In a previous blog, I highlighted proposed International Auditing and Assurance Standards Board (IAASB)'s changes to quality control standards that the Auditing and Assurance Standards Board (AASB) is proposing to adopt. A big change from a Canadian perspective would be to include related services engagements, which are currently not covered under the quality control standards, within the scope of the new quality management standard. The AASB's initial view was that moving to an expanded scope is appropriate and it sought Canadian views on this.\nHow did Canadian stakeholders respond to the exposure draft?\nCanadian stakeholders raised concerns during the AASB's extensive outreach, including:\n\n the standard may not be scalable for smaller practices, particularly sole practitioners\n a risk management approach containing prescriptive requirements carried over from the current standard may be overly onerous for some firms, particularly for smaller firms conducting engagements where quality risks may not be significant, such as related services engagements\n\nThese concerns were reflected in the AASB's response to the IAASB exposure draft and suggest that the expected benefits of the new standard may not be achieved in practice. A preliminary review of some responses to the IAASB exposure draft from other jurisdictions notes concerns that are aligned with the AASB's.\nHow does the AASB move forward from here?\nThe IAASB is currently reviewing the nearly 100 responses to the exposure draft and will be discussing the way forward in the fall of 2019. Its current project plan is to finalize the quality management standard in March 2020.\nThe AASB is closely following the IAASB's discussions of comments it received. The AASB's goal is to make sure that the standard it ultimately adopts is fit for purpose in Canada.\nSo depending on the IAASB's conclusions, the AASB may need to consider different options relating to the scope of the final quality management standard, such as whether to:\n\n adopt the final IAASB standard with minimal amendments\n revert to the current scope and make amendments to remove related services engagements from the standard\n some middle ground to reflect the need for quality management of related services engagements but with an approach the AASB determines is more proportional to the quality risks affecting such engagements\n\nA middle-ground approach could take different forms, such as specific exclusions from the IAASB standard or excluding related services engagements from the IAASB standard but adding a new Canadian standard with specific quality control requirements for related services engagements.\nFurther consultations with Canadian stakeholders may be necessary depending on the direction the IAASB decides to take and whether Canada needs to consider other approaches that address concerns raised.\nKeep the conversation going\nWatch out for more information on this project as it moves forward and be prepared to provide your reaction to new proposals.\nPost a comment below or email me directly.\nConversations about Audit Quality is designed to create an exchange of ideas on global audit quality developments and issues and their impact in Canada.\nDisclaimer \nThe views and opinions expressed in this article are those of the author and do not necessarily reflect that of CPA Canada.