ACCA welcomes the opportunity to provide feedback on this call for views “International Standard on Auditing for Less Complex Entities – How to Enhance Usability”.

ACCA reiterate our feedback to the International Auditing and Assurance Standards Board (‘IAASB’) in our joint submission with CAANZ on the IAASB’s Exposure Draft Proposed International Standard on Auditing for Audits of Financial Statements of Less Complex Entities, including that it: 

• would promote audit quality internationally and allow auditors to do high quality audits focused on the circumstances of LCEs
• is a digestible standard, that follows the flow of the audit process, making it easier for educators to develop training materials
• provides a framework for a consistent, efficient, high-quality audit that still provides reasonable assurance 

While ACCA supports the adoption of the International Standard on Auditing for Less Complex Entities (‘ISA for LCE’) subject to formal consultation, as the ISA for LCE has not been adopted in the UK, we cannot provide feedback on its implementation or use at this time. 

We note the FRC intention to share feedback gathered in this call for views with the IAASB as part of its ongoing engagement with the IAASB on proposals to maintain the ISA for LCE specifically in relation to updates to ISA 240 (Revised), The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements and ISA 570 (Revised 2024), Going Concern.  

In terms of the IAASB maintenance project, feedback from outreach suggests: 

• ACCA support retaining the rebuttable presumption of risk of material misstatement (ROMM) due to fraud risk in relation to revenue recognition in the ISA for LCE however, the inclusion of additional examples and prompts for circumstances in which a rebuttal would be appropriate would be welcomed.
• ACCA cautions against any changes that may, inadvertently, increase inappropriate rebuttals of the presumption of the ROMM due to fraud in revenue recognition.
• We have a strong view that while there is appetite for proportionality, where there is a material uncertainty in relation to going concern, the requirements within the ISA for LCE should be consistent with ISA 570 (Revised 2024), Going Concern.
• ACCA are supportive of a proportionate approach in relation to going concern procedures, that takes account of the challenges in LCE audits i.e. management’s assessment of going concern may not be formalised. We would welcome the inclusion of examples of accessible evidence, in the absence of formal procedures in such entities e.g. owner managed businesses. 

While we believe the ISA for LCE will provide tangible benefits in delivering audits for less complex entities we have a strongly held view that a formal consultation on the adoption of ISA for LCE is needed. 

To read our comments in full, please download the document found on this page.