Plans of LCE Audit Reform moves a step closer

The plans for establishing a simple auditing standard has taken a step onward since IAASB (International Auditing and Assurance Standards Board) has approved the proposal unanimously. They have also decided to publish the rough plan of the new guidelines in next year’s June.

The plan was approved after four years in the December meeting of the IAASB. They have already published the new statement, with information about what the new guidelines has to offer like, the timeline of developments, and which establishments will apply for it.

The principles and concepts of the new guidelines might be similar to the ones of ISAs (International Standards on Auditing). Risk-based approach of the audit has to be there in order to get an appropriate amount of evidence for the audit so that the result can be a rational assurance view.

Chartered Accountants are pleased with the approval of the project and with the significance of the IAASB being reflected on by the communiqué. The LCEs around the world, most of them being SMEs, would be delighted by this news and the schedule shows the commitment of IAASB towards the project.

We are glad to see some clarifications in the process, like; how the engagements are planned to be reasonable assurance engagements (audit-level), instead of limited review engagements (lower-level). It was also confirmed by the IAASB that the standard for LCE shall be independent, similar to that of the ISAs.

The communiqué and the approval took place after ICAEW wrote about calling for action to create a new standard, to the Chair of IAASB. ICAEW wrote that the new guidelines were in need a lot of attention because the current requirements of SMEs are quite complex and can hamper the efforts made to reconstruct the economy worldwide.

Although there is much to do on highlighting the possibilities of the standard, ICAEW welcomes the clarifications made in the communiqué about the responsibility of the application being on a national level.