CAG Me e ting Se pte mbe r 8- 9, 2020 Age nda Ite m F .1 F ra ud a nd Go ing Co nc e rn Pro je c t Upda te SE PT E MBE R 2020
Comple te : Pla nning c omme nc e d: Co lla tio n o f c o mme nts Ro undta b le disc ussio n fro m o the r I AASB pro je c ts a b o ut e xpe c ta tio n g a p - inve sto rs/ a na lysts, Co o rdina tio n with NSS pre pa re rs, tho se g ro up c ha rg e d with g o ve rna nc e (Se pte mb e r I de ntific a tio n o f ke y 28) the me s Ro undta b le c o ve ring De ve lo pe d pla n fo rwa rd fra ud a nd g o ing c o nc e rn pro c e dure s fo r Me e ting s he ld with UK le ss c o mple x e ntitie s a nd Ja pa n to le a rn mo re F ra ud a nd (Oc to b e r 7) a b o ut the ir se pa ra te fra ud a nd g o ing Wo rking g ro up c o nc e rn Go ing Co nc e rn b ra insto rming me e ting s sta nda rds/ pro je c ts in Oc to b e r (F ra ud ) a nd Aug ust 11 th Bo a rd c a ll to No ve mb e r (Go ing Sta tus Upda te Co nc e rn) disc uss dra ft disc ussio n pa pe r c o ve ring Co o rdina tio n with o the rs e xpe c ta tio n g a p (e .g . I AASB wo rkstre a ms, I E SBA, e tc ) a s ne e de d F ra ud-spe c ific te c hno lo g y ro undta b le In proc e ss: Ac a de mic de skto p re vie w F ina liza tio n o f disc ussio n pa pe r c o ve ring e xpe c ta tio n g a p
Clo se c o o rdina tio n with the I ASB thro ug ho ut the c o urse o f the g o ing c o nc e rn pro je c t. Cr itic al po int o f c o lla b o ra tio n. Go ing Ce rta in sta ke ho lde r c o nc e rns a ro und Co nc e rn - g o ing c o nc e rn ma y b e b e st a ddre sse d b y the I ASB (i.e . c ha ng e s to Co o rdina tio n ma na g e me nt’ s re spo nsib ilitie s). So me sug g e ste d c ha ng e s to the a udit with the I ASB sta nda rd ma y no t b e a b le to b e ma de unle ss the re a re c o rre spo nding c ha ng e s ma de to the a c c o unting sta nda rd.
F ra ud - Ma jo r T he me s I de ntifie d/ Ne xt Ste ps # T he me Planne d or Comple te d Ac tion(s) fo c use d o n e xpe c ta tio n g a p Disc ussion pape r 1 xpe c tation gap a nd c la rific a tio n o f the funda me nta l E • Roundtable disc ussion a b o ut e xpe c ta tio n g a p re spo nsib ilitie s o f the a udito r ( se e ne xt slide ) • with inve sto rs, pre pa re rs, tho se c ha rg e d with g o ve rna nc e 2 T e c hnology T e c hnology- foc use d fr aud r oundtable • 3 Sc o pe o f pro c e dure s re q uire d fo r le ss c omple x e ntitie s F ra ud-fo c use d r oundtable ta rg e te d to wa rds • a udito rs o f L CE s 4 Co mme nts on inappr m to e xplo re ho w the opr iate or inc onsiste nt applic ation Wor king gr oup br ainstor • o f c e rta in c o nc e pts in I SA 240, inc luding : sta nda rd/ a pplic a tio n ma te ria l mig ht b e c la rifie d e sumption o f sig nific a nt risk o f fra ud in Re buttable pr • re ve nue re c o g nitio n Audit re spo nse to manage me nt ove r r ide of c ontr ols, • inc luding jour nal e ntr y te sting Additio na l fr aud r isks a nd inte g ra tio n o f fra ud risk in • a ll a spe c ts o f the a udit linkage to o the r I SAs Be tte r • Cla rific a tio n o f pro c e dure s re q uire d whe n fr aud is • ide ntifie d
E xpe c ta tio n Ga p – De ta ile d T he me s E xplo re d in Disc ussio n Pa pe r # T he me s within the E xpe c tation Gap In to da y’ s e nviro nme nt, a re the c urre nt a udit proc e dure s in the a uditing sta nda rds suffic ie nt to a ddre ss the 1 risk o f fra ud? 2 Ide ntify if e xpe c ta tion g a p c a n b e na rro we d with sta nda rd se tting thro ug h the fo llo wing c o nside ra tio ns: E nha nc e d profe ssiona l ske ptic ism re q uire me nts, inc luding a dditio n o f ‘sta nd ba c k’ re q uire me nt • E nha nc e d a uditor re porting re q uire me nts • Re q uire me nts to use fore nsic a udit spe c ia lists or othe r re le va nt spe c ia lists • Co nside ra tio n o f c omplia nc e with la ws a nd re g ula tions • Spe c ific re q uire me nts to a ddre ss risk o f third- pa rty fra ud (e .g . c o llusio n with ve ndo rs) • E nha nc e d qua lity c ontrol re q uire me nts • Othe r e nha nc e d proc e dure s/ le ve ls of e vide nc e , inc luding pro c e dure s o ve r non- ma te ria l fra ud • Additio n o f c onditiona l re quire me nts tha t, if trig g e re d, re q uire a dditio na l a udit e ffo rt • Appe tite fo r ne w type of a ssura nc e o utside tra ditio na l fina nc ia l re po rting a udit in re la tio n to g o ing • c o nc e rn Co nside ra tio n o f proportiona lity (i.e . do e s the b e ne fit to the pub lic inte re st o f a ny a dde d re q uire me nts 3 o utwe ig h the c o st? )
Go ing Co nc e rn - Ma jo r T he me s I de ntifie d/ Ne xt Ste ps # T he me Planne d or Comple te d Ac tion(s) Disc ussion pa pe r fo c use d o n e xpe c ta tio n xpe c ta tion g a p a nd c la rific a tio n o f the funda me nta l 1 E • g a p a nd ta rg e te d to wa rds a ll a udie nc e s re spo nsib ilitie s o f the a udito r in re la tio n to g o ing c o nc e rn Roundta ble disc ussion a b o ut e xpe c ta tio n • (inc luding e xpa nde d re q uire me nts if ne c e ssa ry) (se e ne xt g a p with inve sto rs, pre pa re rs, tho se slide ) c ha rg e d with g o ve rna nc e Sug g e ste d ta rg e te d e nha nc e me nts to ISA 570 (Re vise d) Working g roup bra instorm to e xplo re ho w 2 • the sta nda rd/ a pplic a tio n ma te ria l mig ht b e Communic a tions with tho se c ha rg e d with g o ve rna nc e • c la rifie d a nd with re g ula to rs/ o the r supe rviso ry b o die s Be tte r linka g e to o the r ISAs / spe c ific a c kno wle dg me nt o f • using wo rk pe rfo rme d in o the r a re a s o f a udit (e .g . risk a sse ssme nt) to drive wo rk pe rfo rme d re la te d to g o ing c o nc e rn Sug g e stio n to a dd a udito r re po rting de c ision tr e e to • a pplic a tio n ma te ria l
E xpe c ta tio n Ga p – De ta ile d T he me s E xplo re d in Disc ussio n Pa pe r # T he me s within the E xpe c tation Gap In to da y’ s e nviro nme nt, a re the c urre nt a udit proc e dure s in the a uditing sta nda rds suffic ie nt to a ddre ss the 1 risks a ro und g o ing c o nc e rn? 2 Ide ntify if e xpe c ta tion g a p c a n b e na rro we d with sta nda rd se tting thro ug h the fo llo wing c o nside ra tio ns: E nha nc e d profe ssiona l ske ptic ism re q uire me nts, inc luding a dditio n o f ‘sta nd ba c k’ re q uire me nt • E nha nc e d a uditor re porting re q uire me nts • Re c o nside ra tio n o f the time pe riod re quire d fo r the g o ing c o nc e rn a sse ssme nt • Sta ke ho lde r unde rsta nding o f the c onc e pt of g oing c onc e rn a nd the de finition of a ma te ria l • unc e rta inty nha nc e d a lig nme nt b e twe e n a c c ounting a nd a uditing sta nda rds E • Additio n o f c onditiona l re quire me nts tha t, if trig g e re d, re q uire a dditio na l a udit e ffo rt • Appe tite fo r ne w type of a ssura nc e o utside tra ditio na l fina nc ia l re po rting a udit in re la tio n to g o ing • c o nc e rn Co nside ra tio n o f proportiona lity (i.e . do e s the b e ne fit to the pub lic inte re st o f a ny a dde d re q uire me nts 3 o utwe ig h the c o st? )
T ime line o f Pla nne d Ac tivitie s Ac tivity Da te F ra ud-fo c use d te c hno lo g y ro undta b le 9/ 2/ 2020 Disc ussio n pa pe r pub lishe d with 120-da y c o mme nt pe rio d 9/ 14/ 2020 Ro undta b le disc ussio n a b o ut e xpe c ta tio n g a p with inve sto rs, pre pa re rs, 9/ 28/ 2020 tho se c ha rg e d with g o ve rna nc e F ra ud wo rking g ro up b ra insto rm/ disc ussio n 10/ 5/ 2020-10/ 6/ 2020 F ra ud-fo c use d L CE ro undta b le 10/ 7/ 2020 Go ing Co nc e rn wo rking g ro up b ra insto rm/ disc ussio n We e k o f 11/ 16/ 2020 F e e dba c k on informa tion g a the ring to Boa rd - F ra ud De c e mbe r 2020 F e e dba c k on informa tion g a the ring to Boa rd – Going c onc e rn F e brua ry 2021 CAG Upda te Ma rc h 2021 F ra ud proje c t proposa l Q2 2021 CAG Upda te Se pte mbe r 2021 Going Conc e rn proje c t proposa l Q3 2021
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