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Significant matters need to be identified to ensure that these matters are appropriately documented and resolved. These matters need to be reviewed by both the engagement leader and quality reviewer.
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Office |
Annual Audit |
Performance Audit, Special Examination, and Other Assurance Engagements |
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CAS 230.8 The auditor shall prepare audit documentation that is sufficient to enable an experienced auditor, having no previous connection with the audit, to understand: (Ref: Para. A2-A5, A16-A17) (a) The nature, timing and extent of the audit procedures performed to comply with the CASs and applicable legal and regulatory requirements; (Ref: Para. A6-A7) (b) The results of the audit procedures performed, and the audit evidence obtained; and (c) Significant matters arising during the audit, the conclusions reached thereon, and significant professional judgments made in reaching those conclusions. (Ref: Para. A8-A11) Documentation of Significant Matters and Related Significant Professional Judgments (Ref: Para. 8(c)) CAS 230.A8 Judging the significance of a matter requires an objective analysis of the facts and circumstances. Examples of significant matters include:
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Documentation CSAE 3001.82 The practitioner shall prepare on a timely basis engagement documentation that provides a record of the basis for the assurance report that is sufficient and appropriate to enable an experienced practitioner, having no previous connection with the engagement, to understand: (Ref: Para. A198-A202) (c) Significant matters arising during the engagement, the conclusions reached thereon, and significant professional judgments made in reaching those conclusions. Failure to Achieve an Objective CSAE 3001.21 If an objective in this CSAE or a relevant subject-matter-specific CSAE cannot be achieved, the practitioner shall evaluate whether this requires the practitioner to modify the practitioner’s conclusion or withdraw from the engagement (where withdrawal is possible under applicable law or regulation). Failure to achieve an objective in a relevant CSAE represents a significant matter requiring documentation in accordance with paragraph 82 of this CSAE. |
Significant matters arising during the audit shall be identified. [Nov-2011]
The concept of significant matters is recognized in other Canadian assurance standards, most notably in Canadian Standard on Assurance Engagements (CSAE) 3001—Direct Engagements, as an area of focus on the subject of Review and Engagement Quality Control Review. Given the limited guidance on Identifying Significant Matters in other Canadian assurance standards, the Office also refers to Canadian Auditing Standards for the principles and guidance on Identifying Significant Matters. To view the requirements and application guidance found in CAS, click the “more” feature displayed in the standards information above.
A significant matter is a finding or issue that, in the auditor’s judgment, is significant to the procedures performed, evidence obtained, or conclusions reached. Significant matters either are, or could be, important to our audit opinion/report, or to the support for the assurance engagement opinion/conclusion(s). These matters frequently require consultation. Significant matters require appropriate resolution and documentation by the audit team, and timely review by the engagement leader and quality reviewer (where appointed).
Determining which issues during an audit are to be recorded and resolved as significant matters depends on their significance, complexity, and degree of judgment required, as evaluated by team members in consultation with more senior members of the audit team, the engagement leader or others, as appropriate. Whether a matter is treated as a significant matter will also depend on factors such as whether the involvement of the quality reviewer, where appointed, or consultation with others, is necessary.
Judging the significance of a matter requires an objective analysis of the facts and circumstances. At a minimum, the following should be identified as significant matters in all assurance engagements:
In addition to the matters identified for all assurance engagements above, the following should also be identified as significant matters when performing Annual Audits:
The following are examples of issues that, depending on the circumstances of the particular annual audit engagement, may also be considered significant matters. This list is not intended to be all-inclusive:
With respect to matters for reporting to the entity (e.g., deficiencies in the entity's internal control and the related implications) where there are a number of separate but related issues that only collectively constitute a significant matter, it may be more efficient to document them in one significant matter to facilitate review. Matters deemed to be individually significant on their own are ordinarily treated as separate significant matters.
Consider the following when determining whether a significant risk that has been identified during planning requires treatment as a significant matter, or whether a new matter identified later should be so treated:
Where the assessment of the risk identified or the planned response to significant risks of material misstatement does not require significant professional judgment, there will be no need to document such risks as significant matters.
The work done in response to a significant risk may not cause particular concern that the previously planned response was inadequate, but may give rise to a matter not previously considered, or that otherwise involves significant professional judgment, or that qualifies to be treated as a significant matter in accordance with the above general guidance. In circumstances where the results of audit procedures or matters arising in respect of a significant risk are not considered for documentation as significant matters, it is important that conclusions are clearly identified in the relevant audit step so that there is a clear audit trail of how the risks considered significant were addressed during the audit.
The above guidance is complementary to, and does not override the requirements of the CASs with respect to identification, resolution and documentation of significant risks. Regardless of whether engagement teams document significant risks as significant matters, significant risks may be communicated to management and those charged with governance (CAS 260.16), with documentation of those communications. Significant matters are also required to be so communicated, as explained in OAG Audit 1142.
In addition to the matters identified for all assurance engagements above, the following shall also be identified as significant matters when performing performance audits and special examinations: