IFAC acknowledges challenges faced by auditors of less complex entities

IFAC has issued a comment letter on International Standards on Auditing (ISAs) of less complex entities (LCEs), revealing its concerns about the way it is applied. 

The organisation has acknowledged that those auditing LCEs continue to face challenges, with a vast majority of smaller entities falling into this category.

While IFAC applauded the IAASB’s initiative to consider the situation holistically and chart the best way forward, it said that the challenges will only be best resolved through thoughtful and constructive input and engagement from the largest possible number of diverse global stakeholders. 

“IFAC agrees that there is no easy fix. Balancing the competing needs of all stakeholders while maintaining the robustness of the existing standards and audit quality will be a challenge,” IFAC said.

“But it is a challenge that must be faced, and one that requires thoughtful and constructive input and engagement from the largest possible number of diverse global stakeholders.” 

With this in mind, IFAC strongly encouraged its member organisations to prioritise the discussion paper and work with their members to submit a response.

“We likewise extend this encouragement to any practitioners or other stakeholders with views on the best way forward. We recognise that responding to the discussion paper requires both time and expertise cost, particularly for smaller IFAC members and SMPs. But it is exactly these voices that must engage with the issue to support best possible outcomes.”

Responses to the discussion paper must be submitted by 12 September 2019.

IFAC has also launched a survey designed to gather feedback from stakeholders who are not otherwise intending to respond directly to the discussion paper. The survey will also conclude on 12 September.