In Brief. November A plain and simple overview of the AASB s soon-to-be-released exposure draft, Agreed-upon Procedures Engagements

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1 November 2018 Auditng and Assurance Standards Board This is an overview of the AASB s soon-to-be released exposure draft, Agreed-upon Procedures Engagements, which proposes to adopt International Standard on Related Services (ISRS) 4400 (Revised) as Canadian Standard on Related Services (CSRS) Project objective: Project stage: Next steps: The AASB aims to adopt ISRS 4400 (Revised), Agreed-Upon Procedures Engagements, issued by the International Auditing and Assurance Standards Board (IAASB), as CSRS CSRS 4400 would replace two existing standards: Section 9100, REPORTS ON THE RESULTS OF APPLYING SPECIFIED AUDITING PROCEDURES TO FINANCIAL INFORMATION OTHER THAN FINANCIAL STATEMENTS Section 9110, AGREED-UPON PROCEDURES REGARDING INTERNAL CONTROL OVER FINANCIAL REPORTING The IAASB issued its exposure draft on ISRS 4400 (Revised) in November The AASB will issue a corresponding exposure draft on CSRS 4400 in early December Comments are due to the AASB by February 15, The AASB will consider Canadian stakeholders responses on its exposure draft when developing the its response letter to the IAASB s own document for comment on this topic.

2 Why change is needed Since the development of Section 9100 and Section 9110, significant changes in the business environment have happened. This drives demand for agreed-upon procedure engagements on both financial and non-financial subject matters. Section 9100 was developed over 25 years ago. Section 9110 was developed over 10 years ago. A clarified and modernized CSRS 4400 would serve the public interest better through the following ways: Responding to the needs of the stakeholders: Meeting the needs of users, such as regulators, funding bodies and creditors, for increased accountability around the use of funds and grants. In addition, for agreed-upon procedure engagements on financial and non-financial subject matters. Providing clarity in the agreed-upon procedure report: Enhancing the report for clearer, more consistent language to help clarify what was done, and the results. This can reduce confusion. Reducing inconsistency in the performance of agreed-upon procedure engagements: Drafting CSRS 4400 using the clarity format drafting conventions and other changes to promote clarity will help practitioners interpret and perform agreed-upon procedure engagements consistently. 2

3 What are the key aspects of CSRS 4400 The AASB exposure draft was developed using the clarity format and introduces several key aspects of an agreed-upon procedure engagement. New aspects introduced in CSRS 4400 include the following: Professional judgment: New requirement and application material on the role of professional judgment in an agreed-upon procedure engagement. Independence: New requirements and application material on disclosures relating to the practitioner s independence (or lack thereof). Terminology: New application material on what constitutes appropriate (or inappropriate) terminology to describe procedures and findings in agreed-upon procedure reports. Non-financial subject matters: clarification that non-financial subject matters are within the scope of the standard. Use of a practitioner s expert: New requirements and application material to address the use of the work of a practitioner s expert in an agreed-upon procedure engagement, including the practitioner s responsibilities when using the work of an expert and consideration of whether it is appropriate to include references to the expert in an agreed-upon procedure report. Agreed-upon procedure report restrictions: Clarification that an agreed-upon procedure report may be provided to a party who is a non-signatory to the engagement agreement and new application material on considerations when restricting the use of the report. Recommendations arising from the performance of agreed-upon procedure engagements: Clarification of how such recommendations can be distinguished from the actual agreed-upon procedure report. Documentation: New requirement and application material on documentation of the agreedupon procedure engagement. 3

4 How can you influence the standard? Understand, participate in discussions, and respond in writing on the proposed changes Understand what is changing by attending a webinar Participate in a roundtable session Respond in writing to the Exposure Draft Tune into the AASB s webinar on January 17, 2019 (French) and January 18, 2019 (English) to learn more. Roundtable sessions are open forums to discuss viewpoints to help shape the future standard. We ll be hosting in-person and virtual roundtables January You can respond in writing to all or a few, questions posed in the exposure draft. You will receive the exposure draft and an outline for discussion in advance of the session to help you prepare for participating in the discussion. Go to FRAScanada.ca/agreeduponprocedures to register for the above opportunities and respond to the exposure draft when issued. 4

5 Stay Tuned Get ready to comment on the exposure draft Read the IAASB s Exposure Draft of ISRS 4400 (Revised), issued in November The AASB will issue the corresponding exposure draft in early December 2018, with comments due to the AASB on February 15, Stay informed Stay up to date on this project via the FRAScanada.ca/agreeduponprocedures. Please contact: Chi Ho Ng, CPA, CA Principal, Auditing and Assurance Standards Phone: cng@aasbcanada.ca 5