout d’information dans les
notes aux états financiers concernant la continuité d’exploitation, les situations où la continuité
d’exploitation est menacée sont déjà mentionnées dans un paragraphe d’observation au
rapport de l’auditeur en vertu des NCA. L’ajout d’une section supplémentaire dans tous les
rapports d’audit ressemble pour plusieurs à une opinion à l’intérieur d’une opinion. Ceci risque
d’être mal compris en général en laissant planer le doute que toutes les entités canadiennes
souffrent d’un problème de continuité et donc de discréditer le rapport de l’auditeur.
Il semble que de toute façon, pour plusieurs entités canadiennes, les problèmes de continuité
sont connus bien avant la publication des états financiers, donc il ne semble pas que ce soit un
enjeu particulier au Canada contrairement à d’autres pays.
Les utilisateurs préfèrent largement un rapport « avec des exceptions », plutôt qu’un rapport
qui inclut un paragraphe supplémentaire dans tous les cas.
Annexe 2 : Questionnaire à l’intention des participants
Autres exigences proposées
7. Que pensez-vous des avantages et des conséquences d’ordre pratique de l’exigence
proposée suivant laquelle l’auditeur indiquerait dans son rapport les sources des règles sur
l’indépendance et des autres règles de déontologie pertinentes?
Les participants ne se sont pas montrés en faveur de l’information obligatoire. Ils croient que
seules les situations d’exception devraient être mentionnées, comme les menaces à
l’indépendance. La majorité des participants n’a pas jugé l’information additionnelle comme très
utile.
Les auditeurs comprennent mal l’ajout des informations dans un contexte où les normes d’audit
requièrent, dans les exigences entourant l’acceptation ou de maintien des mandats, d’analyser
l’indépendance du cabinet et les sauvegardes à mettre en place, de même que les
communications avec responsables de la gouvernance à cet égard.
8. Que pensez-vous de la proposition d’exiger la mention du nom de l’associé responsable de
la mission pour les audits des entités cotées, sous réserve d’une exemption en cas de « menace
pour la sécurité »?
Au Québec, les exigences légales font en sorte que l’associé responsable de la mission doit déjà
mentionner son nom ou son numéro de permis dans sa signature. Dans la majorité des cas, les
auditeurs choisissent d’utiliser le numéro de permis au lieu du nom, et ceci même si les noms
peuvent être retracés facilement en connaissant les numéros de permis (par le site web de
l’Ordre des CPA du Québec).
Le vérificateur législatif, présent à la rencontre, mentionne que la Loi nomme le vérificateur
général comme signataire uniquement et ainsi que son nom apparaît obligatoirement dans le
rapport de l’auditeur.
Les utilisateurs des états financiers accordent moins d’importance au nom de l’associé
responsable qu’au nom du cabinet. Ainsi, ils ne croient pas que le nom de l’associé doit
obligatoirement être mentionné. Ils soulignent que la mention du nom de l’associé responsable
permet de clairement identifier la personne sur laquelle une plainte pourrait être levée.
Par contre, les participants sont généralement d’avis que d’augmenter la responsabilité d’une
personne par une signature n’est pas nécessairement une raison valable pour apporter le
changement proposé. Ils conviennent, par contre, que la responsabilité revient à l’associé
responsable de la mission avant tout, même si dans certaines situations de partenariat la firme a
son lot de responsabilités.
9. Que pensez-vous de la proposition de ne pas imposer un ordre de présentation donné pour
les sections du rapport de l’auditeur, même dans les cas où aucun ordre particulier n’est exigé
par les textes légaux ou réglementaires ou par les normes?
Les participants sont généralement d’avis que le manque de directive mine la comparabilité des
rapports et la facilité des utilisateurs à les analyser.
10. Quelle sera l’incidence des propositions sur les processus suivis par la direction et le comité
d’audit pour la préparation des états financiers et sur leur relation de travail avec l’auditeur?
Les participants entrevoient des négociations difficiles et des conflits potentiels entre les
auditeurs, la direction et les responsables de la gouvernance, concernant les ajouts au rapport
de l’auditeur.
11. Avez-vous d’autres commentaires sur l’exemple de rapport de l’auditeur et, plus
précisément, sur les éventuels avantages et inconvénients qu’il présente dans le contexte
canadien?
Les commentaires ont été soulevés dans les réponses aux autres questions. Aucun commentaire
additionnel n’a été relevé.
Annexe 2 : Questionnaire à l’intention des participants
Questions d’ordre général
12. Quelle est votre opinion quant à savoir si le CNAC devrait adopter pour application au
Canada les normes ISA nouvelle et révisées qui sont proposées
La majorité des participants souhaiterait que le CNAC adopte la norme révisée sans
changement, mais requiert l’ajout de modalités d’application pour les auditeurs canadiens
spécifiquement.
13. Que pensez-vous de l’importance de maintenir l’engagement du CNAC d’adopter les
normes ISA en tant que NCA au Canada, sachant que, si le CNAC n’adopte pas les normes ISA
nouvelle et révisées qui sont proposées, les auditeurs canadiens qui réalisent un audit
conformément aux NCA ne pourront pas se déclarer comme étant également en conformité
avec les normes ISA?
La majorité des membres présents croit que c’est très important de maintenir cet engagement.
Conclusion
14. Avez-vous d’autres commentaires à formuler sur le sujet?
Les participants ont indiqué que l’IIASB et le PCAOB devraient s’entendre et collaborer à
l’élaboration d’une norme équivalente pour l’ensemble de l’Amérique du Nord. Par exemple,
l’une des propositions demande de présenter les « key issues » alors que l’autre propose de
présenter les « critical issues », ce qui pourrait être très différent. Les participants ne croient pas
que les différences sont requises étant donné la proximité des marchés et les interrelations
existantes.
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Reporting on Audited
Financial Statements
Exposure Draft
Comments must be received by November 1, 2013
AASB welcomes comments on all aspects of the Exposure Draft.
This form is not intended to constrain your response. Each text box will accommodate your full comments.
You are able to save and forward this form to others in your organization for review prior to submission.
Name :
Greg MacBeth
Organization :
Office of the Auditor General of Manitoba
E-mail :
[email protected]
Phone : (204) 945-6883
Comments requested
Stakeholders are asked to provide comments on the IAASB Exposure Draft directly to the IAASB, and provide the AASB with a copy
of the response. The AASB will take these comments into account in drafting its own response to the IAASB Exposure Draft.
Respondents are asked not to include comments on matters particular to the Canadian environment in their responses to the
IAASB. Such comments should be included only in responses sent to the AASB.
The AASB would appreciate receiving stakeholder input on the following additional questions:
1.
What are your views on whether the AASB should adopt the proposed new and revised ISAs within Canada?
I am replying on behalf of the Office of the Auditor General – Manitoba in Canada. Our comments are from the perspective as a
legislative auditor within our jurisdiction.
We believe that AASB should adopt the proposed new and revised ISAs within Canada. The CAS standards that are based on
the ISA standards should be amended to reflect the Canadian environment. Amendments should be made to reflect that
reporting on the ethical framework is based on ethical frameworks established Provincially. Also, the applicability of the
standards to the public sector should be clarified. Will the proposed ISA 701 apply to governments and to government
entities?
2.
What are your views on the importance of the AASB maintaining its commitment to adopt ISAs as CASs for audits of
financial statements and other information in Canada, recognizing that if the AASB does not adopt the proposed new and
revised ISAs, Canadian auditors performing an audit in accordance with the CASs would not be able to also represent
compliance with the ISAs?
We believe auditing standards should be globally consistent.
3.
Are there other options that you believe the AASB should consider that may enable the AASB to maintain its commitment
to adopt ISAs as CASs for audits of financial statements and other information in Canada while minimizing adverse
consequences of the proposed new and revised ISAs? If so, please provide details.
Not applicable.
Greg Shields, CPA, CA
The Canadian Institute of Chartered Accountants
1 November 2013
Dear Mr. Shields:
Exposure Draft: Reporting on Audited Financial Statements
Ernst & Young LLP (EY) welcomes the opportunity to provide comments to the Auditing and
Assurance Standards Board (AASB) on its exposure draft on Reporting on Audited Financial
Statements.
Ernst & Young Global Limited (EY Global), the central coordinating entity of the EY organization,
will separately respond to the International Auditing and Assurance Standards Board (IAASB) with
the EY Global views on the Reporting on Audited Financial Statements exposure draft issued by the
IAASB.
We support meaningful change to increase the usefulness and informational value of the auditor’s
report. We believe that an expanded auditor’s report should be considered as part of the total
information available to users from management, the auditor and those charged with governance
(e.g. the audit committee). We believe it is important to consider changes to the auditor reporting
model in the context of other initiatives aimed at enhancing overall corporate financial reporting.
Attempts to address concerns with corporate financial reporting solely through changes in the
auditor’s reporting model will not be successful and could result in significant change to or
expansion of the auditor’s role, which we do not believe is appropriate or cost-effective.
We believe that comparability helps global investors and global markets. Therefore, although some
variation may be inevitable, we continue to encourage global consistency in the auditor’s report
and believe that adopting the proposed new and revised ISAs within Canada is the most
appropriate option to maintain global consistency.
The AASB’s exposure draft requests input with respect to the specific questions posed in the
exposure draft; our views on those specific questions are included below.
What are your views on whether the AASB should adopt the proposed new and revised ISAs
within Canada?
We believe that the auditor’s report for general purpose financial statements of listed entities
should be as consistent as possible across jurisdictions, as comparability is important to global
investors. Accordingly, we believe that the AASB should adopt the proposed new and revised
ISAs within Canada.
What are your views on the importance of the AASB maintaining its commitment to adopt ISAs
as CASs for audits of financial statements and other information in Canada, recognizing that if
the AASB does not adopt the proposed new and revised ISAs, Canadian auditors performing an
audit in accordance with the CASs would not be able to also represent compliance with the
ISAs?
We believe that comparability is important for global investors and global markets and we
encourage any Canadian developments in auditing standards to continue to strive for
consistency with IAASB initiatives.
Are there other options that you believe the AASB should consider that may enable the AASB
to maintain its commitment to adopt ISAs as CASs for audits of financial statements and other
information in Canada while minimizing adverse consequences of the proposed new and revised
ISAs? If so, please provide details.
One option that could be considered is a system of tiered requirements based on whether an
entity is listed versus non-listed or potentially further tiered for listed entities based on a
measure of their size. Depending on the nature of future proposed changes to the ISAs, we can
foresee circumstances where the benefits, costs, potential challenges and other implications of
change are not necessarily the same for all types of entities. Certain changes may be applicable
across all entities while other changes may be more appropriate for only listed and public
interest entities. Despite the above, we view the ability to assert ISA compliance when auditing
under the CASs as very important, and accordingly, we recognize that standards issued by the
IAASB will need to include an element of flexibility to allow for tiered requirements in order to
implement this option.
We recognize that the population and diversity of non-listed entities is broad, and therefore it is
difficult to make a generalized statement regarding the applicability of certain changes to the
ISAs (such as the currently proposed auditor reporting changes) to non-listed entities. Some
non-listed entities are very large, complex organizations with financial reporting complexities
rivaling those of a large listed entity. On the other hand, there are many thousands of small and
medium-sized entities (SMEs) for which users of financial statements have generally not voiced
the same concerns about the need for additional information as have users of listed entity
financial statements. We believe that there are strong merits to having consistent audit
performance standards for both listed and non-listed entities; however, the incremental efforts
that would likely be required to comply with the proposed auditor reporting standards may not
be justified based on the limited benefit to users of financial statements of many non-listed
entities.
**************************************
We would be pleased to discuss our comments with members of the AASB or its staff. If you wish
to do so, please contact Eric Spiekman, Professional Practice Director, ([email protected]).
Yours sincerely,
Exposure Draft
Name :
Stuart Barr
Organization :
Office of the Auditor General of Canada
E-mail :
[email protected]
Phone : 613-995-3708
Comments requested
1.
The AASB should adopt the proposed new and revised ISAs within Canada in support of initiatives to ensure the continued
relevance of financial auditing and to ensure Canadian auditing standards continue to be recognized as high quality standards,
internationally endorsed and applied.
2.
We support the AASB maintaining its commitment to adopt ISAs as CASs for audits of financial statements in Canada and believe
this commitment is of high importance.
3.
Given there is no national source of relevant ethical requirements in Canada, the application of proposed requirements to disclose
sources of independence and other relevant ethical requirements in the auditor’s report can be more complex when audits are
conducted in multiple provincial jurisdictions. This matter would be most appropriately addressed in Canada via supplemental
guidance issued by the AASB. Further, timely harmonization of Canadian independence and ethical requirements across all
accounting professions and jurisdictions should be a priority for CPA Canada.
In adopting amendments to ISA 210, it is imperative that the AASB retain existing paragraphs CA8a and CA8b incorporated into
CAS 210 during the initial adoption of ISAs in Canada.
The AASB should continue to support consistency in auditor reporting in Canada by providing high quality illustrative examples for
use in preparing auditor’s reports in Canada, following, for example, the model used to provide illustrative reports via the Task
Force on Audit Reporting Implications of the New Canadian Auditing Standards.
Exposure Draft
Name :
Keith Gagnon
Organization :
MacKay LLP
E-mail :
[email protected]
Phone : 6046874511
Comments requested
1.
We do not believe that the AASB should adopt the proposed new and revised ISAs within Canada.
We completely agree with the consequences of adopting the new and revised ISAs in Canada as outlined in this exposure draft.
But we also believe that these consequences are significantly greater for smaller listed entities than to larger listed entities.
Although we do not agree with many of the new and revised ISAs, we believe the negative consequences to larger listed
entities would not be as great. These entities may also report in international markets and thus consistency with international
standards would be more important. And there would be significantly different cost-benefit considerations for different
categories of listed entities.
There is a large proportion of small public companies in the Canadian securities marketplace and many of these are involved in
resource exploration. The Canadian securities regulators have already recognized the uniqueness of these companies in
setting securities requirements. We believe the negative consequences of adopting the new and revised ISAs would have a
greater impact on these types of listed entities. We do not believe that a one type fits all solution is appropriate.
2.
We believe it is important that the CASs for audits of financial statements in Canada be similar with the ISAs, but not necessarily
identical. For larger entities reporting in international securities marketplaces, compliance with the ISAs is much more important
than for smaller entities only reporting in the Canadian securities marketplace. These larger entities could still have their audit
performed and reported in accordance with the ISAs even if the CASs were different from the ISAs. These larger entities could
potentially have the option to choose from these alternatives based on their market needs.
We are not proposing that the AASB create a new set of auditing standards for Canada, but we believe that there may be some
standards (such as these new standards) that should not be adopted without some modifications in instances when they do not
meet the needs of entities reporting in the Canadian securities marketplace. We believe the negative consequences from fully
adopting these proposed new and revised standards would far outweigh any benefit to entities operating solely in the Canadian
securities marketplace.
3.
We believe the AASB should consider not adopting the proposed new and revised ISAs and instead develop standards (or retain
the existing standards) that meet the requirements of the users of financial statements that only report in the Canadian securities
marketplace. These standards would reflect the views of the many stakeholders that have provided input into the new and
revised ISAs and the views that the AASB has provided to the IAASB on this topic.
The AASB should also consult with the Canada securities regulators to determine a criteria for the types of entities that would be
subject to the IASs and which would be subject to the CASs.
For the most part, these proposed new and revised ISAs are reporting standards. If CASs were developed that were only reporting
standards, then the performance standards under ISAs and CASs would be identical. So all audits would still be performed under
the same performance standards, but only the auditor’s report would be different under a different reporting standard.
Exposure Draft
Name :
Alaina Tennison
Organization :
PricewaterhouseCoopers LLP
E-mail :
[email protected]
Phone : 416-814-5784
Comments requested
1.
Our view is that the AASB should adopt the proposed new and revised ISAs within Canada. We believe that it is important for
Canadian auditing standards to remain relevant and comparable within the global reporting framework.
2.
We believe that it is important for the AASB to maintain its commitment to adopt ISAs as CASs for the reason noted above.
Canadian companies operate in a global environment and it is important for their auditors to be able to represent compliance
with global auditing standards.
3.
We do not believe that there are other options that the AASB should consider.
M. Eric Turner
Comptables professionnels agréés du Canada
277, rue Wellington Ouest
Eric.turner@
Objet : Rapport sur les états financiers audités – Tables rondes
Cher Monsieur Turner,
Il nous a fait plaisir de participer à la table ronde sur le rapport sur les états financiers audités le
mardi 15 octobre dernier à Montréal. Tel que vous le souhaitiez, nous vous faisons parvenir le
questionnaire qui résume nos principaux commentaires. Notez que ceux-ci reflètent principalement
le point de vue des utilisateurs du rapport, i.e. les directeurs du groupe de Financement Commercial.
Nous avons également ajouté certains commentaires liés aux points de vue des préparateurs.
N’hésitez pas à communiquer avec moi si vous avez des questions.
Veuillez agréer, cher Monsieur, nos meilleurs sentiments.
André Lopresti, CPA, CA
Vice-président et chef comptable
Tour Banque Laurentienne
1981, avenue McGill College
Montréal, Québec H3A 3K3
Questionnaire à l’intention des participants
Éléments clés de l’audit
1. L’ajout d’une nouvelle section sur les éléments Oui.
clés de l’audit accroîtra-t-il l’utilité du rapport • C’est la modification qui semble la plus pertinente
de l’auditeur?
selon nous, du point de vue des utilisateurs.
• Les utilisateurs ne lisent pas nécessairement
l’entièreté des états financiers. L’ajout d’une nouvelle
section sur les éléments clés permettrait d’attirer
l’attention sur des éléments importants, un peu
comme un sommaire des états financiers.
Par contre, nous avons de fortes craintes que
l’information soit très standardisée et qu’elle devienne
peu pertinente. Aussi, l’information pourrait devenir
répétitive d’une année à l’autre.
2. Le projet de norme ISA 701 fournit-il un cadre
approprié pour aider l’auditeur à déterminer
les éléments clés de l’audit de façon
cohérente et à les décrire dans son rapport?
3. Que pensez-vous des propositions de l’IAASB
suivant lesquelles la communication des
éléments clés serait obligatoire pour les
entités cotées et laissée au choix de l’auditeur
pour les autres entités?
Aucun commentaire particulier sur ce point.
4. Que pensez-vous des éléments clés de l’audit
illustrés dans l’exemple de rapport de
l’auditeur?
Les exemples semblent pertinents. Les références à
certaines notes des états financiers, par exemple,
apparaissent très efficaces pour identifier les points
importants. Par ailleurs, nous craignons que les exemples
deviennent répétitifs d’une année à l’autre.
Pour les compagnies cotées, le rapport de gestion fournit
déjà beaucoup d’information. Cette section pourrait
devenir répétitive.
Pour les compagnies privées, les utilisateurs ont, dans
certains cas, moins d’information. Ils n’ont pas toujours
accès aux auditeurs pour poser des questions ou discuter
des points sensibles. Ainsi, comme utilisateurs, nous
croyons que l’information devrait être obligatoire pour
toutes les entités.
Aussi, nous croyons que la nature des exemples présentés
suscitera des discussions complexes entre les préparateurs
et leurs auditeurs. À plusieurs égards, cela pourrait générer
des conflits et nuire au bon déroulement de l’audit.
4. Que pensez-vous des éléments clés de l’audit
illustrés dans l’exemple de rapport de
l’auditeur? (suite)
Enfin, le choix des éléments retenus sera sûrement très
subjectif. On s’interroge sur les critères qui serviront à les
identifier, de même qu’au niveau de détail qui peut être
donné dans le rapport des auditeurs compte tenu de
l’éventuelle complexité des éléments clés.
5. Êtes-vous d’accord avec la proposition de
l’IAASB de conserver les paragraphes
d’observations et les paragraphes sur d’autres
points, même lorsque l’auditeur est tenu de
communiquer les éléments clés de l’audit?
Oui.
Ce ne sont pas nécessairement les mêmes points.
Continuité de l’exploitation
6. Êtes-vous d’accord avec les déclarations
relatives à la continuité de l’exploitation qui
figurent dans l’exemple de rapport? Ces
déclarations seront-elles comprises et
interprétées correctement par les lecteurs?
En tant qu’utilisateurs, nous sommes généralement
indifférents. Nous sommes normalement bien au courant
de la situation financière de nos clients, bien avant la
publication des rapports d’audit.
Du point de vue des auditeurs et des préparateurs, nous
constatons que les déclarations ne font référence à aucun
horizon de temps. Nous croyons que cela pourrait nuire à
l’interprétation que des utilisateurs pourraient en faire.
Autres exigences proposées
7. Que pensez-vous des avantages et des
conséquences d’ordre pratique de l’exigence
proposée suivant laquelle l’auditeur
indiquerait dans son rapport les sources des
règles sur l’indépendance et des autres règles
de déontologie pertinentes?
8. Que pensez-vous de la proposition d’exiger la
mention du nom de l’associé responsable de
la mission pour les audits des entités cotées,
sous réserve d’une exemption en cas de
« menace pour la sécurité »?
9. Que pensez-vous de la proposition de ne pas
imposer un ordre de présentation donné pour
les sections du rapport de l’auditeur, même
dans les cas où aucun ordre particulier n’est
exigé par les textes légaux ou réglementaires
ou par les normes?
indifférents. Cela semble avoir peu d’utilité selon nous.
Nous assumons que les exigences sont respectées.
indifférents. Nous nous appuyons davantage sur la
réputation de la firme d’audit qu’à celle de l’auditeur.
indifférents. D’une part, nous aimions avoir une structure
stable. D’autre part, le fait de ne pas imposer un ordre de
présentation donné devrait inciter les utilisateurs à porter
une plus grande attention au rapport. De plus, nous
croyons que la présentation va se standardiser avec le
temps.
10. Quelle sera l’incidence des propositions sur
les processus suivis par la direction et le
comité d’audit pour la préparation des états
financiers et sur leur relation de travail avec
l’auditeur?
11. Avez-vous d’autres commentaires sur
l’exemple de rapport de l’auditeur et, plus
précisément, sur les éventuels avantages et
inconvénients qu’il présente dans le contexte
canadien?
Questions d’ordre général
12. Quelle est votre opinion quant à savoir si le
CNAC devrait adopter pour application au
Canada les normes ISA nouvelle et révisées
qui sont proposées?
13. Que pensez-vous de l’importance de maintenir
l’engagement du CNAC d’adopter les normes
ISA en tant que NCA au Canada, sachant
que, si le CNAC n’adopte pas les normes ISA
nouvelle et révisées qui sont proposées, les
auditeurs canadiens qui réalisent un audit
conformément aux NCA ne pourront pas se
déclarer comme étant également en
conformité avec les normes ISA?
Conclusion
14. Avez-vous d’autres commentaires à formuler
sur le sujet?
Nous comprenons, comme utilisateurs, que la nature de
l’information pourrait être très intéressante dans la
mesure où elle précise différents enjeux spécifiques à
l’entité. Dans le cas contraire, les modifications au
rapport de l’auditeur viendraient uniquement allonger la
divulgation des émetteurs et possiblement diluer le
contenu des états financiers.
Nous croyons que ce serait plus simple de les adopter
afin d’obtenir une cohérence à l’échelle internationale.
Nous croyons que ce serait plus simple de les adopter
afin qu’ainsi les audits canadiens soient conformes aux
audits selon les normes ISA et éviter l’éventuelle
confusion.
PROVINCIAL AUDITOR
SaSkaItheWan
November 20, 2013
CPA Canada
TORONTO, Ontario
M5V 3H2
Dear Mr. Shields:
Re:
Reporting on Audited Financial Statements (September 2013)
In addition to providing you with a copy of our response to IAASB on its "Proposed and New Revised
ISAs for Reporting on Audited Financial Statements", we have set out our response to the specific
questions raised in the AASB exposure draft below.
1. We think the AASB should adopt the proposed new and revised Reporting on Audited Financial
Statements ISAs after careful consideration as to whether Canadian amendments should be made
to the application material to address circumstances resulting from Canada's legal and regulatory
environment.
We recognize ISAs are increasingly being accepted as global auditing standards and that Canada
has been one of the few jurisdictions that has adopted them with virtually no amendments. We find
that while the ISAs attempt to reflect the needs of the public sector, as reflected in our letter to
IAASB dated November 20, 2013, they do not always fully reflect the public sector assurance
environment in Canada.
We encourage AASB's to carefully consider providing application material to clarify application of
the definition of "listed entities", in particular, whether the definition of "listed entities" is intended
to capture governments whose debt is listed on exchanges.
Furthermore, we encourage AASB to include application material to recognize that laws may
require Auditor Generals (or equivalent) to sign audit reports on financial statements of public
sector entities as opposed to "engagement partners."
Given the Exposure Draft is silent, we are unclear of the AASB's intentions with respect to
paragraph 41 in the proposed ISA 700 (revised) that allows the auditor to address other reporting
responsibilities in the auditor's report on the financial statements. This paragraph and supporting
application guidance does not seem consistent with the AASB's Exposure Draft — Reports on
Supplementary Matters Arising from an Audit or a Review Engagement.
2. We support the AASB maintaining its commitment to adopt ISAs as CASs for audits of financial
statements and other information in Canada as long as those ISAs are appropriate in Canada. The
representation that an audit in accordance with CAS represents compliance with the ISAs is most
valuable for auditors of listed entities that operate globally and as such, the alignment of CASs with
ISAs is primarily important for auditors of those entities.
.../2
1500 Chateau Tower - 1'120 Broad Street Regina, Saskatchewan SIP
306.7117.6396 f 306.787.6381 e info(ganditor.sk.ca
www.auditonsk.ca
Mr. G. Shields
November 20, 2013
Page 2
However, Canada is one voice of many involved in the global standard setting process at IAASB.
As noted in the Exposure Draft, to date, we have been successful in providing strong technical
support and having representation on IAASB. However, at times, circumstances in Canada may
differ may not align with those present internationally. While we do not advocate frequent
amendments to ISAs, we do think it is AASB's role to ascertain that all aspects of the ISAs are
appropriate in Canada prior to their adoption in Canada and not to rely solely upon the IAASB's
due process when making this determination. We strongly support AASB actively soliciting the
views of key stakeholders for key changes to standards. Also, we support AASB to continue to use
its criteria to decide when it is appropriate to amend an ISAs when adopting them as CASs.
3. We have not identified any other options for AASB to consider. We encourage AASB to continue
working with IAASB to resolve Canadian concerns with the proposals.
Other comments:
In order to promote consistency in auditor's reports in Canada, we suggest AASB consider setting out
the required order of the sections of the auditor's report.
Yours truly,
7
0
Judy Ferguson, FCA
Acting Provincial Auditor
/kes
November 22, 2013
International Auditing and Assurance Standards Board (IAASB)
529 Fifth Avenue 6th floor
New York, New York 10017
U.S.A.
Cc: Canadian Auditing and Assurance Standards Board
Subject: Reporting on Audited Financial Statements: Proposed New and Revised
International Standards on Auditing (ISAs) – Exposure Draft (ED)
Dear IAASB Members:
The Canadian Securities Administrators (CSA) is an organization of Canada’s provincial and
territorial securities regulators whose objective is to improve, coordinate and harmonize
regulation of the Canadian capital markets. The CSA Chief Accountants Committee is
comprised of the Chief Accountants from the provinces of Ontario, Quebec, Alberta and British
Columbia. We are submitting this letter to you in response to the Reporting on Audited Financial
Statements: Proposed New and Revised International Standards on Auditing (ISAs) Exposure
Draft.
We appreciate the opportunity to comment on the ED, given the significant impact that these
proposals would have on auditor reporting. We acknowledge the IAASB’s goal of improving the
auditor’s report to provide relevant information to users based on the audit that was performed.
Page 7 of the ED states that “the IAASB is of the view that changes in auditor reporting may
have positive benefits to audit quality or users’ perception of it. This in turn may increase the
confidence that users have in the audit and the financial statements which is the public interest.”
Such potential benefits are very difficult to measure and compare to anticipated and potential
costs. We continue to monitor Canadian stakeholders’ views on the benefits and costs. That
assessment will likely take some time and is of particular interest to the CSA because securities
legislation in Canada specifies the auditing standards that must be used to audit the financial
statements of public companies, investment funds, and registered brokers and dealers.
Meanwhile, we offer some observations and suggestions about the proposals in the ED.
Scope of Key Audit Matters
The IAASB is proposing in paragraph 4 of ISA 701 that reporting on key audit matters (KAMs)
apply to listed entities. The Glossary of Terms applicable to ISAs defines listed entity as "An
entity whose shares, stock or debt are quoted or listed on a recognized stock exchange, or are
marketed under the regulations of a recognized stock exchange, or other equivalent body."
Currently ISA 700 applies to all audits of financial statements and does not include requirements
that only apply to listed entities, or any other category of entities. Securities legislation in
Canada generally requires public companies, investment funds and registered brokers and
dealers, regardless of whether or not they are listed on stock exchanges, to have their annual
financial statements audited in accordance with Canadian Generally Accepted Auditing
Standards (CGAAS), which is based on ISAs. We are concerned that if Canada adopts the
-1-
proposed standard with the scope criteria of “listed entities”, this would result in inconsistency
and confusion among users of the auditor reports in the Canadian marketplace.
The costs and benefits of the KAM requirements need to be further understood in order to
determine the appropriate scope for these requirements. Given the large number of small
Canadian public companies and registered brokers and dealers, we continue to be concerned that
the costs of applying the KAM requirements may exceed any potential benefits.
Threshold for Key Audit Matters
The definition of “key audit matters” in paragraph 7 of proposed ISA 701 includes the phrase “of
most significance in the audit”. The word “most” implies that an auditor must always identify a
KAM. Further, paragraph A47 of ISA 701 states that "it is expected to be rare that the auditor
of financial statements of a listed entity would not determine at least one key audit matter" and
proposes language for inclusion in an auditor’s report if the auditor determined there are no
KAMs.
We do not agree that it would rare for an auditor to conclude there are no “areas of significant
auditor attention” including matters described in items (a),(b) or (c) of paragraph 8 of proposed
ISA 701. For example, many Canadian listed entities are in the development stage and their
primary activities are raising financing, and exploring for resources or doing research and
development work. In auditing these entities, an auditor may not identify significant risk,
exercise significant judgment, encounter significant difficulties during the audit, or have to
significantly modify their planned audit approach. We strongly recommend removing the
reference to “most” in the definition of KAMs and in the disclosure requirements in paragraphs 9
and 13 of proposed ISA 701. We also strongly recommend revising paragraph A47 to remove
the reference to “rare” and to acknowledge situations where an auditor may conclude there are
no KAMs to report.
Going Concern
We question the usefulness to readers of the boilerplate language proposed in paragraph 20 of
proposed ISA570 (revised) where no material uncertainty has been identified. Under existing
ISA 570, an auditor includes disclosure relating to the going concern assumption only when a
material uncertainty exists; this approach draws attention to uncertainties. We are concerned that
including a “going concern” section in every auditor’s report may dilute readers’ attention to the
matters reported in that section.
We are also concerned that the proposed statements about going concern may provide
inappropriate comfort to users about the quality or appropriateness of the entity as a potential
investment.
The IASB is planning to issue an ED in Q1 of 2014 of proposed changes to disclosure
requirements relating to the assessment of going concern. We appreciate the reference on page
31 (paragraph 84) of the ED to deferring the finalization of auditor reporting related to going
concern in the final wording of ISA 570 until the IASB incorporates any IFRS changes into IAS
1. It is critical that accounting and auditing related to going concern are consistent to avoid any
potential investor confusion.
-2-
Emphasis of Matter and Other Matters
We think ISA 706 should require (not just encourage) an auditor to include a heading for an
EOM or Other Matters paragraph that provides context. The terms “Emphasis of Matter” and
“Other Matters” on their own without further context are too broad given the introduction of
KAMs.
Convergence with U.S. Public Company Accounting Oversight Board (PCAOB) proposals
We urge the IAASB to work with the PCAOB to converge auditor reporting requirements.
Given the connections between capital markets, including the existence of many cross-border
issuers and cross-border industry peer groups, we think that users of auditor’s reports are best
served by consistent, or very similar, auditor reporting standards. Similarly, we encourage the
convergence of mandatory effective dates for the final standards.
Mandatory effective date
We recognize that the IAASB has been working with auditors to field test these proposals. We
strongly support this type of testing. We encourage the IAASB to take the appropriate time to
complete the field testing and to incorporate recommendations coming from the tests. We also
ask for sufficient lead time for auditors and those charged with governance and management to
prepare for the implementation of the final standards.
We would be pleased to discuss any questions you may have about our letter. Please do not
hesitate to contact us.
Yours truly,
The CSA Chief Accountants Committee
Carla-Marie Hait
Chief Accountant
British Columbia Securities Commission
(604) 899-6726
[email protected]
Lara Gaede
Chief Accountant
Alberta Securities Commission
(403) 297-4223
[email protected]
Cameron McInnis
Chief Accountant
Ontario Securities Commission
(416) 593-3675
[email protected].
Sonia Loubier
Chef comptable
Autorité des marchés financiers
(514) 395-0337 ext. 4291
[email protected]
-3-

Reporting on Audited Financial Statements

Transcription

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