AASOC: An unseen facet of audit standard-setting

AASOC’s success is one of the key reasons why our country continues to produce high-quality and relevant standards today. Here are the four keys to its success.

Canada is the only G8 country whose audit standard-setting process is not, at least in part, government regulated. That privilege comes with an onerous duty to ensure that standards are set in the public interest. The challenge is that "public interest" means different things to different people.

To protect the public interest in the broadest possible terms, the Auditing and Assurance Standards Oversight Council (AASOC) was formed in 2002 by the Canadian Institute of Chartered Accountants (now CPA Canada). AASOC’s primary objective is to oversee the credibility of the standard-setting process undertaken by the Auditing and Assurance Standards Board (AASB).

AASOC has worked hard since its inception to continuously improve the process it uses to oversee the AASB. Four factors are essential to its success:

A focus on process and not standards. AASOC oversees the standard-setting process; it does not set standards. Unlike standards, which dictate practice and procedures, process is ephemeral. It leaves nothing behind but the standards that are created. If AASOC has performed well, there will be little overt evidence of its role in the standards set. AASOC’s key measure of oversight success is the absence of concerns over the standard-setting process; it is therefore not a committee for those who seek the limelight.

Getting the right standard-setting professionals. An oversight council must ensure the best minds are recruited for the standard-setting boards it oversees. This means AASOC needs AASB members to have a variety of experience, come from different geographic regions and possess the right type of knowledge. The AASB currently has 13 members in a country spanning six time zones — getting the right skill set and geographic mix is no mean feat.

Getting the right professionals for oversight. An oversight council must also have the right mix of members. This means that at least a majority of the members of AASOC must be non-practitioners, ensuring independence from the profession. Like the AASB, AASOC requires members with a variety of backgrounds from across the country and with interest in overseeing the standard-setting process. This makes the pool of potential applicants small, but we continually strive to engage the right individuals and encourage your participation.

Overseeing the overseers. You might now be asking, who oversees the overseers? In AASOC’s case, the Canadian Securities Administrators, the Canadian Public Accountability Board and the Office of the Superintendent of Financial Institutions all have a seat and are active at AASOC’s table. These groups are immersed in public interest oversight on a daily basis and are present at every council meeting. Canada has also adopted International Standards on Auditing as Canadian Auditing Standards and there are multiple layers of due process and oversight at the international level. All of this oversight, combined with AASOC’s own rigorous quality assurance program, ensures the public interest is served.

Oversight is critical to the credibility of standard-setting in Canada and AASOC’s success is one of the key reasons why our country continues to produce high-quality and relevant standards today.