ICAS applauds Nordic initiative
ICAS responds to the Nordic Federation of Public Accountants (NRF) consultation paper on a new standard for audits of small entities.
This summer saw the Nordic Federation of Public Accountants (NRF) issue its much anticipated consultation paper on a new standard for audits of small entities (SASE). The NRF comprises the institutes of public accountants in Sweden, Denmark, Finland, Iceland and Norway.
The background to the issue of this 19 page one-stop standard is the rise in audit threshold limits and the increasingly complex and lengthy International Standards on Auditing (ISAs) which are becoming more difficult to tailor and less relevant to small entities.
In response to this ever-increasing burden, in 2014 the NRF embarked on a project to develop a principles-based, stand-alone audit standard for smaller entities, reinforcing its opinion that audit is still a valuable service for these entities. At ICAS, we welcome the initiative taken by the Nordic countries. We ourselves have been pushing the boundaries internationally through our programme of work on the future of assurance.
Read ICAS' response to the NFR
The key points emerging from our response are as follows:
- We welcome the publication of this proposed standard which has been the subject of much discussion in recent years. We are always pleased to see innovation in the field of audit and congratulate the NRF on this development.
- With so much more emphasis on auditors' professional judgement when applying this standard it is important that there is sufficient knowledge, understanding, and familiarity with audit principles and methodology within the engagement team.
- We believe that there would be merit in undertaking an audit of an entity using the Nordic standard and comparing this with an audit of the same entity undertaken using ISAs. This would better illustrate the advantages of such a standard. We would envisage that the required documentation would be substantially less than that associated with an ISA compliant audit but this comparison would allow a better assessment as to the merits of such an approach. It would also be interesting to illustrate the potential different composition of the engagement team.
At ICAS, we ourselves have been pushing the boundaries internationally through our programme of work on the future of assurance and welcome the initiative taken by the NRF. We will follow the development and use of the standard with interest.