CPA Canada’s Canadian Standard on Review Engagements (CSRE) 2400 is now effective for reviews of financial statements for periods ending on or after December 14, 2017. Under the new standards, accountants must now:
- consider, and identify, likely users of the financial statements;
- define ‘materiality’ in terms of the likely users;
- identify areas in the financial statements that are likely to include material misstatements, and design procedures to address them;
- design procedures to address related party issues, going concern, and opening balances.
These changes will have significant implications for accountants and their clients, as well as for lenders.
- A significantly expanded role means more work and higher costs;
- Heightened concern around professional liability;
- Resistance from clients because of increased fees.
- Increased professional fees;
- More in-depth reviews by the accountant;
- Potential write-downs of certain assets.
- Higher quality financial statements, and some nasty surprises;
- Push-back from clients wanting to revert to notice-to-reader statements;
- Improved ability to detect fraud and recover losses through litigation.
For more information on the impact of these changes, contact us today.