AASB Response – Part 10, Audits of Group Financial Statements of the Proposed ISA for Audits of Financial Statements of Less Complex Entities
May 01, 2023
On May 1, 2023, the Canadian Auditing and Assurance Standards Board (AASB) submitted a comment letter responding to the IAASB’s Exposure Draft, Proposed Part 10, Audits of Group Financial Statements of the Proposed ISA for Audits of Financial Statements of Less Complex Entities (LCE). The IAASB plans to approve the final ISA for LCE before the end of the year.
Here’s an excerpt from the comments:
“We are pleased with the IAASB’s proposal to include audits of group financial statements (Group audits) in the scope of the proposed ISA for LCE. Not all group audits exhibit characteristics of complexity. As such, audits of less complex groups should be within the scope of the proposed ISA for LCE.
However, we have significant concerns with the proposed “bright line” exclusion of the use of the proposed ISA for LCE when component auditors are involved. We believe that the proposed prohibition could increase the complexity of the auditor’s decision-making process regarding the use of the proposed ISA for LCE. Consequently, we believe the prohibition will considerably limit the application of the proposed ISA for LCE in Canada and will be a significant factor as we assess whether the proposed ISA for LCE meets the needs of Canadians.
As a result, we recommend that the Authority not include a prohibition when component auditors are involved. In our view, the qualitative characteristics set out in the Authority that describe the typical LCE, in addition to the group-specific qualitative characteristics set out in ED-ISA for LCE Part 10, should be adequate for the purpose of determining the appropriate use of the proposed ISA for LCE for group audits.”
Access the AASB comments on the IAASB website.