Audit Standards – The Landscape Has Changed

THE EVOLUTION OF

AUDIT STANDARDS AUDIT STANDARDS – THE LANDSCAPE HAS CHANGED

Written by Adynea Russell, FCPA, FCA Vice-Chair of the Professional Practice Committee

The old adage “the more things change the more they stay the same” does not necessarily apply to everything. Auditing standards have definitely become more robust in the last number of years. While the concept of auditing has remained the same, the standards have changed significantly. Canadian Auditing Standards (‘CAS’) came into effect for audits of financial statements for periods ending on or after December 14, 2010. Since then CAS is continually being updated and additional CAS standards continue to be released.

When CAS came into effect, it was more than changing the name from Generally Accepted Auditing Standards to Canadian Auditing Standards. CAS is based on International Standards on Auditing and has been adopted to provide more clarity on auditing standards. CAS is a more robust set of auditing standards and provides more guidance on the auditor’s overall responsibilities when auditing financial statements. The responsibility of an auditor has expanded and there are greater expectations of an auditor.

The amount of changes in the handbooks between accounting and assurance have been significant over the past 10 to 15 years. The adoption of IFRS and CAS were both significant changes. Those changes can be overwhelming but as CPAs in public practice, it is our professional duty to ensure we continually stay up to date. As auditors, the users of the financial statements rely on us to provide an opinion on whether a set of financial statements as a whole are free from material misstatement, in all material respects in accordance with the generally accepted accounting standards, whether that be IFRS, ASPE or PSA. There is an expectation that we fully understand and know CAS and that we are auditing in accordance with CAS. In addition, the rules of professional conduct/code of ethics of the CPA profession require that each of us engaged in the practice of public accounting perform our professional services in accordance with the standards and guidance in the CPA Canada Handbooks which CAS is part of.

Under CAS, there is more guidance on assessing risks, fraud, internal controls, understanding the client, journal entries, and so on. With more guidance comes higher expectations, especially when it comes to documentation. Too often practitioners get caught not documenting enough in their audit files. CAS lays out what needs to be considered, and it is up to the practitioner to document their consideration of what is in the standards. However, to know what needs to be documented, you need to know the standards.

It is not easy staying up to date with all the changes that are happening. Then you add COVID-19 into the mix, and there are even more things to consider. CPA Saskatchewan has professional development courses available to assist each of us with updating and maintaining our knowledge. We are all busy people and our focus is on our clients, but in order to provide the high level of service that is expected of a CPA in public practice, each of us has an onus to ensure we stay up to date and informed on the CAS standards. As we consider our professional development plans for the year, ensure to incorporate appropriate audit-related courses so you are up to date and informed.