Addressing Issues and Challenges in Audits of Less Complex Entities

Monday, November 16, 2020

The IAASB is on the edge of something new as they continue on the path to address, complexity and scalability in the ISAs.

The input to the IAASB Discussion Paper and other outreach highlighted to the IAASB that there is a need to address challenges and issues relating to less complex entities (LCEs), and that many of the challenges and issues facing LCEs were also applicable to all audits. In balancing the needs of all its stakeholders, as well as the time needed to develop changes to address the issues and challenges within the broader suite of ISAs, the IAASB agreed to two workstreams: one to develop a separate standard focused on audits of LCEs (LCE workstream), and the other to address issues related to complexity, understandability, scalability and proportionality (CUSP workstream) in the ISAs more broadly.

The voice of our Australian stakeholders will be heard as the Chair of the AUASB Prof Roger Simnett is the Chair of the CUSP workstream and is also a member of the LCE workstream. 

Focusing on the effective and consistent application of IAASB standards, the IAASB has published a new communique detailing its next steps to address complexity, understandability, scalability, and proportionality, including in the audits of financial statements of less complex entities.

Furthermore, the AUASB Chair Prof Roger Simnett, recently held a podcast on the subject matter of Less Complex Entities, the link to the podcast is here.