research, guidance and support audit and assurance an… · research, guidance and support audit...

Research, Guidance and Support Audit and Assurance SUMMARY RESOURCE GUIDE

NOVEMBER 2015

Comments or suggestions on CPA Canada Audit & Assurance initiatives should be sent to: Juli-ann Gorgi, CPA, CA, MAcc Principal Research, Guidance and Support Chartered Professional Accountants of Canada 277 Wellington Street West Toronto, Ontario M5V 3H2 e-mail: [email protected]

Table of Contents 3

Table of Contents

Table of Contents 3

Audit & Assurance Alerts 7

CAS 315 – Common Pitfalls when applying the requirements in CAS 315,

Identifying and Assessing the Risks of Material Misstatement through

Understanding the Entity and its Environment [WIP] – expected early 2016 7

Audit of a Candidate in a Federal Election 7

CSAE 3000 and CSAE 3001 7

CAS 610 – Using the work of internal auditors to provide direct assistance on the

audit 8

CSRS 4460 – A new standard for reports on supplementary matters 8

CAS 600 – Challenges in Complying with the Requirements in Group Audits 8

CAS 600 – Challenges in Complying with the Requirements in Group Audits

Involving Components Located in Emerging Markets 9

CAS 540 – Challenges in Complying with the Requirements when Auditing

Accounting Estimates 9

FAQs for Auditors 10

Are you sure you don’t have to apply CAS 600? 10

Questions auditors frequently ask when implementing CAS requirements related

to communications with those charged with governance [CAS 260, CAS 265] 10

Audit/Practitioner Client Briefings 11

CAS 600: Audit Client Briefing – Considerations for Managing Entities with

Operations in Emerging Markets 11

CAS 540: Audit Client Briefing – Relevant Considerations for Management in the

Determination of Accounting Estimates [WIP] – expected May 2015 11

CSRS 4460: Practitioner Client Briefing 12

4 Table of Contents

CAS 600 - How can group management promote effective group audits? 12

The importance of effective two-way communication between the auditor and the

client 13

Implementation Tools 14

CAS 500: Use of management’s expert [WIP] – expected early 2016 14

CAS 240: Identifying, assessing and responding to the possible risk of fraud

when auditing revenue [WIP] – expected early 2016 14

CSRS 4460, Reports on Supplementary Matters Arising from an Audit or Review

Engagement 14

Testing Journal Entries and Other Adjustments: Responding to the Risk of

Management Override of Controls [CAS 240] 15

Auditing Accounting Estimates under CAS: What, Why and How? [CAS 540] 15

Determining the group auditors’ involvement with the component auditor [CAS

600] 16

Communications between the auditor and those charged with governance: What,

when and how? [CAS 260, CAS 265] 16

Guides 17

A Guide for the Auditor of a Candidate in a Federal Election Pursuant to the

Canada Elections Act (10th Edition) 17

Audits of Not-for-Profit Organizations: Risk Assessment under Canadian Auditing

Standards 17

Auditing Summary Financial Statements [CAS 810] 18

Guide for the Auditors Registered Electoral District Associations Appointed

Under the Canada Elections Act 18

Audit of Third Party Advertising in a Federal Election 18

First-time Reporting on Financial Statements Adopting Canadian Accounting

Standards for Not-for-Profit Organizations 18

Webinars 19

2015 19

Practitioner’s Pulse Webinar (October) [CAS 240] 19

Practitioner’s Pulse Webinar (June) [CSOA 5000, CSRE 2400] 19

Practitioner’s Pulse Webinar (February) [CAS 540] 19

2014 20

Auditing Accounting Estimates [CAS 540] 20

Practitioner’s Pulse Webinar (September) [CAS 600] 20

Practitioner’s Pulse Webinar (June) [CAS 810, CSRS 4460] 20

Table of Contents 5

Practitioner’s Pulse Webinar (February) [CAS 210, CAS 580, CAS 600] 21

2013 21

Practitioner’s Pulse Webinar (September) [CSRE 2400, CSRS 4460] 21

Practitioner’s Pulse Webinar (June) [CAS 240] 21

Practitioner’s Pulse Webinar (February) 21

2012 22

Practitioner’s Pulse Webinar (October) [CAS 540] 22

Practitioner’s Pulse Webinar (May) [CAS 260, CAS 265] 22

Other Audit & Assurance Resources 23


Audit & Assurance Alerts

Audit & Assurance Alerts raise awareness about new or amended standards as well as

highlighting challenges in complying with current standards.

CAS 315 – Common Pitfalls when applying the requirements in CAS 315, Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and its Environment [WIP] – expected early 2016

Audit of a Candidate in a Federal Election (11 pages | CPA Canada | August 2015)

Provides practical and timely non-authoritative audit guidance to auditors appointed

under the Canada Elections Act reporting on the Candidate’s Electoral Campaign Return

(Form EC 20120) of a candidate in a federal election.

https://cpacanada.ca/en/business-and-accounting-resources/audit-and-

assurance/canadian-auditing-standards-cas/publications/alert-auditing-a-federal-election-

candidate

CSAE 3000 and CSAE 3001 (8 pages | CPA Canada | July 2015)

Raises awareness about the requirements pertaining to attestation engagements other

than audits or reviews of historical financial information and direct engagements. These

requirements are effective for attestation or direct engagements where the assurance

report is dated on or after June 30, 2017.

www.cpacanada.ca/en/business-and-accounting-resources/audit-and-

assurance/standards-other-than-cas/publications/audit-assurance-alert-csae-3000-3001

8 Audit & Assurance Alerts

CAS 610 – Using the work of internal auditors to provide direct assistance on the audit (7 pages | CPA Canada | February 2015)

Raises awareness about the requirements pertaining to the use of internal auditors to

provide direct assistance on the audit in accordance with CAS 610, Using the work of

Internal Auditors which are effective for audits of annual financial statements for period

ending on or after December 15, 2014.


assurance/canadian-auditing-standards-cas/publications/audit-and-assurance-alert-cas-

610

CSRS 4460 – A new standard for reports on supplementary matters (8 pages | CPA Canada | October 2014)

Raises awareness about this new standard, issued in June 2014, that deals with

engagements where a practitioner is asked to report on supplementary matters to a third

party such as a regulator or funder.


assurance/standards-other-than-cas/publications/csrs-4460-new-standard-

supplementary-matters

CAS 600 – Challenges in Complying with the Requirements in Group Audits (7 pages | CPA Canada | August 2014)

Raises awareness about challenging aspects of group audits and implementation issues

noted in practice with CAS 600, Special Considerations – Audits of Group Financial

Statements (including the work of component auditors).


assurance/canadian-auditing-standards-cas/publications/cas-600-alert-group-audit-

challenges


CAS 600 – Challenges in Complying with the Requirements in Group Audits Involving Components Located in Emerging Markets (12 pages | CPA Canada | August 2014)

Identifies specific aspects of a group audit involving components located in emerging

markets such as critically assessing whether the auditor has the appropriate

competencies and capabilities to accept or continue with a group audit engagement,

where components are located in emerging markets and understanding the environment

in which components located in emerging markets operate in order to identify and assess

the risk of material misstatement.


assurance/canadian-auditing-standards-cas/publications/cas-600-group-audits-emerging-

markets

CAS 540 – Challenges in Complying with the Requirements when Auditing Accounting Estimates (7 pages | CPA Canada | August 2014)

Offers you an insight into the challenges auditors face when auditing accounting

estimates, including a reminder of selected requirements, and potential actions to assist

you in complying with the requirements.


assurance/canadian-auditing-standards-cas/publications/cas-540-alert-auditing-

accounting-estimates

10 FAQs for Auditors

FAQs for Auditors

Are you sure you don’t have to apply CAS 600? (7 pages | CPA Canada | 2012)

Helps you determine if the audit falls under CAS 600 by discussing:

� How components, group and group financial statements are defined under CAS 600

� The factors to consider in determining if there is a group

� Examples of identifying components for a parent company with subsidiaries and a

head office with divisions


assurance/canadian-auditing-standards-cas/publications/does-cas-600-for-groups-apply-

to-your-audit

Questions auditors frequently ask when implementing CAS requirements related to communications with those charged with governance [CAS 260, CAS 265] (12 pages | CPA Canada | 2012)

Considers key questions related to communicating with those charged with governance.


assurance/canadian-auditing-standards-cas/publications/cas-implementation-of-

governance-communication


Audit/Practitioner Client Briefings

Audit or Practitioner Client Briefings facilitate discussions between the auditor/practitioner

and the client.

CAS 600: Audit Client Briefing – Considerations for Managing Entities with Operations in Emerging Markets (13 pages | CPA Canada | October 2015)

Explains, to management, requests made by auditors when performing group audits

involving components located in emerging markets. You will learn:

� What auditors might include in their audit plan

� Why auditors request certain information

� Procedures auditors may perform

� What auditors require in terms of audit evidence

https://www.cpacanada.ca/en/business-and-accounting-resources/audit-and-

assurance/canadian-auditing-standards-cas/publications/client-briefing-cas-600-

emerging-markets

CAS 540: Audit Client Briefing – Relevant Considerations for Management in the Determination of Accounting Estimates [WIP] – expected May 2015 (14 pages | CPA Canada | May 2015)

Offers management insights into a robust estimation process and will help to make sure

the estimates are prepared in accordance with the relevant financial reporting framework.

You will learn:

� Your responsibility, as management, with respect to the audit of the estimation

process

� The four key steps of the estimation process

� Some of the more significant, overall considerations for all types of estimates

� The requirements of the applicable financial reporting framework

12 Audit/Practitioner Client Briefings

� Considerations for all kinds of accounting estimates regarding the reassessment of

the method used to calculate the accounting estimate

� Factors to consider when calculating the estimate and assessing the inputs

� The importance of ongoing monitoring/ overseeing the calculation process


assurance/canadian-auditing-standards-cas/publications/audit-client-briefing-canadian-

auditing-standard-540

CSRS 4460: Practitioner Client Briefing (28 pages | CPA Canada | February 2015)

Helps you explain to your clients what’s involved when they receive a request from a

regulator, funder or other third party for a report on supplementary matters. This Briefing

will assist you in your discussions with your client and in their discussions with the third

party requesting the report.


assurance/standards-other-than-cas/publications/client-briefing-csrs-4460

CAS 600 - How can group management promote effective group audits? (8 pages | CPA Canada | 2012)

Helps you explain to clients that effective communication is critical to ensuring an

effective group audit among all participants, including the group auditor, group

management, those charged with governance, component management and component

auditors. This document provides:

� Examples of interactions among key players

� A diagram illustrating the interrelationships

� A table listing relevant documents on specific matters that group management can

provide to group auditors to improve audit effectiveness


assurance/canadian-auditing-standards-cas/publications/managing-group-audits-

effectively


The importance of effective two-way communication between the auditor and the client (1 pages | CPA Canada | March 2009)

Provides guidance and discussion points to help you establish effective communications

with clients during audits. You and your clients will learn how:

� Auditors help clients fulfill oversight responsibility for financial reporting

� Clients can enhance communication with auditors

� Two-way communication allows for timely observations on significant and relevant

matters


assurance/canadian-auditing-standards-cas/publications/effective-auditor-client-

communication

14 Implementation Tools

Implementation Tools

Implementation Tools are designed to walk through the requirements of a standard and

provide practical considerations or examples to assist the auditor in implementation that

standard.

CAS 500: Use of management’s expert [WIP] – expected early 2016

CAS 240: Identifying, assessing and responding to the possible risk of fraud when auditing revenue [WIP] – expected early 2016

CSRS 4460, Reports on Supplementary Matters Arising from an Audit or Review Engagement (28 pages | CPA Canada | April 2015)

Assist you with the implementation of CSRS 4460, Reports on Supplementary Matters Arising from an Audit or a Review Engagement. This Tool provides:

� A summary of the requirements

� Factors to assess when determining if an engagement can be accepted

� Considerations when planning and performing the engagement

� Illustrative examples including a supplementary matter, the related criteria and

potential procedures to perform Examples of wording to be included in the report


assurance/standards-other-than-cas/publications/csrs-4460-implementation-tool

Implementation Tools 15

Testing Journal Entries and Other Adjustments: Responding to the Risk of Management Override of Controls [CAS 240] (15 pages | CPA Canada | April 2015)

Helps you design an approach to testing journal entries and other adjustments as a

response to risks of management override of controls. It focuses on how to comply with

the requirements of CAS 240 paragraph 32(a). Topics include:

� CAS 240 and its requirements

� Detailed steps to test the appropriateness of journal entries and other adjustments

� A list of other resources about fraud in an audit of financial statements.


assurance/canadian-auditing-standards-cas/publications/journal-entry-testing-

management-override-fraud

Auditing Accounting Estimates under CAS: What, Why and How? [CAS 540] (17 pages | CPA Canada | 2013)

Focuses attention on areas of higher risk in accounting estimates, expanding on how

CAS 315, CAS 330 and other relevant CASs are to be applied to accounting estimates.

This tool also provides:

� The main steps in auditing accounting estimates under CAS 540 when a risk of

material misstatement exists

� Reasons for performing each step

� Practical considerations about how to implement each step

� A helpful reference table that you detach and use as a reminder


assurance/canadian-auditing-standards-cas/publications/implementation-tool-for-

auditing-accounting-estimates

16 Implementation Tools

Determining the group auditors’ involvement with the component auditor [CAS 600] (26 pages | CPA Canada | September 2013)

Helps you apply CAS 600 as a group auditor when a component auditor works on the

financial information of a component for the group audit. This tool also provides:

� a summary of CAS 600 requirements indicating the specific requirements discussed

in the Tool

� samples of letters and memorandum of work performed

� practical considerations for complying with the requirements


assurance/canadian-auditing-standards-cas/publications/determining-the-group-auditors-

involvement-with-the-component-auditor-implementation-tool

Communications between the auditor and those charged with governance: What, when and how? [CAS 260, CAS 265] (18 pages | CPA Canada | 2012)

Helps you apply CAS 260, Communication with those charged with governance, CAS

265, Communicating Deficiencies in Internal Control to Those Charged with Governance

and Management and other relevant CAS by providing:

� a checklist for matters to discuss, detailed by CAS reference

� suggested timing

� suggested forms of communication (whether oral or written) www.cpacanada.ca/en/business-and-accounting-resources/audit-and-

assurance/canadian-auditing-standards-cas/publications/implementation-tool-for-audit-

communication-requirements

Guides 17

Guides

A Guide for the Auditor of a Candidate in a Federal Election Pursuant to the Canada Elections Act (10th Edition) (118 pages | CPA Canada | October 2015)

If you have been appointed under the Canada Elections Act to prepare or audit an

electoral campaign return for a federal candidate, you have specific responsibilities. A

Guide for the Auditor of a Candidate in a Federal Election Pursuant to the Canada

Elections Act provides practical guidance and includes a suggested audit program as well

as a sample independent auditor’s report.


assurance/canadian-auditing-standards-cas/publications/auditing-electoral-campaign-

returns-for-federal-candidates

Audits of Not-for-Profit Organizations: Risk Assessment under Canadian Auditing Standards (126 pages | CPA Canada | September 2015)

Addresses key issues likely to arise when applying the risk assessment standards set out in CAS in an audit of an NFPO. You will learn about:

� characteristics of NFPOs

� engagement risks and independence issues

� materiality issues

� identifying and assessing risks of material misstatements in an NFPO audit

(overview)

� assessed risks at the financial statement level

� assessed risks at the assertion level


assurance/canadian-auditing-standards-cas/publications/risk-assessment-of-nfpos-

under-cas

18 Guides

Auditing Summary Financial Statements [CAS 810] (24 pages | CPA Canada | February 2014)

Discusses areas that have been noted as difficult when preparing summary financial

statements and reporting on summary financial statements in accordance with CAS 810

including topics such as generally recognized criteria for preparing summary financial

statements and how to determine acceptability of applied criteria.


assurance/canadian-auditing-standards-cas/publications/auditing-summary-financial-

statements-guide-for-auditors

Guide for the Auditors Registered Electoral District Associations Appointed Under the Canada Elections Act (76 pages | CPA Canada | 2014)

When auditing a registered electoral district association’s Financial Transactions Return,

you must comply with Canadian Auditing Standards (CAS). Guide for Auditors of

Registered Electoral District Associations Appointed under the Canada Elections Act

provides practical guidance and includes a sample independent auditor’s report.

www.cpacanada.ca/en/business-and-accounting-resources/audit-and-assurance/internal-

control/publications/auditors-guide-for-electoral-district-associations

Audit of Third Party Advertising in a Federal Election (29 pages | CPA Canada | 2011)

Under the Canada Elections Act, a third party incurring advertising expenses over $5,000

must appoint an auditor to express an opinion on the Third Party Election Advertising

Report. Audit of Third Party Advertising in a Federal Election provides guidance to assist

auditors and is a supplement to our Guide for the Auditor of a Candidate in a Federal

Election Pursuant to the Canada Elections Act.


assurance/canadian-auditing-standards-cas/publications/auditing-third-party-advertising-

for-federal-candidates

First-time Reporting on Financial Statements Adopting Canadian Accounting Standards for Not-for-Profit Organizations (56 pages | CPA Canada | 2012)

Provides guidance the auditor of an NFPO will need to make a smooth transition the a

new financial reporting framework including examples an excerpts from actual

engagement letters, representation letters and unmodified and qualified auditors’ reports.

www.cpacanada.ca/en/business-and-accounting-resources/financial-and-non-financial-

reporting/not-for-profit-organizations/publications/reporting-nfpo-first-time-adopting-

accounting-standards

Webinars 19

Webinars

2015

Practitioner’s Pulse Webinar (October) [CAS 240] (October 1, 2015)

This 15 minute assurance segment discusses an approach to testing journal entries and

other adjustments as a response to risks of management override of controls focusing on

how to comply with the requirements of CAS 240 paragraph 32(a).

https://www.cpacanada.ca/en/career-and-professional-development/professional-

development/webinars/2015/October/practitioners-pulse-october-2015

Practitioner’s Pulse Webinar (June) [CSOA 5000, CSRE 2400] (June 24, 2015)

The 15 minute assurance segment discusses the AASB’s exposure draft on Association,

Review Engagements and Auditor Reporting.

www.cpacanada.ca/en/career-and-professional-development/professional-

development/webinars/2015/June/practitioners-pulse-webinar-june-2015

Practitioner’s Pulse Webinar (February) [CAS 540] (February 11, 2015)

The 15 minute assurance segment covers tips in applying CAS 540 when auditing

accounting estimates.


development/webinars/2015/February/practitioners-pulse-webinar-february-2015

20 Webinars

2014

Auditing Accounting Estimates [CAS 540] (December 9, 2014)

This 60 minute webinar covers:

� complexities and challenges of auditing accounting estimates

� select CPA Canada Handbook – Assurance requirements, with a focus on CAS 540

Auditing Accounting Estimates, including Fair Value Accounting Estimates, and

Related Disclosures

� examples of complex accounting estimates you may encounter during the financial

statement audit

� practical considerations and potential actions when addressing select requirements

of CAS 540

� what additional resources are available to assist you when auditing accounting

estimates


development/webinars/2014/December/auditing-accounting-estimates

Practitioner’s Pulse Webinar (September) [CAS 600] (September 10, 2014)

The 15 minute assurance segment discusses common audit performance deficiencies

noted when conducting group audits and group audits with components located in

emerging markets.


development/webinars/2014/September/practitioners-pulse-webinar-september-2014

Practitioner’s Pulse Webinar (June) [CAS 810, CSRS 4460] (June 5, 2014)

The 15 minute assurance segment discusses auditing summary financial statements

(CAS 810) and an updated on CSRS 4460.


development/webinars/2014/June/practitioners-pulse-webinar-june-2014

Webinars 21

Practitioner’s Pulse Webinar (February) [CAS 210, CAS 580, CAS 600] (February 12, 2014)

The 15 minute assurance segment discusses important clauses to be included in

engagement and representation letters and when to apply CAS 600 in a group audit.


development/webinars/2014/February/2013-annual-improvements-cas-600-and-t1135-

changes

2013

Practitioner’s Pulse Webinar (September) [CSRE 2400, CSRS 4460] (September 10, 2013)

The 15 minute assurance segment discusses overviews of the exposure drafts for CSRE

2400, Engagements to Review Historical Financial Statements and CSRS 4460, Reports

on Supplementary Matters Arising from an Audit or a Review Engagement.


development/webinars/2013/September/section-3475-csre-2400-and-csrs-4460

Practitioner’s Pulse Webinar (June) [CAS 240] (June 5, 2013)

The 15 minute assurance segment discusses fraud risks in an audit of financial

statements.


development/webinars/2013/June/section-3462-and-2013-federal-budget-updates

Practitioner’s Pulse Webinar (February) (February 13, 2013)

The 15 minute assurance segment discusses private and government NFPOs reporting

on their first financial statements prepared in accordance with a new set of accounting

standards.


development/webinars/2013/February/nfps-transition-to-new-accounting-standards

22 Webinars

2012

Practitioner’s Pulse Webinar (October) [CAS 540] (October 3, 2012)

The 15 minute assurance segment discusses auditing accounting estimates.


development/webinars/2012/October/news-about-aspe-and-nfpo-standards

Practitioner’s Pulse Webinar (May) [CAS 260, CAS 265] (May 24, 2012) The 15 minute assurance segment discusses the communication process between the auditor and those charged with governance. www.cpacanada.ca/en/career-and-professional-development/professional-development/webinars/2012/May/news-on-accounting-standards-and-cas

Other Audit & Assurance Resources 23

Other Audit & Assurance Resources

CPA Canada is committed to providing guidance and support for understanding and

applying the CASs and other assurance standards.

CPA Canada has compiled various audit and assurance resources that will help you:

� apply an existing standard

� adopt a new standard

� report on financial statements

� explain CASs and other assurance standards to others

� monitor developing standards

To access our online library of Audit & Assurance resources, visit

www.cpacanada.ca/en/business-and-accounting-resources/audit-and-assurance

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