With the introduction of the revised Canadian Auditing Standards (“CAS”) 700, Forming an Opinion and Reporting on Financial Statements, as well as other new and amended standards that address matters related to the auditor’s report, comes a new auditor’s report with a new structure and a new feel. Effective for periods ended on or after December 15, 2018.
What has moved
The “Opinion paragraph” has been brought forward to now be the first paragraph of the report.
Any going concern related wording, if included, currently under “Emphasis of Matter” will be headed by “Material Uncertainty Related to Going Concern”.
“Management’s Responsibility for the Financial Statements” is changed to “Responsibilities of Management and Those Charged with Governance (“TCWG”) for the Financial Statements” and includes new paragraphs (see below).
“Auditor’s Responsibility” is changed to “Auditor’s Responsibilities for the Audit of the Financial Statements” and includes new paragraphs (see below).
What has been added
The “Basis for Opinion” paragraph discusses auditor independence and ethics.
Other Information (“OI”) paragraphs are to be included for non-listed companies when certain additional financial information is published, and includes management’s responsibility for the OI; a statement that the auditor’s report does not extend to the OI; and that the auditor did not find material misstatements included in the OI.
The “Responsibilities of Management and TCWG for the Financial Statements” paragraph now includes that management is responsibility for the going concern assessment as well as for the use of the going concern basis being appropriate. In addition, it identifies TCWG and their responsibility.
“Auditor’s Responsibilities for the Audit of the Financial Statements” now includes descriptions of audit terms as well as additional terms, including management’s use of the going concern basis; responsibilities in group audits; and communications with TCWG.
A sample auditor’s report under the new standards can be found on the CPA Canada website.