Montreal, August 23, 2005
CICA Handbook update
The CICA Standards and Guidance Collection on the Internet has been updated to reflect
changes made to the CICA Handbook – Accounting, dated May and June 2005, to the CICA
Handbook – Assurance, dated June, July and August 2005, and to the CICA Public Sector
Accounting Handbook, dated June 2005.
CICA Handbook – Accounting
•
Revisions release No. 34
This release comprises the new guideline:
• AcG–19, Disclosures by entities subject to rate regulation
The Emerging Issues Committee amended the following Abstract:
• EIC-151, Exchangeable securities issued by subsidiaries of income trusts
The following abstract was issued:
• EIC-152, Mining assets — impairment and business combinations
•
Revisions release No. 35
“Business combinations,” paragraph 1581.22, was amended to remove the exception
for a transaction that does not represent the culmination of the earnings process.
Paragraph .68 was added to provide transitional provisions for amended
paragraph .22.
The Appendices in “Consolidated financial statements,” Section 1600, were renamed
and amended to conform with the status of Appendices and illustrative material, as
described in Section 1100.
The Appendices in “Comprehensive revaluation of assets and liabilities,” Section 1625,
were renamed and amended to conform with the status of Appendices and illustrative
material, as described in Section 1100.
The Appendices in “Segment disclosures,” Section 1701, were renamed and amended
to conform with the status of Appendices and illustrative material, as described in
Section 1100.
“Interests in joint ventures,” paragraph 3055.32 (formerly paragraph 3055.33) was
amended to remove a reference to “similar productive assets” and clarify that
transfers of non-monetary assets to joint ventures have commercial substance when
the venturers are not related parties prior to the transfer. Former paragraph 3055.32
was renumbered as paragraph 3055.33. The Appendices were renamed and amended
to conform with the status of Appendices and illustrative material, as described in
Section 1100.
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CICA Handbook update
The Appendices in “Leases,” Section 3065, were renamed and amended to conform
with the status of Appendices and illustrative material, as described in Section 1100.
“Disposal of long-lived assets and discontinued operations,” paragraphs 3475.05 and
.07, were amended to remove references to “exchanges of similar productive longlived assets.”
“Non-monetary transactions,” Section 3830, was re-filed under Superseded
Accounting Recommendations and “Non-monetary transactions,” Section 3831,
revises and replaces Section 3830.
“Related party transactions,” paragraph 3840.18 was amended as a result of issuing
new Section 3831, to replace references to “culmination of the earnings process” with
“commercial substance.” Paragraphs 3840.19-.21 were added to explain the test for
commercial substance. Paragraph 3840.22 was added to introduce a requirement to
measure related party exchanges of product or property held for sale in the normal
course of operations at the carrying amount. Former paragraphs 3840.19-.24 were
renumbered as 3840.23-.28. Former paragraph 3840.25 was deleted as a result of
issuing new Section 3831. Paragraph 3840.29 (formerly paragraph 3840.26) was
amended as result of issuing new Section 3831 to introduce a test for commercial
substance. Former paragraphs 3840.27-.57 were renumbered 3840.30-.60.
Paragraph 3840.61 was added to provide transitional provisions for paragraphs
3840.18, .22 and .29. The Appendices were renamed and amended to conform with
the status of Appendices as illustrative material, as described in Section 1100. The
Decision Tree was amended to reflect amendments to Section 3840.
The Appendices in “Pension plans,” Section 4100, were renamed and amended to
conform with the status of Appendices and illustrative material, as described in
Section 1100.
The Appendices in “Contributions — revenue recognition,” Section 4410, were
renamed and amended to conform with the status of Appendices and illustrative
material, as described in Section 1100.
The following EIC Abstracts were amended:
• EIC-9, Transfers of receivables;
• EIC-26, Reductions in the net investment in self-sustaining foreign operations;
• EIC-54, Transfers of receivables — definition of recourse;
• EIC-101, Debtor’s accounting for changes in line-of-credit or revolving-debt
arrangements.
The following abstract was issued:
• EIC-153, Applying the conditions in CICA 3475.27 in determining whether to
report discontinued operations.
CICA Handbook – Assurance
•
Revisions release No. 22
This Release includes new and revised standards for defining the concepts of reasonable
assurance and audit risk, understanding the entity and its environment, including internal
control, assessing the risks of material misstatement, and designing audit procedures that
are responsive to assessed risks and for audit evidence. It also includes terminology changes
to conform wording throughout the Handbook with the terminology in new Sections 5095,
5141, 5143 and 5300.
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CICA Handbook update
These changes are presented in detail in a table in Revisions release No. 22. The new
standards apply to all audits in Canada, for both small and large entities.
The new requirements are effective with respect to financial statements and financial reports
for periods beginning on or after January 1, 2006.
The following new Sections were issued:
• “Reasonable assurance and audit risk,” Section 5095;
• “The auditor's responsibility to consider fraud,” Section 5135. This Section revises and
replaces current Section 5135 as a result of the scope of application being narrowed to
address only misstatements due to fraud. Material dealing with misstatements due to
error is addressed in the following new Sections:
– “Reasonable assurance and audit risk,” Section 5095;
– “Understanding the entity and its environment and assessing the risks of material
misstatement,” Section 5141;
– “Materiality,” Section 5142;
– “The auditor's procedures in response to assessed risks,” Section 5143.
Additionally, the material formerly in Section 5135 dealing with communications matters has
been moved to “Communication with management of matters identified during the financial
statement audit,” Section 5750, and “Communications with those having oversight
responsibility for the financial reporting process,” Section 5751.
• “Audit evidence,” Section 5300. This Section revises and replaces current Section 5300
to incorporate ISA 500, “Audit Evidence,” into the Handbook.
“Knowledge of the entity's business,” Section 5140, was withdrawn as a consequence of the
issuance of Section 5141.
“Internal control in the context of the audit,” Sections 5200-5210, were withdrawn as a
consequence of the issuance of Sections 5141 and 5143.
Auditing Guideline AuG-41, Applying the concept of materiality, was issued.
The following Guidelines were withdrawn:
• Applying the concepts of materiality and risk in conducting an audit (AuG-31);
• Auditing in an EDP environment (AuG-33);
• Computer-assisted audit techniques (AuG-34);
• Risk assessments and internal control — CIS characteristics and
considerations (AuG-35);
• IT environments — stand-alone personal computers (AuG-36);
• IT environments — online computer systems (AuG-37);
• IT environments — database systems (AuG-38).
•
Revisions release No. 23
This release includes three new sections: “Terms of the engagement,” Section 5110,
“Management representations,” Section 5370, and “Auditor's report on controls at a
service organization,” Section 5970.
“International Standards on Auditing,” Section 5101, was withdrawn. In future, timely
information comparing international standards with Canadian standards will be provided
on the Auditing and Assurance Standards Board website.
“Audit evidence considerations when an entity uses a service organization,” Section
5310, was revised.
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CICA Handbook update
“Communications with those having oversight responsibility for the financial reporting
process,” paragraph 5751.14, was amended to include new item (i) to conform to new
Section 5370.
“Opinions on control procedures at a service organization,” Section 5900, was withdrawn
and replaced by new Section 5970.
Footnote 3 of paragraphs .23 and .24 in “Audit of related party transactions,” Section
6010, was amended to reflect the new requirements in “Related party transactions,”
Section 3840.
“Subsequent events,” paragraphs 6550.04(f) and 6550.06, were amended to conform to
new Section 5370.
“Public accountant's review of financial statements,” Section 8200, was revised to include
standards and guidance on:
- establishing an understanding of the terms of the engagement and documenting the
terms of the engagement in a written agreement (paragraphs .02-.22);
-
using management representations when gathering information regarding important
matters to support the conclusion expressed in the review engagement report, and
obtaining management’s written representations (paragraphs .25-.41).
In addition, Appendix A has been revised to update the example of the engagement letter
for a review of annual financial statements and Appendix C has been added as an example of
a representation letter that the public accountant may obtain from management.
Performance of a review of financial statements in accordance with Sections 8100 and 8200,
AuG-20, was amended.
Revisions release No. 24
This release includes one new Section: “Authority of auditing and assurance standards and
other guidance,” Section 5021.
Paragraphs 2 and 4 of the “Introduction to Assurance and Related Services
Recommendations” and the “Identification of Recommendations” paragraph were amended
to conform to new Section 5021.
“Standards for assurance engagements,” paragraphs 5025.11-.12 and 5025.56-.57, and
“Use of specialists in assurance engagements,” paragraph 5049.80 and Appendix C, were
amended to replace the term “analysis” with “analytical procedures,” to conform to revised
Section 5301.
“Generally accepted auditing standards,” paragraph 5100.03, was amended to indicate that
Recommendations in the CICA Handbook – Assurance are developed based on paragraph
5100.02, and to provide a reference to new Section 5021.
“The auditor's responsibility to consider fraud,” paragraphs 5135.053-.054, were amended
to conform to revised Section 5301.
“Analysis,” Section 5301, revises and replaces existing Section 5301 to incorporate changes
resulting from new Sections 5141 and 5143.
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CICA Handbook update
The “Application” paragraph of the “Introduction to Assurance and Related Services
Guidelines” was amended to conform to new Section 5021.
Auditing Guideline AuG-39 was amended to replace the term “analysis” with “analytical
procedures,” to conform to revised Section 5301.
CICA Public Sector Accounting Handbook
•
Revisions release No. 20
This release includes a number of editorial changes as a result of issuing “Generally
accepted accounting principles,” PS Section 1150, which clarifies the equal authority
of italicized and non-italicized paragraphs.
“Financial statement presentation — federal, provincial & territorial governments,”
paragraph PS 1200.136, “Government reporting entity,” paragraph PS 1300.47,
“Foreign currency translation,” paragraphs PS 2600.51-.53, and “Post-employment
benefits, compensated absences and termination benefits,” paragraph PS 3255.37,
are no longer italicized and references to “Recommendations” were removed.
“Loans receivable,” paragraph PS 3050.62, “Retirement benefits,” paragraphs
PS 3250.115-.117 and “Loan guarantees,” paragraph PS 3310.34, were amended to
remove references to “Recommendations.”
Sale-leaseback transactions — expense-based, PSG-5, was issued and replaces
revised Sale-leaseback transactions, PSG-3.
Leased tangible capital assets, PSG-2 was revised.
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