March 20, 2020


In April 2017, certain new and amended Canadian Auditing Standards (CAS) were approved by the Auditing and Assurance Standards Board (AASB). One of the significant revisions pertains to changes in the content of the Independent Auditor’s Report, mainly as a result of the revised CAS 700 Forming an Opinion and Reporting on Financial Statements and the new CAS 701 Communicating Key Audit Matters in the Independent Auditor’s Report. In Canada, these new auditor reporting standards are effective for audits of financial statements for periods ending on or after December 15, 2018. For example, if the reporting entity’s fiscal period ends on December 31, 2018, then the entity must comply with these new standards.

With the introduction of the new auditor reporting standards, there’s one thing that’s certain— the current one page auditor’s report is no more. The types of changes to the Independent Auditor’s Report vary. Some changes are minor, whereas the more significant changes require additional paragraphs and descriptions (with some being quite verbose). The changes are summarized below.

Some of the Changes

• The auditor’s opinion has been moved from the end of the auditor’s report to the beginning.
• When a material uncertainty exists related to an entity’s ability to continue as a going concern, the related disclosure was previously disclosed under the Emphasis of Matter heading. The new auditor’s report will move this wording to a separate section under the heading Material Uncertainty Related to Going Concern.
• The previous heading Management’s Responsibility for the Financial Statements has been re-named to Responsibilities of Management and Those Charged with Governance for the Financial Statements. This section of the report also includes new content as described below.
• The previous heading Auditor’s Responsibility has been re-named Auditor’s Responsibilities for the Audit of the Financial Statements. This section of the report also includes new content as described below.

New Paragraphs and Descriptions

• A Basis for Opinion paragraph has been added near the beginning of the report (following the Opinion paragraph), which describes the auditor’s independence and ethical responsibilities.
• A new Other Information paragraph has been added for applicable entities. It is applicable when the reporting entity publishes financial or non-financial information (other than financial statements and the auditor’s report) included in an entity’s annual report. The paragraph describes the responsibilities of management and the auditor with respect to the other information. Additionally, it includes the auditor’s conclusion on whether the other information is materially misstated. The paragraph is mandatory for listed entities.
• The Responsibilities of Management and Those Charged with Governance for the Financial Statements section has been enhanced to include management’s responsibility for assessing the entity’s ability to continue as a going concern and whether the assumption that the entity is a going concern is appropriate. Additionally, the section states that those charged with governance (for example, the audit committee) are responsible for overseeing the entity’s financial reporting process.
• The Auditor’s Responsibilities for the Audit of the Financial Statements has been expanded significantly to include detailed descriptions of the auditor’s responsibilities related to:

o concluding on the appropriateness on the use of the going concern basis of accounting by management;
o group audits (if applicable); and
o communication with those charged with governance.

• Some additional changes that are only applicable to listed entities are as follows:

o A statement to those charged with governance that the auditor has complied with relevant ethical and independence requirements.
o Insertion of the name of the engagement partner.

Financial statement users should familiarize themselves with the changes to understand what they can expect to see on the next auditor’s report.

If you have any questions or require assistance with your assurance needs, please contact us at (905) 475-2222 or

The preceding was derived from CPA Canada – Audit & Assurance Alert – Canadian Auditing Standards (CAS) – May 2017