The development of the International Standards on Auditing (ISAs) has been influenced by the move towards increasingly complex structures and transactions. This increasing complexity in the ISAs has been perceived to create problems for the audit of less complex entities.
In April 2019 the IAASB published a discussion paper: ‘Audits of Less Complex Entities: Exploring Options to Address the Challenges in Applying the ISAs’. In December 2019, as a result of the feedback, the IAASB agreed that there is a need for a global solution which would ensure that the standards remain appropriate for use by auditors of entities of all sizes and complexities.
The IAASB created two separate workstreams to take this forward:
- Development of a separate standard for audits of less complex entities. This workstream’s objective is to address the issues specific to the audit of less complex entities. It has now been published that the first draft of a separate standard is scheduled to be considered by the IAASB in December 2020 and an exposure draft is to be issued for public consultation in July 2021.
- Focus on addressing complexity, understandability, scalability and proportionality. This workstream is tasked with developing principles and guidelines to promote consistent and effective use of the ISAs. It has now been published that the timetable for this workstream is to undertake targeted consultation in the final quarter of 2021 to establish drafting principles and guidelines.
Further information is available at www.iaasb.org.