Hands of three men in focus. Man on the left is holding a pen in his left hand and pointing it at a piece of paper on the table, position in front of man in the middle. Man in the middle is wearing a blue shirt sitting at a table with his left hand resting on his right hand. Man on the right and pointing at the same piece of paper

For some time, it has been recognised that there are challenges in applying auditing standards to the audits of smaller and non-complex entities. In response, there is growing pressure to address these challenges.

Some practitioners are worried that auditing standards can be difficult to apply when auditing certain smaller companies and that the standards require procedures that are unnecessary.

While the benefits of audit are obvious for the largest companies, policymakers have debated how to respond to the cost-benefit question for smaller companies.

These pressures are continuing to grow and it is time to address them.

New standards

In 2004, the International Auditing and Assurance Standards Board (IAASB) commenced the significant project of revising and reformatting all its auditing standards to simplify their wording and structure.

The IAASB reworked every standard to separate its requirements from the application material that helps explain how to implement it properly.

The IAASB has a project team that has been collecting views from practitioners in order to understand the areas that concern auditors of small and medium-sized entities (SMEs). This feedback will be used to guide the IAASB's possible future responses.

Audit should be scalable

Historically, standard-setters have attempted to maintain a unitary approach to audit. This concept has sometimes been summarised by the phrase 'an audit is an audit'. Standards have attempted to protect audit as a single product that can be applied in a scalable and proportionate manner to all types of entity, recognising that a larger and more complex entity will result in a larger and more difficult audit.

ACCA's position is that it is advantageous to maintain a unitary approach to audit and to ensure that public confidence in the rigour of audit is sustained.


Revising auditing standards is a time-consuming process. The IAASB's previous project of revising and restructuring all auditing standards, known as the Clarity Project, took several years and soaked up considerable staff and volunteer time. However, over time this will deliver the benefits of simpler standards without imposing a large one-off cost.

The current standard-setting approach relies upon drafting and redrafting actual standards for review in working group and board meetings, and may take time for the board to become accustomed to this new methodology with less detailed drafting.

In the long run, the approach may make standard-setting more efficient if it serves to reduce the amount of board time spent redrafting standards.

While there may be some temporary issues while transitioning towards this new way of working, the benefits for users and for the public interest make this a price worth paying.

If you have any questions, please contact: Antonis Diolas.