The Audit and Assurance Standards Board (AASB) published a consultation paper on January 15, 2021 in relation to its draft strategic plan for 2022-2025. Key factors that they have considered in their strategic plan are the longer term impacts of the COVID-19 pandemic such as the negative impacts on the economy and changes in business practices such as increased reliance on technology and remote working arrangements. Other factors considered were the increasing interest in crypto currencies and the accounting and assurance implications of these assets. They also made a specific point of highlighting that the business environment is becoming more complex and the impact this has on standards and implementation of standards. The AASB has proposed several strategic directions out of these considerations which we have summarized below.
Strategic direction #1 – Reflect the increasing use of technology by entities and practitioners in standards and guidance. This would include guidance related to assurance client’s increasing use of technologies that impact operations, communications and information systems. It would also address technology-enhanced tools and techniques used in assurance engagements.
Strategic direction #2 – Address the increasing complexity in the business environment in standards and guidance. This would mean more timely guidance for implementation of assurance standards that continue to become more complex as a result of the changes in the business environment.
Strategic direction #3 – Provide solutions that respond to the environment for small and medium sized entities and allow practitioners to apply standards in a scalable and proportional way on the less complex elements of an entity. Specifically, the paper states that the AASB is experiencing increasing pressure to provide scalable and proportional standards,
which respond to the less complex elements of an entity’s operations and financial statements.
Strategic direction #4 – Understand and respond to the evolving information needs of users. What this means is that the AASB will look for sources of information, other than financial statements, for which assurance standards could be built to deliver other types of assurance engagements.
Strategic direction #5 – Understand and respond to the expectations and changing public confidence in audits. This would include increased detection and reporting of fraud and going concern issues.
Strategic direction #6 – Understand and assess the impact of a remote working environment on standards and guidance. The AASB notes that practitioners are responding to the current need to conduct engagements remotely, and raising questions about how standards can be adapted to this environment.
You can read the full version of the consultation paper here. The AASB is requesting responses to the consultation paper by April 15, 2021.