ACCA: UK should adopt international auditing rules for less complex entities

The UK financial regulator should adopt international auditing guidelines for smaller and less complex businesses to improve audit quality, the Association of Chartered Certified Accountants (ACCA) has said.

ACCA said a move to the global standard by the Financial Reporting Council would allow auditors to focus on the specific circumstances of smaller operations. The organisation stated the shift would benefit all auditors, including those working within small and medium-sized practices.

The Financial Reporting Council is currently gathering views on how to enhance the usability of the international standard on auditing for less complex entities. It is also working with global standard-setters to update existing elements regarding fraud and going concern procedures.

The association stated it supports a proportionate approach to going concern procedures that considers the unique challenges of smaller audits, particularly where management assessments may not be formalised.

Head of technical and strategic engagement at ACCA Glenn Collins said: “We have been long time supporters of using the IAASB auditing standard for LCE in the UK. We are clear it provides a framework for a consistent, efficient, high-quality audit that provides reasonable assurance.

“However, we strongly believe that a formal consultation on the adoption of the ISA for LCE is needed in the UK. A formal consultation on the ISA for LCE is needed to evidence consensus within the profession on the most appropriate way forward.”

Senior manager of policy and insights for EEMA and UK at the Association of Chartered Certified Accountants, Lisa O’Sullivan, added: “We support retaining the rebuttable presumption of risk of material misstatement in relation to revenue recognition in the LCE. We would welcome examples in which a rebuttal would be appropriate to encourage appropriate implementation.”