This may be justified by the significant changes in

This preview shows page 28 - 30 out of 47 pages.

risk. This may be justified by the significant changes in the assurance engagement envi- ronment. Auditors now need to be explicitly aware of what should be considered sig- nificant for various subject matters. Perhaps the most important change introduced by section 5025 is the concept of suit- able criteria. Paragraph 5025.38 identifies five characteristics of suitable criteria: relevance, reliability, neutrality, understandability, and completeness. Since these criteria are sup- posed to apply to all assurance engagements, including financial statement audits, they introduce a potentially revolutionary link to accounting theory in that new characteristics of accounting information may now be contemplated. For example, CICA Handbook sec- tion 1000 does not list completeness as a characteristic of financial statements, which is not a problem currently, as paragraph 5025.02 explicitly exempts existing CICA Handbook recommendations from the assurance engagement standard. In the longer term, however, it appears that some reconciliation may be necessary. What is remarkable in this is that assurance and accounting standards are for the first time being linked, albeit in a tentative way. It may indicate a closer coordination between accounting and auditing standard set- ting in the future—a development some consider long overdue in an increasingly compli- cated and interrelated business world. There is already a shared focus on accountability relations in assurance engagements and financial statements. In the next section we will see that suitable criteria and accountability relations are also central concepts in public sector auditing. This is not surprising, since section 5025 is intended to provide a framework for all assurance engagements. Suitable Criteria and the Fair Presentation Framework The suitable criteria concept of section 5025 is clearly related to the acceptable reporting framework concept of CAS 200. An acceptable reporting framework is one that is required by law or regulation, or that meets the particular objectives of the entity’s financial state- ments. AADBA discussed earlier in this chapter is the older Canadian term for the inter- national concept of acceptable fi nancial reporting framework. Acceptable fi nancial reporting can be either special purpose or general purpose reporting. Acceptable reporting frameworks can also be classified according to whether they are compliance or fair pre- sentation frameworks. These are summarized in the four categories in the following box.
Image of page 28

Subscribe to view the full document.

654 PART IV Other Professional Services F OUR C ATEGORIES OF A CCEPTABLE F INANCIAL R EPORTING F RAMEWORKS 1 Fair Presentation Framework 3 Compliance Framework 2 General Purpose Financial Statements Special Purpose Financial Statements 4 Source: CAAA 2008 Audit Education Update.
Image of page 29
Image of page 30
  • Fall '12
  • Smith
  • Accounting, Accountant, Auditor's report, CICA Handbook

{[ snackBarMessage ]}

Get FREE access by uploading your study materials

Upload your study materials now and get free access to over 25 million documents.

Upload now for FREE access Or pay now for instant access
Christopher Reinemann
"Before using Course Hero my grade was at 78%. By the end of the semester my grade was at 90%. I could not have done it without all the class material I found."
— Christopher R., University of Rhode Island '15, Course Hero Intern

Ask a question for free

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern