The Association of Chartered Certified Accountants (ACCA) has commented on the Financial Reporting Council (FRC) market study, which scrutinises the audit and reporting obstacles encountered by small and medium-sized enterprises (SMEs).
The study, part of a campaign by the FRC, seeks to understand the difficulties practitioners face when auditing SMEs and to explore the decision-making process for SMEs that choose to procure audit services, even when exempt.
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ACCA has shown its support for the FRC’s initiative to lessen the reporting burden on these enterprises, emphasising the need to focus on the complexity of business operations rather than company size.
It has recommended that the FRC engage in a formal consultation process, particularly regarding the International Standard on Auditing for Audits of Financial Statements of Less Complex Entities.
The association has also called for the provision of clear, practical examples to aid in the application of UK ISAs, the Revised Ethical Standard 2024, and ISQM (UK) 1, alongside guidance for the use of emerging technologies such as AI analytics.
Furthermore, ACCA suggests the development of sector-specific guidance, educational resources, and collaboration with software providers to facilitate the adoption of technologies and to fill existing knowledge gaps.
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By GlobalDataACCA urges the FRC to produce materials that distinguish the benefits of financial audits from the administrative burdens they may impose.
Additionally, the association points to the need to bridge the expectation gap within the UK audit market, advocating for better audit work among the investors, public, and SMEs themselves.
ACCA UK and EEMA policy lead Joe Fitzsimons said: “We believe securing stakeholder feedback in the UK would show the depth of feeling that exists across the profession about the need for a more scalable, proportionate approach to auditing and reporting on smaller and less complex businesses.”
This commentary from ACCA comes after a joint report with the Chartered Institute for Securities & Investment, which cast a spotlight on the ethical challenges AI poses to the finance sector.
