Audit Methodology Update—Summer 2019
Jul-2019
Target Audience: All Direct Engagement Auditors.
Effective date: The revised methodology is effective upon release. For audits that are currently underway, auditors should apply the revised methodology and tools moving forward.
Standards: This update reflects up to CPA Canada—Assurance—Update Number 25—March 2019
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, TeamMate procedures, templates and Intranet pages. Significant changes to the methodology are summarized below.
Questions: Contact DEPT
Key changes are:
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Updated guidance on sampling and evidence reliability in section 4045 of the Direct Engagement Manual.
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Clarified expectations for substantiation in section 7060 of the Direct Engagement Manual.
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Added a section in the Audit Logic Matrix to identify the United Nation’s sustainable development goals to be covered (if any) and to summarize the approach to integrate the SDGs in the audit.
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Added a new section to the Direct Engagement Manual for the new Canadian Standard on Assurance Engagements (CSAE 3531)—direct engagements to report on compliance.
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Updated the document Completed and Scheduled SAPs available on the INTRAnet.
Updates to the Manual
A number of revisions have been made to the System of Quality Control Manual sections, the Office-wide sections and the Direct Engagement Manual sections. Revisions to the System of Quality Control Manual sections are included in the Annual Audit Manual and the Direct Engagement Manual. The following is a summary of revisions other than editorial or minor revisions.
System of Quality Control and Office-wide Sections
| Section | Section Title | Nature of Changes |
|---|---|---|
|
1051 |
Sufficient appropriate audit evidence |
Added examples of procedures designed to obtain evidence about reliability of information and/or audit evidence. |
|
1193 |
Communications with a successor auditor |
Removed reference to consultation with AAG to be consistent with OAG Audit 1192. |
|
3031 |
Independence |
Updated OAG guidance regarding the timing of independence confirmation completion to be consistent with the policy updated in April 2018. |
|
3081 |
Consultations |
Added reference to the International Specialist—Compliance with Authorities for consultations when instances of possible non-compliance are identified. |
|
3063 |
Quality reviewer responsibilities |
Moved an OAG Policy on QR responsibilities from the Substantiation section to this section. |
|
Glossary |
Glossary |
Added two new definitions—general purpose financial statements and general purpose framework. Aligned definition of misstatement of the other information to CAS 720 and removed definition for multilocation audit given this term has been replaced with group audit. |
Direct Engagement Sections
| Section | Section Title | Nature of Changes |
|---|---|---|
|
1510 |
Selection of performance audit topics |
Included consideration of the United Nation’s sustainable development goals in audit selection. |
|
4042 |
Audit scope and approach |
Clarified period covered by the audit by changing an example with specific dates. |
|
4043 |
Audit criteria |
Added the United Nation’s sustainable development goals as potential sources of criteria. Clarified that we ask entities to acknowledge the suitability of criteria. |
|
4045 |
Evidence-gathering methods |
Incorporated updated guidance on sampling and evidence reliability. |
|
7060 |
Substantiation |
Clarified that substantiation is not a concept referred to in CSAE 3001 and updated the text of the section accordingly. Deleted the concept of re-performance for substantiation. Moved a policy about QR in Quality reviewer responsibilities (section 3063). Deleted a policy on evidence since it is already covered in section 1051—Sufficient appropriate audit evidence. |
|
NEW—12010 |
Direct engagements to report on compliance with specified requirements (reports on compliance) |
Added a new section of the Manual that describes the new CSAE 3531 for reports on compliance. |
Updates to TeamMate Audit Procedures
A number of revisions have been made to the following TeamMate TeamStores: Performance Audit and Special Examinations. The audit procedures were updated to reflect the changes made to the Direct Engagement Methodology. There were no key structural changes made to either the performance audit or the special examination TeamMate procedures.
Audit teams with audit work currently under way should continue using their current TeamMate file. Update the file to incorporate changes that are effective immediately, for the procedures not yet started, using the tables of changes below.
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Import relevant audit procedures, as needed using “Get Programs,” and replace sub-folders and/or audit procedures where work has not yet started.
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Do not make changes to audit procedures that are completed.
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If needed, include the changes to TeamMate from this update under the “Documentation of Significant Judgments” subfolder and link to it as necessary.
Audit teams that have not yet created their TeamMate file should use the new TeamStore for Performance Audits or Special Exams that incorporates the changes.
The following is a summary of the revisions to the TeamMate procedures, other than editorial or minor revisions. Ensure you have the updated procedure step for those steps not yet started.
Performance Audit TeamStore
| Program (PRG) | Procedure Step | Change |
|---|---|---|
|
A.1.PRG—Project Management |
CPA Canada Licence Agreement (Jul-2019) |
Copyright date changed from 2018 to 2019. |
|
A.4.PRG—Information Management |
IF APPLICABLE—Management of Cabinet and TB Documents (Jul-2019) |
Updated the process for managing Cabinet and Treasury Board documents to reflect Record’s new role and the secret room. |
|
D.2.PRG—Internal Draft and Consultation |
Prepare Internal Draft and Consult Internally (Jul-2019) |
Updated to include reference to the new CSAE 3531. |
|
E.1.PRG—PX Draft |
Prepare the PX Draft (Jul-2019) |
Deleted the Checklist for Preparing the Principal’s (PX) Draft. Editorial Services and Translation communicate directly with teams to establish the production schedule. |
|
E.1.PRG—PX Draft |
Date of the Report and Subsequent Events Before the Date of the Report (Jul-2019) |
Clarified the requirements for the date of the report and included a link to the relevant Manual section. |
|
E.2.PRG—Audit Report Substantiation |
INSTRUCTIONS—Substantiation (Jul-2019) |
Clarified the process for completing and reviewing substantiation. |
|
E.4.PRG—Transmission (DM) Draft |
Prepare Transmission (DM) Draft for Production (Jul-2019) |
Deleted the Checklist for Preparing the Transmission Draft and Final Report. Editorial Services and Translation communicate directly with teams to establish the production schedule. |
Special Exam TeamStore
Although instances have not been identified below, the product leader’s references were deleted from TeamMate.
| Program (PRG) | Procedure Step | Change |
|---|---|---|
|
A.1.PRG—Project Management |
CPA Canada Licence Agreement (Jul-2019) |
Copyright date changed from 2018 to 2019. |
|
A.4.PRG—Information Management |
IF APPLICABLE—Management of Cabinet and TB Documents (Jul-2019) |
Updated the process for managing Cabinet and Treasury Board documents to reflect Record’s new role and the secret room. |
|
E.1.PRG—PX Draft |
Prepare PX Draft (Jul-2019) |
Deleted the Checklist for Preparing the Principal’s (PX) Draft. Editorial Services and Translation communicate directly with teams to establish the production schedule. |
|
E.2.PRG—Audit Report Substantiation |
INSTRUCTIONS—Substantiation (Jul-2019) |
Clarified the process for completing and reviewing substantiation. |
Updates to Guidance and Templates
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. The following is a summary of all revisions other than editorial or minor revisions.
System of Quality Control Templates
| Phase | Template or Guidance Name | Change |
|---|---|---|
|
General |
Independence Confirmation |
Endnote 3 has been updated to align with the Independence FAQ question #18. The statement on confirmation that the Internal specialist Values and Ethics has reviewed and approved the Exception report has been moved under the section Exception Report given the answer is dependent upon the answer to the statement initiating an exception report. |
|
General |
Independence—Frequently Asked Questions (FAQ) |
Question #18—Wording has been aligned to wording used in endnote 3 of the Independence confirmation form. French version—Fixed inconsistencies between English and French. |
Direct Engagement Guidance and Templates
| Phase | Template or Guidance Name | Change |
|---|---|---|
|
General |
DELETED—Requests for Cabinet Documents / Treasury Board Submissions |
Document replaced by templates specific to the requested documents. |
|
General |
NEW—Request for Cabinet Documents |
Specific template for requesting Cabinet Documents. |
|
General |
NEW—Request for Treasury Board Submissions |
Specific template for requesting Treasury Board Submissions |
|
General |
Letter of Notification and Solicitor-Client Privilege (Performance Audit) |
Clarified the OAG expectations regarding Cabinet confidence documents. |
|
General |
Engagement and Solicitor-Client Privilege Letter (Special Examinations) |
Clarified the OAG expectations regarding Cabinet confidence documents. |
|
General |
Key Dates for Special Examination Reports |
Updated document to clarify reporting process dates for edit and translation. DEPT no longer reviews of the Checklist—Assurance on the Application of Reporting Standards and Policies. |
|
General |
DELETED—Delegation of Signing Authority—Annual Audits and Special Examination Reports (Special Examinations) |
Removed from the guidance list. No longer applies to Special Examinations. |
|
Planning |
DELETED—Memorandum for Advisory Committee Meeting during Early Planning Phase |
Early Planning Phase Advisory Committee Meeting is no longer mandatory. |
|
Planning |
Special Examination Plan Letter to the Head of Crown Corporation |
Clarified the requirements from the standard regarding the written acknowledgement. |
|
Planning |
Audit Plan Summary Letter to the Deputy Head |
Clarified the requirements from the standard regarding the written acknowledgement. |
|
Planning |
Audit Logic Matrix |
Added a section to identify the United Nation’s sustainable development goals to be covered and to summarize the approach to integrate the SDGs in the audit (if any). |
|
Reporting |
DELETED—Principles for substantiation for performance audits and special examinations |
The content is included in the Manual section 7060. |
|
Reporting |
DELETED—Checklist for Preparing the Principal’s (PX) Draft |
Editorial Services and Translation communicate directly with teams to establish the production schedule. This checklist is therefore no longer needed. |
|
Reporting |
Entity PX Draft Audit Report Letter |
Added a note to remind entities to translate their responses to our recommendations. |
|
Reporting |
Entity PX Draft Audit Report Letter (Special Examination) |
Added a note to remind entities to translate their responses to our recommendations. |
|
Reporting |
DELETED—Checklist for Preparing the Transmission Draft and Final Report |
Editorial Services and Translation communicate directly with teams to establish the production schedule. This checklist is therefore no longer needed. |
|
Reporting |
Entity Hard Copy Transmission Draft Audit Report Letter (Special Examinations) |
Updated wording to be consistent with the Performance Audit letters. |
|
Reporting |
Third Party Letter |
Updated to list the CESD Reports to Parliament as an option. |
Updates to INTRAnet
Direct Engagement INTRAnet pages reflect the changes included in this Methodology Update.
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Completed and Scheduled SAPs—the document was updated.
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Removed the Summary Guide on Secondary Evidence and the Sampling Guide for Performance Audits from the Internal Specialist’s page—guidance is now integrated into updates to Manual section 4045.
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Removed the Performance Audit Sampling Plan from the Internal Specialist’s page—a current copy is available on the Templates and Checklists page.