Input Needed on Updated JPS
We have been asked by The Canadian Bar Association to provide input on a new Joint Policy Statement on Audit Inquiries (“JPS”) developed by the CBA in collaboration with the Auditing and Assurance Standards Board. As you know, an auditor of an entity’s financial statements will often request that its lawyers confirm the reasonableness of the entity’s evaluation of claims and possible claims both by and against the entity. The JPS was developed in 1978 by the CBA and (then) CICA to provide guidance on communication protocols between the auditor, law firm and management of the entity, in order to protect solicitor-client privilege and keep an appropriate distance between the auditor and the law firm.
Although these objectives apply equally today, the JPS is in need of an update to reflect evolving circumstances in the 35 years since it was first issued. The proposed updates reflect developments in accounting and auditing standards and the legal environment and include: express inclusion of in-house counsel in the scope of the JPS; clarification that lawyers need not consider the applicable financial reporting framework when responding to an audit inquiry; and revisions to communication protocols with the auditors to resolve concerns expressed by members of legal profession.
The CBA sought feedback from members throughout its negotiations with the AASB and commenced a consultation period on the exposure draft at the end of 2014. It is now asking for input from members of the Law Society and we would appreciate it if you could provide this. The deadline for comments is April 6, 2015.