AASB response – Audits of less complex entities

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Oct 04, 2019

On October 4, 2019, the International Auditing and Assurance Standards Board (IAASB) published the Auditing and Assurance Standards Board's (AASB) comment letter responding to the IAASB’s Discussion Paper, Audits of Less Complex Entities: Exploring Possible Options to Address the Challenges of Applying the ISAs.

Overall, the AASB is very supportive of the IAASB’s efforts to obtain a greater understanding of the challenges that practitioners encounter in applying the ISAs in a scalable and proportionate manner.

The challenges in applying the ISAs require a solution that focuses on the complexity of the elements of an entity’s operations and financial statements rather than on the complexity of the entity. Therefore, the AASB believes that the most effective solution is to address within each ISA the ability to scale or modify requirements for the less complex elements of an entity’s operations and financial statements. Also, the solution needs to be practical and achievable in a reasonable timeframe.

However, the AASB does not believe that the development of a separate auditing standard for LCEs based on the ISAs is an appropriate solution.

Review the comment letter on the IAASB’s website.

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