In April 2017, the Auditing and Assurance Standards Board (AASB) adopted International Auditing Standards (ISA) issued by the International Auditing and Assurance Standards Board (IAASB) as Canadian Auditing Standards (CAS) dealing with Auditor reporting.
The implications of these new and revised standards are significant and will impact those involved in the financial reporting process (i.e., management, Those Charged With Governance (TCWG), including audit committees) as well as external auditors and financial statement users. The new report provides reporting of going concern matters, as well as entity-specific reporting of other information, and key audit matters for certain entities. The report also provides enhanced transparency by clarifying the scope of the auditor’s work as well as the roles and responsibilities of the auditor, management and TCWG.
These changes aim to enhance communication by offering entity-specific information to make the auditor’s report more informative and relevant to user decision making.
Key audit matters (KAM) - Optional
A significant change that introduces a new level of transparency into the audit process in the new standards is the introduction of KAM. The final reporting standards, as adopted, do not contain a KAM reporting requirement at this time. However, they do allow for law or regulation to require reporting of KAM and for the auditor to decide to do so.