IAASB consultation seeks input on professional skepticism, quality control and group audits

To drive meaningful changes in audit quality, it’s imperative that Canadian stakeholders contextualize their input to the uniqueness of the Canadian market when responding to the IAASB’s consultation on public interest issues.

The International Auditing and Assurance Standards Board (IAASB) is seeking input on public interest issues affecting audit quality, with a focus on professional skepticism, quality control and group audits.

This initiative — driven by the IAASB’s standards implementation monitoring project, its strategic and work plan consultations, its audit inspection findings and ongoing outreach — will be addressed in one consultation.

Due to the pervasive nature of the issues being considered and the potential significant consequences for standards projects, the IAASB consultation will be of interest to many Canadian stakeholders. The Invitation to Comment (ITC) will be of primary interest to users focusing on the technical aspects of standards while the Overview of the ITC, a shorter, less technical document, is likely to draw more interest for other users such as financial statement users, preparers, and audit committees.

What should Canadian stakeholders focus on as they review the ITC? In my view, they need to keep in mind the following when developing their views on the proposed action items in the ITC:

  1. Will proposed changes make a meaningful difference to audit quality in Canada? For example, the ITC identifies a broad range of issues, but which ones are the most important to address in a Canadian context?
  2. Audit firms are already challenged to apply auditing standards on an effective and efficient basis for smaller audits. Are actions going to be proportionate for smaller audits?
  3. Canada is almost unique in the makeup of its capital markets. It has a significant number of very small listed entities, many in the resource sector where the interests of investors and others may be different from other listed entities. If the IAASB makes recommendations specific to audits of listed entities, are these going to be appropriate for Canada’s capital markets?
  4. Canada also has a large number of not-for-profit and other public sector entities that may present different challenges for auditors. Will IAASB actions reflect these challenges?

KEEP THE CONVERSATION GOING

The IAASB response deadline is May 16, 2016. Let me know what you think of the IAASB’s ITC. Do you think the public interest issues identified by the IAASB are the ones that are relevant to focus on in Canada?

Post a comment below; or email me directly.

Conversations about Audit Quality is designed to create an exchange of ideas on global audit quality developments and issues, and their impact in Canada.

About the Author

Eric Turner, CPA, CA

Director, Auditing and Assurance Standards, CPA Canada

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