Methodology Update—December 2023
Dec-2023
Target audience: All Attest Auditors
Effective dates:
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Updates related to CAS 220 (Revised), Quality Management for an Audit of Financial Statements, are effective for audits of financial statements for periods beginning on or after 15 December 2022.
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Updates to the Auditor's Report Template apply to audits of financial statements prepared in accordance with IFRS Accounting Standards and are effective for annual reporting periods beginning on or after 1 January 2023.
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Other updates are effective upon release.
Standards: This update reflects up to CPA Canada—Assurance—Update Number 37—May 2022 and, also includes CPA Canada‑Assurance‑Update Number 39.
It does not include CPA Canada—Assurance—Update Number 38. Number 38 relates to CAS 600 Audits of Group Financial Statements (Including the Work of Component Auditors) and will be reflected in a future methodology update.
Description of subject: The update includes changes to audit manual policies and guidance, templates and INTRAnet pages. Significant changes to the methodology are summarized below.
Key changes are:
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New and enhanced policies and guidance to align with CAS 220 (Revised).
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Updated External and Interoffice Letter of Instructions to align with CAS 220 (Revised).
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Updated Auditor’s Report Template to reflect amendments to International Accounting Standards (IAS) 1, Presentation of Financial Statements, related to disclosing material accounting policy information rather than significant accounting policies.
CAS 220 (Revised)—Quality Management for an Audit of Financial Statements
This methodology update completes the OAG’s implementation of CAS 220 (Revised) which commenced with the December 2022 Methodology Update. CAS 220 (Revised) is effective for audits of financial statements for periods beginning on or after 15 December 2022. This means that CAS 220 (Revised) should be applied to audits of financial statements for the first time to periods ending on 31 December 2023.
The implementation of CAS 220 (Revised) was completed as follows:
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Methodology Update December 2022—Extracts of the CAS 220 (Revised) requirements were updated throughout the manual while updates to policies and guidance for CAS 220 (Revised) were limited to those that supported the CSQM 1 requirements.
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Methodology Update June 2023—The Annual Audit procedures were updated to align with the CAS 220 (Revised) requirements.
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Methodology Update December 2023—Aligned all remaining updates and enhancements in the audit manual, policies, guidance, and templates with CAS 220 (Revised).
Updates to the Manual
A number of revisions have been made to the annual audit manual sections. The following is a summary of all revisions other than editorial revisions, revisions made solely to CAS extracts or revisions made solely to procedure references:
| Section | Section Title | Nature of Changes |
|---|---|---|
| SOQM Sections | ||
|
1012 |
Audit quality, including roles and responsibilities for audit quality |
Updated OAG policy to formalize the process so that individuals who have the operational responsibility for the system of quality management, compliance with independence requirements and the monitoring and remediation process shall have a direct line of communication to the Auditor General. Enhanced guidance related to CSQM 1. |
|
1031 |
Ethical Requirements Relating to an Assurance Engagement |
Added new policies and enhanced guidance on the engagement leader’s responsibilities related to threats and breaches of relevant ethical requirements. |
|
1071 |
Job Rotation |
Revised policy to change the approver of the Assistant Auditor General’s and quality reviewer’s exception report. |
|
1161 |
Evidencing the extent of review of audit documentation |
Updated guidance on planning and reporting sign‑offs to align with CAS 220 (Revised). |
|
1162 |
Engagement leader review: minimum documentation requirements |
Updated guidance to align with CAS 220 (Revised). Added new guidance on documenting the review of financial statements and formal written communications. |
| 3031 |
Independence |
Added new policies and enhanced guidance on the engagement leader’s responsibilities related to threats and breaches of relevant ethical requirements. |
| 3061 | Engagement Team: Assigning and Managing Tasks | Updated guidance to align with CAS 220 (Revised). |
| 3062 | Engagement Leader Responsibilities for Audit Quality |
Updated policies and guidance to align with CAS 220 (Revised). Changes include engagement leader’s responsibilities for audit quality specific to:
|
| 3063 | Engagement Quality Reviewer Responsibilities | Updated guidance related to engagement quality reviewer’s responsibilities to improve alignment with CSQM 2 and EQR checklist published in December 2022. |
| 3073 | Direction, Supervision and Review Considerations When Using Technology Solutions | Enhanced guidance on the use of technology solutions. |
| 9081 | Post‑audit surveys | Aligned the guidance with the new process for post‑audit surveys that are sent with checkbox. |
| Glossary | Glossary | Added new and updated definitions related to CAS 220 (Revised), CSQM 1 and CAS 315. |
| Annual Audit Sections | ||
|
2213 |
Communication process |
Aligned the guidance with CAS 220 (Revised) that relates to the engagement leader’s requirement to review formal written communications to management, those charged with governance or regulatory authorities. |
|
2311 |
Introduction—Group audit considerations |
Added new guidance on the application of CAS 220 (Revised) in a group audit context. |
|
2312 |
Responsibilities of the group engagement leader |
|
|
2321 |
Acceptance and continuance as group auditor |
|
|
2321.1 |
Sharing Acceptance and & Continuance information on a group audit |
|
|
2324 |
Evaluating group auditor’s planned involvement in the work of component auditors |
|
|
2326 |
Understanding the component auditors |
|
|
2328 |
Compliance with ethical requirements, including those related to independence |
|
|
2329 |
Sufficient and Appropriate Resources |
|
|
2340.1 |
Planned Direction and Supervision of Component Auditors and Review of Their Work |
|
|
2340.2 |
Group Engagement Team Planning |
|
|
2341 |
Communicating instructions to component auditors |
|
| 2342 | Communicating among group engagement teams and component auditors during the audit | |
| 2361 | Review of the work performed by component auditors | Added new guidance for teams to consider when deciding whether to visit entities’ sites or component teams in‑person. |
|
2362 |
Evaluating the sufficiency and appropriateness of audit evidence obtained |
Added new guidance on the application of CAS 220 (Revised) in a group audit context |
|
2365 |
Group Engagement Leader—Taking Overall Responsibility for Quality |
Added new section to emphasize the group engagement leader’s responsibility for managing and achieving quality on the audit, in applying CAS 220 (Revised) in a group audit. |
|
3064 |
Team manager |
Updated guidance to align with CAS 220 (Revised). |
|
3093 |
Determining the procedures to perform when using auditor’s experts |
Updated guidance to align with CAS 220 (Revised). |
|
4011 |
Purpose, attendance and timing of the team planning meetings |
Enhanced guidance on team planning meeting to align with CAS 220 (Revised) including:
|
|
4013 |
Required discussions |
Aligned guidance on required discussions related to quality with CAS 220 (Revised). |
|
4014 |
Other discussions at the team planning meetings |
|
|
4031 |
Develop and document an audit plan |
Added new guidance to align with CAS 220 (Revised). The audit plan must now include a description of the nature, timing and extent of the planned direction, supervision of the team and the review of their work. Enhanced guidance on documentation of the audit plan and expected review. |
|
4041 |
Planning sign‑off |
Updated guidance to align with CAS 220 (Revised). |
|
4051 |
Changes to the audit strategy and plan |
Updated guidance to align with CAS 220 (Revised). Changes relate to planned direction, supervision and review of the audit team’s work. |
|
5512 |
Fraud Communications |
Updated guidance to align with CAS 220 (Revised). |
|
7011.1 |
Audit guidance for specific financial statement areas |
Added new frequently asked questions on targeted testing and level of coverage necessary to apply the supplemental level of assurance. |
|
7022 |
Taking stock meetings |
Updated guidance to align with CAS 220 (Revised). |
| 8015 | Determine and communicate key audit matters | Updated guidance to specify that evidence of the engagement leader’s review of key audit matters is documented in the working papers. |
| 9031 | Financial statements preparation and audit procedures |
Updated guidance to align with CAS 220 (Revised), regarding the engagement leader’s responsibility to review the financial statements and auditor’s report, and to keep evidence of such review within the audit file. |
| 9061 | Completion sign‑offs | Added new guidance to align with CAS 220 (Revised) on the engagement leader’s responsibility to perform certain tasks before completing sign‑off procedures. |
Updates to templates
The following is a summary of all revisions other than editorial revisions and any actions that need to be taken:
|
Planning |
External Firms/Auditors (Non‑OAG) Letter of Instruction Template for Use on Group Audits |
Required and optional correspondence added to align with CAS 220 (Revised) in a group audit. Improvements related to communication of threats and breaches. |
New template must be used for audits of financial statements for periods beginning on or after 15 December 2022. |
|
Planning |
Interoffice Letter of Instruction Template for Use on Group Audits |
Required and optional correspondence added to align with CAS 220 (Revised) in group audits. Minor changes related to CAS 315. Improvements related to communication of threats and breaches. |
New template must be used for audits of financial statements for periods beginning on or after 15 December 2022. |
| Reporting | CAS Auditor's Report Template—Listed Entities (for periods ending on or after 15 Dec 2018) |
Updated for changes to IAS 1. The template was also revised to include key audit matters. |
Template must be used for audits of financial statements for periods beginning on or after 1 January 2023. |
| Reporting | CAS Auditor’s Report Template—Non‑Listed Entities (for periods ending on or after 15 Dec 2018) | Updated for changes to IAS 1. |
Template must be used for audits of financial statements for periods beginning on or after 1 January 2023. |
| Annual Audit Templates | |||
| Phase | Template Name | Change | Action Required/Impact |
|---|---|---|---|
Updates to INTRAnet
The Financial Audit INTRAnet pages reflect the changes included in this Methodology Update.
There is a new link to “IFRS Interpretation Committee (IFRIC) Published Agenda Decisions” that replaces the previous link to the IFRS website. This new link can be found on the “New Accounting Standards or Amendments” INTRAnet page.
In addition, links to audit and accounting guidance were added:
- Cybersecurity Risk Assessment FAQ—on the Templates and Checklists page
- Summary of PS 3400 requirements—on the Accounting Guidance page