In response to changes in third-party assurance standards in both the US and internationally, the Auditing and Assurance Standards Board has issued a new Canadian Standard on Assurance Engagements called Reporting on Controls at a Service Organization (CSAE 3416). This standard replaces the Auditor’s Report on Controls at a Service Organization, Section 5970 (S 5970), which has been the standard in Canada for performing independent third-party assurance engagements.
CSAE has been designed to provide standards and guidance to an auditor who is reporting on the controls at a service organization. This is relevant to situations when the service (a specialized business task or function) being provided to customers (or user entities) impacts the user entity’s financial reporting processes. In such situations, service organizations are often subjected to audits of these processes.