The Association of Chartered Certified Accountants (ACCA) has backed the UK Financial Reporting Council’s (FRC) potential adoption of an international standard on auditing (ISA) for less complex entities (LCE).
The ACCA says aligning with the International Auditing and Assurance Standards Board’s (IAASB) standards would allow audits to better reflect the circumstances of smaller and less complex businesses, benefitting these businesses.
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Responding to the FRC’s call for views on improving the usability of the LCE standard, the ACCA restated its support for bringing the framework into the UK.
ACCA Technical and Strategic Engagement head Glenn Collins said: “We have been long time supporters of using the IAASB auditing standard for LCE in the UK. We are clear it provides a framework for a consistent, efficient, high-quality audit that provides reasonable assurance.
“However, we strongly believe that a formal consultation on the adoption of the ISA for LCE is needed in the UK. A formal consultation on the ISA for LCE is needed to evidence consensus within the profession on the most appropriate way forward.”
The FRC is also working with the IAASB on its maintenance project, which involves revising elements of the LCE standard on fraud and going concern.
ACCA EEMA & UK Policy and Insights senior manager Lisa O’Sullivan said: “We support retaining the rebuttable presumption of risk of material misstatement in relation to revenue recognition in the LCE.
“We would welcome examples in which a rebuttal would be appropriate to encourage appropriate implementation.”
The ACCA added that it supports a proportionate approach to going concern procedures that reflects the specific challenges typically seen in LCE audits.
Last month, the ACCA also supported the FRC’s updated auditing requirements on fraud and going concern.
