IAASB Consults on Simplifying Auditing Standards for Small Entities with Less Complexities
The International Auditing and Assurance Standards Board (IAASB) is expected to be planning towards simplifying the use of auditing standards for the audit of less complex business entities.
The board has launched a consultation after facing criticism for a number of years regarding difficulties and complexities for small size business entities when applying International Standards on Auditing (ISAs).
IAASB has said that it acknowledges the call from different parts of the world requiring actions to be taken to address as well as resolve the issues of length, complexity, understandability, proportionality, and scalability related with applying auditing standards, and wants to learn more with regards to how they affect small size entities with less complexities, and the ways through which such issues could be handled, provided its commitment towards developing as well as maintaining one set of international standards on auditing.
The consultation paper sets out issues that have been identified so far together with various possible options available to address and resolve the highlighted issues.
The board is looking to consult from all those who will be impacted by changes to the ways in which auditing standards will be applied to less complex entities, but specifically from auditors of those entities, and is also open towards considering suggestions for possible actions to address the aforementioned issue.
The standard setter has admitted no simple or easy solution was available to the highlighted issue, provided that ISAs are meant for audits of various entities, ranging from large to small, complex entities to entities that are less complex.
IAASB chairman, Arnold Schilder, said that we must maintain a balance among competing needs while at the same time ensuring that any proposed change does not reduce the existing auditing standards robustness and as a result impacting audit quality.
He also said that there is no easy solution and time will be required to progress the actions the globe needs, but we acknowledge that we must do more to keep the audit standards relevant to those firms performing audits of entities with less complexities.
The options that are being discussed and highlighted in the consultation paper includes revisiting the auditing standards; developing a new standard for audits of entities that are less complex; and developing guidance that will aid auditors performing audit of business entities with less complexities.
The last date for consultation is September 12, 2019.