Professional Engagement Guide (PEG) update
It’s that time of year again when the updated PEG checklists are released and your firm templates should be updated.
Whether you subscribe to Caseware, Jazzit or another third party service provider and use the checklists in their entirely or you customize your firms’ templates you will see a number of new resources. Here are our thoughts on which you should be considering.
New Alternative Review Engagement Forms (CSRE 2400)
The alternative review engagement forms have been developed in response to feedback received. You now have a choice between the original PEG review engagement forms and these alternative review forms.
The new forms are intended to improve documentation of the linkage between understanding the entity section and identifying areas of identified misstatements and the related procedures which are being performed, including inquiry and analysis. At this time we are not transiting to the alternative review engagement forms. The new workflow integrates the understanding of the clients accounting processes (i.e. cycles documentation) into the related sections. We prefer that systems documentation is included in the planning section of the file in order to complete the engagement scoping where the specific procedures to be performed are identified.
We like a few of the improvements such as the additional guidance for junior staff included in WP R2-92 which provides a listing of common areas of likely misstatement to consider, if your engagement is a retail or manufacturing company. However, these changes will not significantly improve our file documentation nor will they reduce time to complete the engagement. So we will not be investing (in another) conversion to a new template at this time.
Compliance Engagement Letters and Forms (CSAE 3530 and CSAE 3531)
Canadian Standards on Assurance Engagements (CSAE) CSAE 3530 and 3531 are effective for any practitioners’ reports dated after April 1, 2019. If you complete any of these engagements the new PEG update has provided useful resources including sample engagement letters, as well as planning and performing checklists.
Not sure if you complete any of these engagements? Don’t worry they are not overly common unless you practice in the not-for-profit sector. The ministry of education requires an Eligible Student report for independent schools which supports the funding provided that falls under CSAE 3530. Other examples we have seen in practice include department of justice funding reporting and other municipal funding reporting requirements.
When navigating the resources you will first need to identify whether you are providing audit level (reasonable) or review engagement level (limited) assurance. Then you will need to confirm that the engagement is a direct or indirect reporting engagement. If you believe it is a direct report give us a call! It is not that these don’t exist, but we would rarely (likely never) accept such an engagement so I presume you would want to consider extensively before you did.
The new PEG release includes a number of additional examples of tailored auditors’ reports and review engagement reports. These provide a good starting point for the complexity around reporting under the new standards however the templates do not (and in all fairness cannot) provide all the variations of reporting requirements. We encourage all firms to ensure that your firm resources for reporting include the CPA Canada’s Reporting Implications documents which are freely available on CPA Canada’s website.
For the specifics of changes to individual forms be sure to start you template update by reviewing the “What’s New” document in your PEG Subscription on Knotia.
If you are looking for an in-house training session on how to implement, navigate and appropriately document your engagement files using these forms contact us.
Authors: Richard Konings / Bridget Noonan