ICAS responds to IAASB Exposure Draft - International Standard on Auditing for Less Complex Entities
Proposed IAASB ISA for LCE standard provides catalyst for increased proportionality
ICAS congratulates the IAASB on its progress on this initiative and the work that has been undertaken in getting to this stage and looks forward to the IAASB issuing its finalised standard in due course.
In its response to the IAASB’s 2019 discussion paper ‘Audits of Less Complex Entities: Exploring Possible Options to Address the Challenges in Applying the ISAs’ ICAS set out the following vision as to the roadmap to be adopted in relation to the setting of future International Standards on Auditing (ISAs):
Priority 1 – Develop a separate standard for audits of LCEs based on the key principles in the current ISAs that delivers the same level of assurance and has the same objectives as the current ISA audit.
Priority 2 – The current ISAs should be redesigned and re-drafted to be fully principles-based using a ‘plain English’ language convention based on the same ‘building blocks’, or ‘think simple first’ approach adopted in the development of a separate auditing standard for LCEs.
Priority 3 – In due course, more consideration should be given to converging the two activities above resulting in the ultimate desired option of a single suite of ISAs that can be applied to all audits regardless of size and complexity.
This remains the roadmap that the IAASB should follow. ICAS therefore welcomes the IAASB’s publication of its proposed separate auditing standard for LCEs, which is intended to deliver the same level of assurance as an audit undertaken by applying the full suite of ISAs. ICAS views this as a first step towards producing a full suite of standards that are truly proportionate.
ICAS also highlighted that the key change that the IAASB should act on before issuing the standard is not to specifically exclude all groups but rather to consider whether the standard would be appropriate in such circumstances on a basis similar to that applied to standalone entities.