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Audits of Less Complex Entities – AASB

Date recorded:

At its meeting on June 7-8, 2021, the AASB provided input to the IAASB members from Canada on the IAASB’s project to develop a separate standard for audits of the financial statements of less complex entities (LCEs). Key issues discussed included: (i) the extent of judgment inherent in the characteristics of complexity and how many of these characteristics an entity needs to exhibit before it is no longer appropriate to use the separate standard for audits of LCEs; (ii) understanding the related implications, including the work effort and reporting, of transitioning between International Standards on Auditing (ISAs) and the separate standard for audits of LCEs; and (iii) the proposed approach to maintain the separate standard for audits of LCEs, including the potential for narrow-scope amendments, when necessary. The AASB expects to approve a Canadian discussion paper for audits of the financial statements of LCEs at its July 2021 meeting.

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