The International Auditing and Assurance Standards Board (IAASB) is planning to simplify the use of International Standards on Auditing (ISAs) for the auditing of less complex entities
The four-month consultation has been launched as a result of long-standing criticism of the complexity and difficulties for smaller listed entities when applying ISAs.
The standard setter says it is aware of the global call for action to address issues of complexity, length, understandability, scalability, and proportionality related to using the ISAs, and wants to find out more about how they impact less complex entities, and the ways in which these issues could be tackled, given its commitment to developing and maintaining one set of auditing standards.
The discussion paper sets out the challenges so far identified, along with a number of possible actions to address the identified problems.
The global audit standard setter is looking for input from all stakeholders, but in particular from auditors of less complex entities, and is open to considering proposals for possible approaches it has not yet thought about.
IAASB admitted that there was no simple solution, given that ISAs are intended for audits of a wide variety of entities, ranging from large, complex public interest entities to entities that are considerably less complex, so there are competing interests.
In the foreword to the discussion paper, Arnold Schilder, IAASB chair, said: ‘We must also maintain the fine balance between competing needs and being mindful that any changes do not reduce the robustness of the existing auditing standards thereby affecting audit quality (i.e., have unintended consequences on audits other than those that are audits of less complex entities).
‘There is no easy “fix,” and it will take time to progress global actions, but we are very aware that more must be done to keep the ISAs relevant to those auditing less complex entities.’
Amongst the options under consideration and outlined in the paper are revising the ISAs; developing a separate auditing standard for audits of less complex entities; and developing guidance for auditors of less complex entities.
The consultation closes on 12 September 2019.
IAASB Discussion paper on audits of less complex entities
Pat Sweet, edited by Sara White