Recommend: New proposed International Standard for less complex entities

Why is it important?
It is recognised that less complex entities (LCEs) make an important contribution to the world economy and account for the great majority of entities globally. At the same time, increasingly complex structures and transactions need to be addressed in the International Standards on Auditing (ISAs). The International Auditing and Assurance Standards Board (IAASB) has realised that this complexity in the ISAs can pose challenges for the audits of less complex entities. The IAASB has therefore developed a draft standard that is proportionate to the typical nature and circumstance of an audit of a less complex entity.

Who should be paying attention?
The standard is relevant to a multitude of stakeholders, including users of financial statements, owners, management, and those charged with governance of entities, preparers of financial statements, legislative or regulatory authorities, relevant local bodies with standard-setting authority, professional accountancy organisations, academics, regulators and audit oversight bodies, and auditors and audit firms, among others.

When was it issued?
The draft standard was issued on 23 July 2021, while feedback to the IAASB was due by 31 January 2022.

What should be noted?
Herewith a high-level summary of important facts to consider when reviewing the draft standard:

See the detailed Explanatory Memorandum here.

AUTHORS
Michelle Vermeulen CA(SA), Project Manager: Assurance at SAICA