Assurance Standards

Experts Narrow-Scope Amendments

On January 5, 2026, the IAASB released the final pronouncement for Narrow-Scope Amendments to IAASB Standards Arising from the IESBA’s Using the Work of an External Expert Project. The IAASB has also published a Basis for Conclusions. The IAASB’s updates reflect ongoing collaboration and coordination between the IAASB and IESBA and help to maintain interoperability between the IAASB standards and the IESBA Code.

The targeted amendments affect the following IAASB standards:

• ISA 620, Using the Work of an Auditor’s Expert
• ISRE 2400 (Revised), Engagements to Review Historical Financial Statements
• ISAE 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information
• ISRS 4400 (Revised), Agreed-upon Procedures Engagements

In December 2025 the AASB approved targeted revisions to CAS 620, Using the Work of an Auditor’s Expert, and other Canadian standards (CSAE 3000, CSAE 3001, CSRE 2400 and CSRS 4400) that address the use of external experts. The AASB expects the narrow-scope amendments will be published in the February 2026 CPA Canada Handbook update.

The narrow-scope amendments are effective for audits and reviews of financial statements for periods beginning on or after December 15, 2026, and for other assurance and related services engagements beginning on or after December 15, 2026.

Revised Standard - Fraud

On July 8, 2025, the IAASB revised ISA 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements. The IAASB has published a fact sheet and Basis for Conclusions.

ISA 240 (Revised) incorporates the following enhancements:

• Clearer Auditor Responsibilities – Strengthens and clarifies what auditors are expected to do when addressing risks relating to fraud.
• Reinforced Professional Skepticism – Introduces new requirements to elevate the consistency and effective practice of professional skepticism across all stages of the audit.
• Sharper Fraud Risk Assessment – Requires a focused “fraud lens” when identifying and addressing risks, with stronger links to related standards.
• More Effective Fraud Responses – Establishes a new section with clearer, enhanced requirements to guide how auditors respond to identified or suspected fraud.
• Improved Transparency and Communication – Emphasizes timely communication with management and those charged with governance, with clearer disclosures in the auditor’s report.

The revisions also align with ISA 570 (Revised 2024), Going Concern, recognizing that fraud and financial distress are often interrelated risks that must be addressed together to bolster corporate transparency and resilience.

The AASB published CAS 240, which included no Canadian amendments, into the CPA Canada Handbook – Assurance in September 2025.

Both ISA 240 (Revised) and CAS 240 are effective for audits of financial statements for periods beginning on or after December 15, 2026, with early application permitted.

Revised Standard - Going Concern

On April 9, 2025, the IAASB released the final pronouncement for ISA 570 (Revised 2024), Going Concern. The IAASB also published the Basis for Conclusions and a fact sheet.

ISA 570 (Revised 2024) introduces several key changes:

• Robust risk assessment - Auditors must conduct, in a more timely manner, thorough risk assessments to determine whether events or conditions are identified that may cast significant doubt on the entity’s ability to continue as a going concern.
• Evaluating Management’s Assessment - Auditors must evaluate management’s assessment of going concern irrespective of whether events or conditions are identified. In doing so, auditors must consider the potential for management bias and evaluate the underlying method, significant assumptions, and data used when management formed its assessment. Additionally, auditors must evaluate whether management’s judgements and decisions indicate potential bias.
• Extended date of evaluation period - The auditor’s evaluation period for going concern now extends at least twelve months from the date of approval of the financial statements, contributing to an assessment of more relevant, decision-useful information.
• Enhanced transparency - The standard requires clearer communication in the auditor’s report about the auditor’s responsibilities and work related to going concern and strengthened communications with those charged with governance and external parties.

The AASB published CAS 570, which included no Canadian amendments, into the CPA Canada Handbook - Assurance in June 2025.

Both ISA 570 (Revised 2024) and CAS (570) are effective for audits of financial statements for periods beginning on or after December 15, 2026.

Revised standard – audits of group financial statements (including the work of component auditors)

The AASB revised CAS 600 to include a more robust risk-based approach to planning and performing a group audit. The revised standard provides detailed guidance for group and component auditors when conducting a group audit.

Effective for audits of group financial statements for periods beginning on or after December 15, 2023, with earlier application permitted.

Revised standards – Quality management

The AASB issued two new standards, quality management for firms (CSQM 1) and engagement quality reviews (CSQM 2), replacing the existing standard, CSQC 1. CSQMs largely mirror the international quality management standards (ISQM 1 and ISQM 2).

The AASB also issued conforming amendments to Other Canadian Standards to avoid inconsistencies with the new and revised quality management standards.

CSQMs will apply to both assurance and related service (i.e., non-assurance) engagements. This is a significant change from CSQC 1, which only scopes in assurance engagements.

The AASB also proposed revisions to the standard on quality management for an audit of financial statements (CAS 220) to clarify and strengthen the key elements of quality management at the engagement level.

CSQM 1 and 2 are effective for audits or reviews of financial statements or other assurance engagements as of December 15, 2022; and effective for related services engagements as of December 15, 2023.

CAS 220 (Revised) is effective for audits of financial statements for periods beginning on or after December 15, 2022.

The conforming amendments will be effective on or after December 15, 2022 except the amendments to the compilation (CSRS 4200) and agreed upon procedures (CSRS 4400) standards, which will be effective for periods beginning on or after December 15, 2023.

Narrow Scope Amendments to ISQMs, ISAs as a Result of Revisions to the Definitions of Listed Entity and Public Interest Entity in the IESBA Code

The IAASB has released narrow scope amendments to its standards revising the definition of listed entity to align with the definition in the International Ethics Standards Board for Accountants’ (IESBA) Code of Ethics for Professional Accountants (including International Independence Standards). The new definition will amend the International Standards on Quality Management and International Standards on Auditing. In addition, amendments to International Standard on Review Engagement 2400 (Revised), Engagements to Review Historical Financial Statements, aim to align with the IESBA Code of Ethics regarding certain public disclosures about the application of independence requirements.

The narrow scope amendments:

• Adopt the same definition of publicly traded entity (PTE) in the ISQMs and ISAs as adopted in the IESBA Code of Ethics, while recognizing the role local standard setters and regulators play in defining PTEs for their jurisdictions.
• Incorporate an overarching objective for differential requirements for PTEs in the ISQMs and ISAs and a framework for when it may be appropriate to apply such requirements to other entities.
• Amend the applicability of the existing requirements for audits of listed entities to apply to audits of PTEs.
• Add a new requirement in ISRE 2400 (Revised) for public disclosure in the practitioner’s review report when the practitioner applied independence requirements specific to reviews of financial statements of certain entities, e.g., for public interest entities.

The narrow scope amendments become effective for engagements for periods beginning on or after December 15, 2026.

The AASB is waiting for the Public Trust Committee’s Independence Standing Committee to finalize its definition of “public interest entity” for the Canadian Independence Standards. Once finalized, the AASB will consider the appropriateness of similar narrow-scope amendments to the Canadian Standards on Quality Management and the CASs.

Exposure Draft  – Compilation of Future-Oriented Financial Information and Pro Forma

The AASB issued an exposure draft proposing to replace Assurance and Related Services Guideline (AuG) - 16, Compilation of a Financial Forecast or Projection, with a new Canadian Standard on Related Services (CSRS) 4250, Compilations Engagements on Future-oriented Financial Information and Pro Forma. This exposure draft also proposes limited consequential amendments to CSRS 4200, Compilation Engagements. The purpose of proposed CSRS 4250 is to address the inconsistencies in reporting and performance requirements between AuG-16 and the new compilation engagement standard (CSRS 4200) and to also address confusion in relation to the appropriate level of work effort and documentation in a compilation engagement under AuG-16.

The comment period for the AASB exposure draft is closed.

At the AASB’s January 2026 meeting, the Board will consider any remaining issues and perform a final read of the CSRS. The AASB anticipates approval of the final standard in Spring 2026.

Exposure draft – Sustainability Assurance

On December 1, 2023 the IAASB issued an exposure draft for International Standard on Sustainability Assurance (ISSA) 5000, General Requirements for Sustainability Assurance Engagements that will:

• Serve as a comprehensive, stand-alone standard suitable for any sustainability assurance engagements.
• Apply to both limited and reasonable assurance engagements.
• Apply to sustainability information reported across any sustainability topic and prepared under multiple frameworks, including the recently released IFRS Sustainability Disclosure Standards S1 and S2.
• Serve as a profession agnostic standard that can be used by both professional accountant and non-accountant assurance practitioners.

On November 12, 2024 the IAASB published the final standard on sustainability assurance engagements.

In September 2023 the AASB also issued an exposure draft for the Canadian Standard on Sustainability Assurance (CSSA) 5000, General Requirements for Sustainability Assurance Engagements. The Comment period for this exposure draft is closed.

At its December 2024 meeting, the AASB decided to re-expose its Canadian amendments to the exposure draft, relating to Indigenous matters. In April 2025, the AASB published the Re-exposure Draft: Canadian Amendments Related to Indigenous Matters in the Canadian Standard on Sustainability Assurance (CSSA) 5000, General Requirements for Sustainability Assurance Engagements. The Comment period for this re-exposure draft is now closed.

Following a review of the results of outreach activities, the Board concluded that robust and appropriate engagement was achieved on the Re-Exposure Draft.

The AASB has published What We Heard and Next Steps for the Canadian Amendments Related to Indigenous Matters in the Canadian Standard on Sustainability Assurance (CSSA) 5000, General Requirements for Sustainability Assurance Engagements.

International Standard on Auditing (ISA)

New ISA standard  – Less complex entities (not adopted in Canada)

In December 2023, the IAASB issued the International Standard on Auditing (ISA) for Audits of Financial Statements of Less Complex Entities (LCE) alongside the Basis for Conclusions. ISA for LCE is  a stand-alone standard designed specifically for smaller and less complex businesses and organizations. Built on the foundation of the ISAs, audits performed using this standard provide the same level of assurance for eligible audits: reasonable assurance.

The ISA for LCE cannot be used for audits of listed entities, entities with public interest characteristics, groups where component auditors are involved (except for limited circumstances) or when otherwise prohibited by jurisdictions.

It is effective for audits of financial statements for periods beginning on or after December 15, 2025, for jurisdictions that adopt or permit its use. Early adoption is permitted.

After careful consideration, the AASB decided not to adopt the ISA for LCE. The Board believes the ISA for LCE would not adequately meet the needs of interested and affected parties in Canada nor serve the Canadian public interest. Following this decision, the AASB will continue to discuss possible alternative options for addressing the unique challenges faced by small and medium-sized entities and practitioners engaged in audits of LCEs. For further background, refer to the AASB’s publication titled Canada’s Decision to Not Adopt the international Standards for Audits of Less Complex Entities.

The AASB has established an Audits of Less Complex Entities Working Group that focuses on the identifying and pursing timely and impactful actions to support efficient and effective LCE audits.

The AASB will also monitor and consider providing input only at key milestone stages of the IAASB’s ISA for LCE maintenance projects.

Additional non-authoritative guidance and complimentary webinar/training

To stay ahead of the curve, find additional non-authoritative guidance to help you navigate the application of assurance and other Canadian standards.

• AASB Virtual Roundtable on April 7, 2026 – Canadian Input on the IAASB’s Post-implementation Review of ISA 540 (Revised), Auditing Accounting Estimates and Related Disclosures (AASB, 2026)
• IAASB Launches Survey for Post-Implementation Review of ISA 540 (Revised) on Accounting Estimates (IAASB, 2026)
• The Evolving Use of Technology in Audit (CPAB, 2025)
• CPAB Smaller Firm Series: Public Company Audit Summits (CPAB, 2025)
• CPAB Risk Alert: Acquisitions of a business or assets that were impaired by year end (CPAB, 2025)
• Embracing the AI Frontier: The Transformative Impact of AI on Audit Firms & Methodologies (IFAC, 2025)
• The Role of Valuation Experts and Other Key Individuals in the Financial Reporting Ecosystem (CBV Institute and CPAB, 2025)
• Performing an Effective Root Cause Analysis: Strengthening Audit Quality (CPAB, 2025)
• Audit Focus: Auditing Accounting Estimates (PCAOB, 2025)
• The State of Play: Sustainability Disclosure and Assurance, (Five-Year Trends and Analysis, 2019-2023) (IFAC, 2025)
• Use of Technology in Audits – Observations, Risk and Further Evolution (IFIAR, 2025) 
• Considerations for Audit Firms Using the Work of Specialists (PCAOB, 2025)
• Key Reminders for Auditors When Testing Journal Entries (PCAOB, 2025)
• Impact of climate-related risks on financial statement audits (CPAB, 2024)
• FAQ for Auditors: Service Organizations – When and How to Apply CAS 402 (CPA Canada, 2024)
• Crypto Assets Inspections Insights (CPAB, 2024)
• Reporting implications of Canadian Auditing Standards - 5^th Edition (CPA Canada, 2024)
• Identifying and assessing the risk of material misstatement: Strengthening audit quality (CPAB, 2024)
• Insights from our conversations with audit committees (CPAB, 2024)
• Audit considerations relating to an entity using service organizations: strengthening audit quality (CPAB, 2023)
• CSQM and QMG Cloud Blog: What’s in it for you? (CPA Canada, 2023)
• Frequently Asked Questions: CAS 315 and Auditor’s Responsibilities for General IT Controls (CPA Canada, 2023)
• Finding the right related services or assurance engagement (CPA Canada, 2023)
• Implementation tool for auditors: Revised CAS 315, risks of material misstatement (CPA Canada, 2023)
• Implementation tool for practitioners: Compilation engagements (CPA Canada, 2020)
• Election Guidance: Attention CFOs, Official Agents, and Auditors of Election Candidates (CPA Ontario, 2020)
• Practitioner Alert: Comparing Compliance Engagements (CPA Canada, 2022)
• Guide for practitioners: Roadmap to the CPA Canada Handbook - Assurance Tool (CPA Canada, 2021)
• Understanding assurance needs: A framework for the decision-maker (CPA Canada, 2021)

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