IAASB launches consultation on audits for less complex entities

The International Auditing and Assurance Standards Board (ISAAB) has launched a consultation regarding a new section of proposed auditing standards for smaller and less complex entities. 

The accountancy body said that smaller, less complex entities “play a vital role in the world’s economy and account for the great majority of entities globally”. 

It added that “in an increasingly complex world with evolving reporting needs, a need for a set of high-quality requirements tailored for the audits of less complex entities has emerged”.

The IAASB previously issued a public consultation for a proposed, stand-alone standard for LCE audits, designed to be proportionate to the typical nature and circumstances of an LCE audit and responsible to stakeholders’ challenges.

However, group audits were not included in the scope of the original exposure draft of the proposed ISA for LCE. 

Following stakeholder feedback, the IAASB reconsidered and developed proposals to address audits of less complex groups. This new Part 10 focusing on LCE group audits was issued for public consultation on 23 January, and feedback is requested by 2 May 2023.

Following stakeholder feedback on the current consultation, the IAASB envisions approving a final standard in December 2023. When final, the standard will meet the growing global need for a separate standard for audits of less complex entities, while reducing the emerging risk of jurisdictional divergence.