Canada: Technical Bulletin: February 2017

ACCOUNTING

ACCOUNTING STANDARDS FOR PRIVATE ENTERPRISES (ASPE)

Active projects – watch for further activity on these matters

Proposed change Summary Status
Redeemable Preferred Shares Issued in a Tax Planning Arrangement Amendment to Section 3856 regarding the current exemption of classifying redeemable preferred shares issued in a tax planning arrangement as equity. The AcSB is considering retaining the exception. Currently in deliberations. The AcSB has decided that the effective date of any such change will be no earlier than January 1, 2018.
Agriculture As a result of a lack of specific authoritative guidance, there is diversity in accounting by private enterprises for biological assets and agricultural produce. Stakeholder input to this Discussion Paper will assist the AcSB in deciding whether to develop authoritative guidance, and if so, the issues to be addressed and how they could be addressed. This Discussion Paper was published by the AcSB in December 2015. Currently in deliberations. Several key issues have emerged from the feedback, and the AcSB requested that additional consultations with financial statement users be undertaken.
2017 Annual Improvements This ED proposes amendments to Sections 1505, 1506, 1521, 1651, 3031 and 3065. Comment period closed on December 15, 2016. The proposed updates will be effective for annual periods beginning on or after January 1, 2018.

Questions?

Here are some resources that will assist in the application of the standards.

CPA Canada Publications for ASPE
The following publication has recently been issued:
ASPE Briefing: A New Light on Accounting for Investments – Section 1591 Subsidiaries, Section 3051 Investments and Section 3056 Interests in Joint Arrangements (May 2016).

Private Enterprise Advisory Committee
This committee assists the AcSB in maintaining and improving accounting standards for private enterprises and advises on the need for non-authoritative guidance about the standards. At the request of the AcSB, the committee may also undertake research into the financial reporting needs of private enterprises.

Click here to access recent meeting notes.

Digest of issued standards and amendments

Standards affected Summary of changes Effective date
Section 3056, Interests in Joint Arrangements Amendments clarify that the transitional provisions may not be applied when an enterprise changes its accounting policy choice to consolidate its subsidiaries at any time in the future and that this relief is only available when transitioning to this Section for the first time. Annual financial statements relating to fiscal years beginning on or after January 1, 2017.
Section 1591, Subsidiaries Amendments:
  • clarify that the transitional provisions may not be applied when an enterprise changes its accounting policy choice to consolidate its subsidiaries at any time in the future and that this relief is only available when transitioning to this Section for the first time, and
  • explicitly state that an enterprise preparing non-consolidated financial statements is not required to assess whether contractual arrangements give rise to control.
Amendment sets out the underlying principle that an interest in a subsidiary that is subsequently accounted for using the cost method is initially measured on a basis that is similar to other business combinations.
Annual financial statements relating to fiscal years beginning on or after January 1, 2017.

Annual financial statements relating to fiscal years beginning on or after January 1, 2018.
Section 3051, Investments Amendments add guidance on how to apply the cost method and add two indicators of impairment relating to the acquisition of an additional interest, sale of a portion of an interest or dilution of an investor's interest in an investee. Annual financial statements relating to fiscal years beginning on or after January 1, 2018.

ACCOUNTING STANDARDS FOR NOT-FOR-PROFIT ORGANIZATIONS (ASNPO)

Questions?

Here are some resources that will assist in the application of the standards.

Not-for-Profit Advisory Committee
This committee's purpose is to advise the AcSB on maintaining and improving ASNPO and in identifying the need for non-authoritative guidance about the standards. The committee makes recommendations to the AcSB but is not authorized to interpret or provide authoritative guidance.

Click here to access recent meeting notes.

INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)

New developments

Annual Improvements Cycle 2015-2017
The IASB issued this exposure draft in January 2017, proposing the following amendments:

  • IAS 12 Income Taxes – to clarify that an entity should account for all income tax consequences of dividends in the same way, regardless of how the tax arises;
  • IAS 23 Borrowing Costs – to clarify which borrowing costs are eligible for capitalization as part of the cost of an asset in particular circumstances; and
  • IAS 28 Investments in Associates and Joint Ventures – to clarify that an entity should apply IFRS 9 Financial Instruments to long-term interests in an associate or joint venture to which it does not apply the equity method.

Comment period ends on April 12, 2017.

Active projects – watch for further activity on these matters

Proposed change Summary Status
Insurance Contracts Project aimed at improving comparability through a coherent, principles-based framework, one accounting model for all types of insurance contracts and increased transparency. Final standard is expected to be issued by the IASB in the first half of 2017, followed by final Handbook material to be issued by the AcSB in the second half of 2017.
Measuring Quoted Investments in Subsidiaries, Joint Ventures and Associates at Fair Value Clarification that an entity should measure the fair value of quoted investments and quoted CGUs as the product of the quoted price for the individual financial instruments that make up the investments held by the entity and the quantity of financial instruments. The work carried out in this project will be fed into the Post-Implementation Review of IFRS 13. Direction of this project will be determined in 2017.
Reporting the Financial Effects of Rate Regulation This DP considers the common features of rate regulation and explores which of them, if any, creates a combination of rights and obligations that is distinguishable from the rights and obligations arising from activities that are not rate-regulated. Currently in discussions. Another DP is expected in the second half of 2017.
Accounting for Dynamic Risk Management The DP explores a possible approach (portfolio revaluation approach) to better reflect dynamic risk management activities in entities' financial statements. Discussion Paper issued by the IASB in April 2014. Currently in deliberations. Another DP is expected in the second half of 2017.
Classification of Liabilities Proposed amendments to IAS 1 clarify the criteria for the classification of a liability as either current or non-current. Currently in deliberations. IASB expects to issue amendments in the first half of 2017, followed by final Handbook material to be issued by the AcSB in the second half of 2017.
Conceptual Framework and Updating References to the Conceptual Framework The proposal aims to provide a more complete, clear and updated set of concepts that can be used by the IASB when it develops IFRSs and others to help them understand and apply those standards and to provide transition to the revised Conceptual Framework. EDs published by the IASB in May 2015. Currently in deliberations. Conceptual Framework is expected to be issued in the first half of 2017.
Remeasurement on a Plan Amendment, Curtailment or Settlement/Availability of a Refund from a Defined Benefit Plan The proposed amendments to IAS 19 specify that the entity is required to use the updated assumptions about obligations and fair value of the plan to determine current service cost and net interest for the period followed by these changes. The proposed amendments to IFRIC 14 address how the powers of other parties, such as the trustees of the plan, affect an entity's right to a refund of a surplus from the plan. Currently in deliberations. IASB expects to issue amendments in the second half of 2017.
Uncertainty Over Income Tax Treatments This draft IFRIC Interpretation gives guidance on how uncertainty over income tax treatments should affect the accounting for income taxes. Currently in deliberations. IFRIC Interpretation is expected in the first half of 2017.
Application of Materiality to Financial Statements – Draft IFRS Practice Statement The objective of this publication is to assist management in applying the concept of materiality to general purpose financial statements prepared in accordance with IFRS. Draft guidance issued by the IASB in October 2015. Currently in deliberations.
Definition of a Business and Accounting for Previously Held Interests The proposed amendments to IFRS 3 will help distinguish between a business and a group of assets when applying the definition of a business. The proposed amendments to IFRS 3 and IFRS 11 are also intended to clarify the accounting for previously held interests in the assets and liabilities of a joint operation in two types of transactions: those in which an entity obtains control of a business that is a joint operation and those in which it obtains joint control of a business that is a joint operation. Comment period ended on October 31, 2016. Currently in deliberations.

Questions?

Here are some resources that will assist in the application of the standards.

CPA Canada Reporting Alerts for IFRS
CPA Canada issues Reporting Alerts aimed at assisting companies in determining the impact of new and revised standards on their business. Reporting Alerts provide a summary of the standard, highlight significant items, summarize key changes and address common questions. The following alert has recently been issued: IFRS 16 Leases – March 2016.

Implementing IFRS 15
A panel discussion on the implementation of IFRS 15 Revenue from Contracts with Customers was held by the AcSB in October 2016. You can watch the video from the discussion and download the slides.

Test your knowledge − take the IFRS quiz

Viewpoints
This series discusses views of the Oil and Gas Task Force and the Mining Task Force on IFRS application issues relevant to junior oil and gas companies and junior mining companies, respectively.

Recent issues: Segment Reporting (Mining, July 2016), Presentation of Transportation Costs (Oil & Gas, July 2016)

IFRS Discussion Group Meeting Topics
Established by the AcSB, the IFRS Discussion Group implements and maintains a regular public forum to discuss issues that arise in Canada when applying IFRS. The Financial Reporting & Assurance Standards Canada website allows for topics and issues discussed by the IFRS Discussion Group to be searched and sorted. Find out whether the group has discussed an issue that you face in applying IFRSs and get the meeting report extract and audio webcast for each issue you find.

Digest of issued standards and amendments

Standards affected Summary of changes Effective date
IFRS 12 Disclosure of Interests in Other Entities Amendments clarify the scope of the standard. Annual periods beginning on or after January 1, 2017. Amendments have not been issued by the AcSB; expected in the first half of 2017.
IAS 7 Statement of Cash Flows Amendments will require entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. Annual periods beginning on or after January 1, 2017.
IAS 12 Income Taxes Amendments clarify how to account for deferred tax assets related to debt instruments measured at fair value. Annual periods beginning on or after January 1, 2017.
IFRS 1 First-time Adoption of International Financial Reporting Standards Amendments remove short-term exemptions for first-time adopters. Annual periods beginning on or after January 1, 2018. Amendments have not been issued by the AcSB; expected in the first half of 2017.
IFRS 2 Share-based Payment Amendments clarify how to account for certain types of share-based payment transactions. Annual periods beginning on or after January 1, 2018.
IFRS 4 Insurance Contracts Amendments designed to address the concerns about the different effective dates of IFRS 9 and the forthcoming new Insurance Contracts standard. Annual periods beginning on or after January 1, 2018.
IFRS 9 Financial Instruments IFRS 9 is built on a logical, single classification and measurement approach for financial assets that reflects the business model in which they are managed and their cash flow characteristics. Certain changes were made to the fair value option for financial liabilities to address the issue of own credit risk. IFRS 9 includes a new hedge accounting model. In addition, a single, forward-looking expected loss impairment model is introduced, which will require more timely recognition of expected credit losses. Annual periods beginning on or after January 1, 2018.
IFRS 15 Revenue from Contracts with Customers The core principle of the new standard is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. The new standard contains enhanced disclosures about revenue, provides guidance for transactions that were not previously addressed comprehensively and improves guidance for multiple-element arrangements. IFRS 15 supersedes IAS 11, IAS 18, IFRIC 13, IFRIC 15, IFRIC 18 and SIC-31.

Amendments to IFRS 15 have been issued by the IASB which clarify how to identify the performance obligations, determine whether a company is a principal or an agent and determine whether the revenue from granting a licence should be recognized at a point in time or over time. Two additional reliefs are included, which reduce cost and complexity for a company when it first applies the new standard.
Annual periods beginning on or after January 1, 2018.
IAS 28 Investments in Associates and Joint Ventures Amendments with respect to measuring an associate or joint venture at fair value clarify that an entity makes the election separately for each associate or joint venture. Annual periods beginning on or after January 1, 2018. Amendments have not been issued by the AcSB; expected in the first half of 2017.
IAS 40 Investment Property Amendments clarify the requirements on transfers to, or from, investment property. Annual periods beginning on or after January 1, 2018. Amendments have not been issued by the AcSB; expected in the first half of 2017.
IFRIC Interpretation 22 Foreign Currency Transactions and Advance Consideration This Interpretation addresses the exchange rate to be used in transactions that involve advance consideration paid or received in a foreign currency. Annual periods beginning on or after January 1, 2018. Amendments have not been issued by the AcSB; expected in the first half of 2017.
IFRS 16 Leases This new standard replaces IAS 17 Leases and brings leases onto companies' balance sheets, increasing the visibility of their assets and liabilities. IFRS 16 removes the classification of leases as either operating leases or finance leases (for the lessee – the lease customer), treating all leases as finance leases. Short-term leases (less than 12 months) and leases of low-value assets (such as personal computers) are exempt from the requirements. Annual periods beginning on or after January 1, 2019.
IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures These standards were amended to eliminate an inconsistency between IFRS 10 and IAS 28 in dealing with the sale or contribution of assets between an investor and its associate or joint venture. Subsequent to the amendments, a full gain or loss is recognized when a transaction involves a business (whether it is housed in a subsidiary or not), and a partial gain or loss is recognized when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary. Effective date to be determined. These amendments are available for application.

Public Sector Accounting (PSA)

New developments

Employment Benefits: Deferral Provisions in Sections PS 3250 and PS 3255
Invitation to Comment related to the Employment Benefits Project was issued by PSAB in November 2016. The objectives of this Invitation to Comment are to:

  • explain why PSAB is considering whether the deferral provisions in the standards remain appropriate;
  • identify potential alternatives and related considerations; and
  • seek stakeholder input prior to PSAB establishing its preliminary views on this issue.

The ultimate objective of this project is to issue a new employment benefits Section, replacing Sections PS 3250 and PS 3255. Comment period ends on March 3, 2017.

Active projects – watch for further activity on these matters

Proposed change Summary Status
Retirement Obligations The objective of this Statement of Principles is to gather comments on retirement obligations associated with tangible capital assets controlled by a public sector entity. Currently in deliberations. Exposure draft is expected in Q1 of 2017.
Revenue The Statement of Principles proposes definitions and principles applying to a broad range of revenues public sector entities report on. The proposals apply to exchange transactions involving a sale of goods or services and also cover other forms of revenue that do not involve an exchange, such as fines and penalties. Statement of Principles issued by the PSAB in August 2013. Currently in deliberations. ED to be issued in Q1 of 2017.
Financial Instruments: Transition Proposed amendments clarify aspects of the Section's scope of application, specifically, the receivables and payables that the Section does not apply to, and add transitional provisions and new guidance relating to certain specialized forms of agreements. Consideration of amendments proposed in this ED is currently deferred until a later date.
Conceptual Framework Fundamentals and the Reporting Model Consultation paper proposes a new reporting model and draft principles on public sector characteristics, financial statement objectives, qualitative characteristics, elements, recognition, measurement and presentation. Consultation Paper 3 was issued by the PSAB in March 2015. Currently in deliberations. Statement of Principles is being developed.
Withdrawal of Disclosure of Related Party Transactions by Not-for-Profit Organizations, Section PS 4260 This ED proposes to withdraw Section PS 4260, given the completion of PSAB's Related Party Transactions project, and amend the transitional provisions in Section PS 2200, Related Party Disclosures. Sections PS 2200 and PS 4260 are very similar, and while some minor terminology differences exist, the basic intent of each Section is the same. Withdrawal of Section PS 4260 has been approved.

Questions?

Here are some resources that will assist in the application of the standards.

PSA Discussion Group Meeting Topics
Established by the PSAB, the PSA Discussion Group provides a public forum for discussion of issues arising on the application of the PSA Handbook. Summaries of topics and discussions from past meetings are available on the Financial Reporting & Assurance Standards Canada website.

Digest of issued standards and amendments

Standards affected Summary of changes Effective date
Related Party Disclosures, Section PS 2200 This new Section defines a related party and establishes disclosures required for related party transactions. Fiscal years beginning on or after April 1, 2017.
Inter-entity Transactions, Section PS 3420 This new Section establishes standards on how to account for and report transactions between public sector entities that comprise a government's reporting entity from both a provider and recipient perspective. Fiscal years beginning on or after April 1, 2017.
Assets, Section PS 3210 This new Section provides guidance for applying the definition of assets set out in Section PS 1000 and establishes general disclosure standards for assets. Fiscal years beginning on or after April 1, 2017.
Contingent Assets, Section PS 3320 This new Section defines and establishes disclosure standards on contingent assets. Fiscal years beginning on or after April 1, 2017.
Contractual Rights, Section PS 3380 This new Section defines and establishes disclosure standards on contractual rights. Fiscal years beginning on or after April 1, 2017.
Restructuring Transactions, Section PS 3430 This new Section defines a restructuring transaction and establishes standards for recognizing and measuring assets and liabilities transferred in a restructuring transaction. Fiscal years beginning on or after April 1, 2018.
Financial Statement Presentation, Section PS 1201 This Section revises and replaces Financial Statement Presentation, Section PS 1200. The new standard introduces a new statement for reporting of remeasurement gains and losses. Fiscal years beginning on or after April 1, 2019.
Foreign Currency Translation, Section PS 2601 This Section revises and replaces Foreign Currency Translations, Section PS 2600. Definition of currency risk is aligned with the new Financial Instruments Section, PS 3450. The new standard also removes certain previously available exceptions to measurement of items on initial recognition. The deferral and amortization of foreign exchange gains and losses relating to long-term foreign currency denominated monetary items, hedge accounting and presentation of items as synthetic instruments are removed. In addition, the new statement of remeasurement gains and losses introduced in Section PS 1201 is used to reflect exchange gains and losses until the period of settlement, rather than reflecting them in the statement of operations. Fiscal years beginning on or after April 1, 2019.
Portfolio Investments, Section PS 3041 This Section replaces Section PS 3040, Portfolio Investments. In addition, Section PS 3030 is withdrawn as the distinction between temporary and portfolio investments is removed with the issue of Section PS 3041. The scope in the new standard is expanded to include interests in pooled investment funds, and requirement for application of cost method is removed. The new standard is also aligned with the new Financial Instrument Section, PS 3450. Fiscal years beginning on or after April 1, 2019.
Financial Instruments, Section PS 3450 This new Section establishes standards for recognizing and measuring financial assets, financial liabilities and non-financial derivatives. The standard introduces two measurement categories: fair value and cost or amortized cost. The statement of remeasurement gains and losses will reflect gains and losses arising on fair value remeasurement until an item is derecognized. The standard also introduces new disclosure requirements of items reported and the nature and extent of risks arising from financial instruments.

Fiscal years beginning on or after April 1, 2019.

Assurance and Related Services

In the works

Exploring the Demand for Agreed-Upon Procedures Engagements and Other Services, and the Implications for the IAASB's International Standards
The AASB issued this Invitation to Comment in December 2016 to encourage Canadian stakeholders to provide feedback to the IAASB's Discussion Paper of the same name, resulting from a higher demand for agreed-upon procedures engagements either as stand-alone engagements or in combination with other engagements. The IAASB has established a working group to explore such engagement and inform the IAASB's decisions in this regard.

The Working Group Discussion Paper provides more in-depth discussions on:

  • the role of professional judgment and professional skepticism in an agreed-upon procedures engagement;
  • the independence of the professional accountant;
  • terminology in describing procedures and reporting factual findings in an agreed-upon procedures engagement report;
  • agreed-upon procedures engagements on non-financial information;
  • using the work of an expert;
  • format of the agreed-upon procedures engagement report;
  • agreed-upon procedures engagement report restrictions;
  • recommendations made in conjunction with agreed-upon procedures engagements; and
  • multi-scope engagements.

AASB's comments period ends on February 10, 2017.

The IAASB's project to revise ISA 540

The IAASB has a project to revise the standard on Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures. This project is intended to address auditing challenges that have arisen as a result of new accounting standards, as well as issues identified by regulators, auditors and others. Refer to the publication An Update on the Project and Initial Thinking on the Auditing Challenges Arising from the Adoption of Expected Credit Loss Models. This publication describes the project and is particularly relevant for those involved in entities where the financial statements have one or more accounting estimates that require significant judgment. In addition, the publication addresses audit challenges that may arise from entities' adoption and future application of Expected Credit Loss (ECL) models, and aims to help auditors develop appropriate audit procedures in that respect.

Compilation engagements
Exposure Draft is being developed to address needed changes to the standard on compilation engagements. ED is expected to be approved in the second half of 2017. Issues being discussed by the AASB include:

  • the scope and definition of a compilation engagement;
  • engagement acceptance and continuance;
  • documentation requirements;
  • whether CSQC 1 should be applicable to compilation engagements; and
  • whether communication with management and those charged with governance is needed.

The task force is starting to obtain input from stakeholders.

Audit Data Analytics Committee
CPA Canada has formed an Audit Data Analytics Committee (the Committee) comprising audit practitioners, internal auditors, members in business and academia to:

  • obtain up-to-date information on the nature and extent of the use of technology-enabled data analytics by auditors;
  • monitor developments in auditors' use of audit data analytics (e.g. innovative approaches being used by some auditors to keep pace with a changing technological environment, including accessing and making effective use of greater volumes and diverse types of data); and
  • provide useful input to auditors and other interested parties by developing non-authoritative guidance on these matters.

Representatives of the Committee are now proactively collaborating with the AICPA and their Audit Analytics Guide Task Force on the development of an updated version of the AICPA Audit Guide Analytical Procedures. This comprehensive Guide, with appropriate amendments, will be issued as non-authoritative audit guidance in Canada and will provide foundational guidance to auditors of all sizes on the use of data analytics in the audit of financial statements.

Refer to Audit Data Analytics Alert: Keeping up with the Pace of Change for more information.

Active projects – watch for further activity related to Canadian Auditing Standards

Proposed change Summary Status
New and Revised Auditor Reporting Standards and Related Conforming Amendments IAASB issued new ISA 701, Communicating Key Audit Matters in the Independent Auditor's Report and revised ISA 700, 705, 706, 570 and 260, along with some conforming amendments to other ISAs. New Section to communicate key audit matters, and disclosure of the name of the engagement partner are mandatory for audits of listed entities. Enhanced reporting on going concern, affirmative statement about the auditor's independence, enhanced description of the responsibilities of the auditor and key feature of an audit, and change in order of the opinion and basis for opinion sections are mandatory for all audits. The IAASB issued new and revised standards in January 2015. The AASB anticipates approving the CASs in the spring of 2017. The AASB is still considering whether key audit matter reporting should be required for audits of entities that are not TSX-listed.
Changes for Reporting on Special Purpose Financial Statements Amendments to ISA 800 and ISA 805 provide guidance on how the enhancements to the auditor's report issued by the IAASB in January 2015 would apply in audits of special purpose financial statements. The IAASB issued final amendments in March 2016. The AASB has not issued the final amendments in the Handbook, which are expected in Q2 of 2017.
Engagements to Report on Summary Financial Statements Amendments to ISA 810, Engagements to Report on Summary Financial Statements, explain how the enhancements resulting from the new and revised Auditor Reporting standards apply to engagements to report on summary financial statements. The IAASB issued final amendments in March 2016. The AASB has not issued the final amendments in the Handbook, which are expected in Q2 of 2017.
Addressing Disclosures in the Audit of Financial Statements The changes to various ISAs clarify the concept of disclosures as an integral part of the financial statements and emphasize the need for auditor consideration of disclosures earlier in the audit process, including understanding of relevant aspects of the information system relating to information disclosed in the financial statements, identifying and assessing the risks of material misstatements in quantitative and qualitative disclosures, obtaining sufficient appropriate audit evidence relating to disclosures, and evaluating the overall presentation of the financial statements, including their relevance and understandability. The IAASB issued revisions in July 2015. The AASB has not yet issued the final amendments in the Handbook, which are expected in Q2 of 2017.
The Auditor's Responsibilities Relating to Other Information Specifies responsibilities of auditors relating to the range of other information in documents containing audited financial information. Improves transparency by requiring auditors to articulate in their reports their responsibilities under the revised ISA 720 and the outcome of their work. The IAASB issued revisions in April 2015. The AASB issued an exposure draft in November 2015 relating to adoption issues in Canada, designed to clarify the scope of application of CAS 720. The AASB expects to issue final amendments in the Handbook in Q2 of 2017.
The ISAs referred to above, which are effective for audits of financial statements for periods ending on or after December 15, 2016, have not been adopted as CASs. Accordingly, auditors performing audits of financial statements in accordance with CASs for periods ending on or after December 15, 2016 should not represent compliance with ISAs unless they have also complied with these ISAs issued by the IAASB. The AASB currently does not anticipate making the CASs effective prior to periods ending on or after December 15, 2018.
Responding to Non-Compliance or Suspected Non-Compliance with Laws or Regulations The IAASB's proposal is intended to allow for flexibility when ethical requirements other than the IESBA Code are applied. For instance, in Canada, the rules of professional conduct/code of ethics issued by various professional accounting bodies are followed, rather than the IESBA's Code of Ethics; however, Canadian rules are at least as stringent as the IESBA Code. No Canadian amendments were proposed by the AASB. The AASB plans to issue final amendments in Q1 of 2017, which will be effective for audits of financial statements for periods beginning on or after December 15, 2018.
Enhancing Audit Quality in the Public Interest: A Focus on Professional Skepticism, Quality Control and Group Audits This ITC highlights the IAASB's discussions on the topics of professional skepticism, quality control and group audits, and flags potential standard-setting activities the IAASB could take to enhance audit quality. Invitation to Comment (ITC) issued by the IAASB in December 2015 (AASB in February 2016). Comment period closed. Currently in deliberations.

Active projects – watch for further activity related to Other Canadian Standards

Proposed change Summary Status
Reports on Compliance with Agreements, Statutes and Regulations The new standard, CSAE 3530, Reports on Compliance with Agreements, Statutes and Regulations, will replace Sections 5800, 5815 and 8600. Objective of the proposal is to update the standards and rewrite them in a clarity format. The proposed standard will cover both audit and review engagements. Currently in deliberations. Re-ED is expected to be issued in Q2 of 2017.

Digest of issued standards and amendments – Canadian Auditing Standards

Standards affected Summary of changes Effective date
Communication with Law Firms The new Joint Policy Statement Concerning Communications with Law Firms Regarding Claims and Possible Claims in Connection with the Preparation and Audit of Financial Statements ("Statement") replaces the existing Statement and AuG-46. The new Statement includes an expanded scope that also includes in-house legal counsel, excludes guidance relating to a specific financial reporting framework, clarifies the communication protocols and timelines, and includes new guidance with respect to the auditor's role, updated response letters, and format and content of the inquiry and response letter. Effective for inquiry letters dated on or after December 1, 2016.

Digest of issued standards and amendments – Other Canadian Standards

Standards affected Summary of changes Effective date
Section 7170, Auditor's Consent to the Use of the Auditor's Report Included in a Business Acquisition Report Section 7170 sets out new requirements relating to the auditor's responsibilities in responding to requests to consent to the use of the auditor's report on the audited financial statements of the acquired business that are to be included in a business acquisition report issued by the acquirer. In addition, the standard sets out requirements for the format and content of the auditor's consent. Effective for an auditor's consent to the use of the auditor's report in a business acquisition report issued on or after June 1, 2017.
CSOA 5000, Use of the Practitioner's Communication or Name CSOA 5000 replaces Section 5020 and sets out requirements relating to:
  • use of the practitioner's communication or name in connection with accompanying information;
  • translated practitioner's communication or information on which the practitioner reported; and
  • inappropriate use of the practitioner's communication or name.
The fundamental principles underlying CSOA 5000 are consistent with Section 5020 being replaced.
Effective as of, and applicable to a practitioner's consent provided on or after, June 1, 2017.
CSAE 3000, Attestation Engagements Other than Audits or Reviews of Historical Financial Information and CSAE 3001, Direct Engagements Replaces Sections 5025, 5030, 5049 and 5050. CSAE 3000 is adopted from ISAE 3000, Assurance Engagements Other than Audits or Reviews of Historical Financial Information. CSAE 3000 contains Canadian amendments to address differences between ISAE 3000 and the applicable Canadian assurance standards. These differences include narrowing the scope of CSAE 3000 to address attestation engagements only, references to relevant ethical requirements and terminology. CSAE 3001 sets out requirements related to planning, performing and reporting on direct engagements. Differences in wording between CSAE 3000 and CSAE 3001 relate only to differences between the performance of an attestation engagement and the performance of a direct engagement. Effective for attestation and direct engagements where the assurance report is dated on or after June 30, 2017.
CSRE 2400, Engagements to Review Historical Financial Statements This new standard sets out requirements related to quality control, acceptance, communication with management and those charged with governance, performance of the engagement, reporting and documentation. CSRE 2400 replaces Sections 8100, 8200, 8500, AuG-20 and AuG-47. Effective for reviews of financial statements for periods ending on or after December 14, 2017.

ACRONYMS USED
AASB – Auditing and Assurance Standards Board
AcSB – Accounting Standards Board
ED – Exposure Draft
Re-ED – Re-Exposure Draft
GAAP – Generally Accepted Accounting Standards
IAASB – International Auditing and Assurance Standards Board
IASB – International Accounting Standards Board
IFRIC – International Financial Reporting Interpretations Committee
CMA – Certified Management Accountants
CPA – Chartered Professional Accountants
CPAB – Canadian Public Accountability Board
CSA – Canadian Securities Administrators
PSAB – Public Sector Accounting Board

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions