Audit Methodology Update—December 2023
Dec-2023

Target audience: All direct engagement auditors.

Effective dates: The revised methodology is effective on release with the exceptions below.

New manual section 3064 Assigned Legal Counsel: Roles and Responsibilities. This new manual section reflects changes made in TeamMate procedures on the legal counsel roles and responsibilities published in February 2023. Engagement teams are therefore already aligned with this new manual section. 

Updated templates: Engagement teams need to use the most recent templates if they have not started their engagement file or completed it yet. 

Standards: This update reflects up to CPA Canada—Assurance—Update Number 37—May 2022.

Copyright: CPA Canada Handbook sections and excerpts are reproduced herein for your non‑commercial use with the permission of the Chartered Professional Accountants of Canada (CPA Canada). These may not be modified, copied, or distributed in any form, as this would infringe CPA Canada’s copyright.

Description of subject: The update includes changes to audit manual policies and guidance, templates, and INTRAnet pages. Significant changes to the audit methodology are summarized below.

Key changes

  • Updated Engagement and Solicitor‑Client Privilege Letter (for special examinations) and Letter of Notification and Solicitor‑Client Privilege (for performance audits) to improve clarity.

  • Revised special examination report template, including streamlined findings section.

  • Added new and updated manual sections to

    • enhance the System of Quality Management manual sections to support auditors in achieving quality

    • outline roles and responsibilities of assigned legal counsel

    • provide guidance to find the root causes of identified issues

    • update the documented audit selection process

    • add guidance related to subsequent events

Upcoming key changes

In January 2024, the manual section 4045 Evidence-Gathering Methods will be replaced by 6000 Evidence‑Gathering Methods, 6020 Assessing the reliability of data, and 6040 Selection of items for review. A new manual section 8100 Whether and How to Amend a Tabled or Issued Direct Engagement Report will also be added in January 2024. 

Updates to the Manual

A number of revisions have been made to the System of Quality Management and OAG‑wide sections and to the direct engagement sections. Revisions to the System of Quality Management sections are included in both the Annual Audit Manual and the Direct Engagement Manual. The following is a summary of revisions other than editorial or minor revisions.

Section Section Title Nature of Changes
System of quality management and OAG‑wide sections

1012

Audit quality, including roles and responsibilities for audit quality

Updated OAG policy to formalize that the individuals assigned 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 Canadian Standard on Quality Management (CSQM) 1.

1031

Ethical Requirements Relating to an Assurance Engagement

Added new policies and enhanced guidance regarding the engagement leader’s responsibilities for the identification, evaluation, and appropriate actions to take for threats and breaches of relevant ethical requirements.

1071

Job Rotation

Revised policy on who approves exceptions to rotation requirements for assistant auditors general and quality reviewers.

1161

Documenting evidence of the extent of review

Enhanced guidance on documenting the evidence of the extent of review of audit documentation.

1162

Engagement leader review: minimum documentation requirements

Enhanced guidance on documenting the evidence of the engagement leader’s involvement.
3031

Independence

Added new policies and enhanced guidance regarding the engagement leader’s responsibilities for the identification, evaluation, and appropriate actions to take for threats and breaches of relevant ethical requirements. 

Enhanced guidance for specific actions to take when there is a breach of an independence rule to improve alignment with Independence Rule 204.
3062 Engagement Leader Responsibilities for Audit Quality

Enhanced policies and guidance on the engagement leader’s responsibilities for audit quality specific to

  • relevant ethical requirements including independence
  • engagement resources
  • direction, supervision, and review
  • consultation
  • engagement quality review
  • differences of opinion
3063 Engagement Quality Reviewer Responsibilities Updated guidance related to engagement quality reviewer’s responsibilities to improve alignment with CSQM 2 and Engagement Quality Reviewer checklist published in December 2022.
3073 Supervision and Review Considerations When Using Technology Solutions Enhanced guidance for directing the engagement team on the use of technology solutions.
9081 Post‑audit surveys Aligned guidance with the new process for post‑audit surveys for annual audits and special examinations that are sent using Checkbox software.
Glossary Glossary Added new and updated definitions related to CAS 220, CSQM 1, and CAS 315.
Direct engagement sections

NEW—103

Root Cause Analysis

Added a new section to better equip engagement teams to assess whether recommendations are appropriately focused on the root causes of identified issues.
1510 Selection of Performance Audit Topics Updated guidance to specify that evidence of the engagement leader’s review of key audit matters is documented in the working papers.

NEW—3064

 Assigned Legal Counsel: Roles and Responsibilities

Revised the section to align with changes made to the audit selection process.

These new policies and guidance reflect changes made in TeamMate procedures on legal counsel roles and responsibilities published in February 2023. Please refer to the February 2023 announcement.
8030 Subsequent Events Updated to include the guideline AUG-50—Conducting a performance audit in the public sector in accordance with CSAE 3001.

Updates to TeamMate Audit Procedures

There are no revisions to be made to the TeamMate TeamStores to align with this methodology update.

Updates to templates and guidance

Revisions have been made to some templates and guidance. With the exception of those documents identified as being specific to performance audits or special examinations, all templates and guidance documents listed below apply to both practices. Engagement teams need to use the most updated templates if they have not yet completed their engagement file. The following is a summary of all revisions other than editorial or minor revisions.

Engagement Management

Engagement and Solicitor‑Client Privilege Letter (for special examinations)

Updated the wording to indicate that the intention is not to waive any privilege attached to documents provided by the entity.

Updated the wording in the French version to align with the terminology used in the Financial Administration Act.

Engagement Management

Letter of Notification and Solicitor‑Client Privilege (for performance audits)

Updated the wording to indicate that the intention is not to waive any privilege attached to documents provided by the entity.
Examination Special Examination Report

Streamlined findings sections to enhance conciseness.

Replaced “Entity’s Applied Title” with “Name of the entity” throughout this template.

Added precision to references to the Financial Administration Act.

Updated the terminology in the French version to align with the terminology used in the Financial Administration Act.
Direct engagement templates
Phase Template Name Change

Updates to INTRAnet

Direct engagement INTRAnet pages reflect the changes included in this methodology update.