9. What will the impact of the transition to CASs be and how do CASs compare with existing standards for audits of financial statements?

CASs are principles based and most are consistent with current Canadian practice. Some, however, represent significant change and will require auditors to prepare accordingly.

These areas of financial statements auditing are essentially unchanged from existing standards:

• Compliance with professional ethics and auditor responsibilities;
• Legal liability and corporate governance issues;
• Understanding business entities and business risk;
• Audit planning; and
• Internal control evaluation and testing.
  

There are no significant changes to standards governing other public accounting services and reports.

Further, some significant standards in the current CICA Handbook/Assurance already closely mirror CASs. These standards, which auditors should be using already, deal with audit risk, fraud and audit planning.

The IAASB has significantly revised some ISAs to reflect good auditing practice. These ISAs are adopted in Canada as CAS. The time and effort required to implement the resulting CASs could be significant for some auditors depending, in part, on the processes and procedures they currently use. The topics covered by revised ISAs include:

• communicating deficiencies in internal control (CAS 265)
• materiality and evaluation of misstatements identified during an audit (CASs 320 and 450)
• audit considerations relating to an entity using a third party service organization (CAS 402)
• external confirmations (CAS 505)
• auditing accounting estimates, including fair value accounting estimates and related disclosures (CAS 540
• related parties (CAS 550)
• written representations (CAS 580)
• special considerations - audits of group financial statements (CAS 600)
• using the work of an auditor's expert (CAS 620)
• form and content of auditor’s reports (CASs 700, 705, 706, 800, 805).
  

The CICA’s Guide to New CASs in Canada provides an overview comparison of the proposed CASs (i.e. the ISAs as they will be adopted in Canada) to current Canadian GAAS.