ISCA Comments on IAASB’s ED on Proposed ISA for Audits of Financial Statements of Less Complex Entities (ISA for LCE)

ISCA has provided comments on IAASB’s ED on Proposed ISA for LCE, which was developed in response to feedback that the complexity in existing ISAs pose challenges for audits of less complex entities.

We highlighted the mixed views on the proposed standard received through our outreach activities, which include a focus group organised to engage auditors to obtain their views on the feasibility of ISA for LCE.

Some auditors do not see a need for a separate standard as they cannot see a clear difference between ISA for LCE and ISAs since both frameworks are based on the same principles and designed to achieve reasonable assurance. They are concerned about stakeholders’ perception that using ISA for LCE will lead to a less robust audit. Also, there is a possibility of low adoption rate.

On the other hand, those who are supportive of ISA for LCE expect a more efficient audit, especially with documentation being more focused and relevant to the nature of a less complex entity. They also feel that this could be an opportunity for firms to relook at their audit methodology.

Click here to read our detailed comments.