While regulators are lifting the audit thresholds around the world, SMEs still see the access to funding as a challenge. This raises the issue of the value of assurance services for SMEs and the role of accountants in offering, or not, these services.

At the World Congress of Accountants (WCOA) an international panel chaired by ACCA External Affairs Director Sue Almond looked at this changing environment and the different approach in terms of audit and assurance for SMEs in light of cultural and legislative differences form one country to another.

Sue Almond: Not only does the practice of assurance services vary around the world but the practices around audit vary around the world, Philippe can you talk about the French specificity?

Conseil Superieur de l’ordre des Experts-Compables vice-president Philippe Arraou: There is a good history and practice of auditing SMEs in France. We have a vast number of SMEs which are audited. And we have two kinds of profession in France providing services to SMEs: the chartered accountant (CA) who advices and the auditor who audits. CAs are different than auditors. The French regulation is made in a way that both aspects: advising and comparing financial statements, and auditing and delivering an opinion need to be regulated. But we consider that they are two different assignments: the financial statement is prepared by a professional according to accounting standards and then the role of the auditor is limited to delivering an opinion on this financial statement. There are different roles but complementary of course.

IFAC Small and Medium Practices Committee (SMPC) member Stuart Black (Australia): If one chooses that we need to have audits, it is another aspect to say how do you provide advice and audit independently. To my mind there is no evidence anywhere in the world that shows that the countries that don’t have audit for the SMEs have greater failure than countries that do have audit.
The French aspect makes sense if you have a regulation that says you need to have an audit, then you can break the independence question. But to be frank in my view it ignores the question of why do you need an audit for an SME. Is there any evidence that there is value? I find it very difficult and therefore hard to sell it to clients.

IFAC SMPC member Phil Cowperthwaite (Canada): You can have a bookkeeper, one accountant, two accountants or three or four, but what I see is that when a micro entity wants to have an audit or a review, the audit firm sends out their least qualified person. So this person has no understanding or experience in assurance and audit review, and they are sent out to a client that has no real understanding of accounting.
If there was ever a formula for disaster, it is to send a junior auditor to a junior accountant and expect to get something of value.
I don’t really know if you need one, two, three or four accountants. For the really small clients you have to send out senior people on the job, on site, talking to your clients having direct communication.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

Den Norske Revisorforening (The Norwegian Institute of Public Accountants) CEO Per Hanstad: In addition to having very good and efficient people, we could have a product that is fit for the client. One of the problems today is that we try to sell a product, to small companies, which is absolutely not fit for purpose at all. As long as you try to sell an audit the same way as to the biggest companies or multinationals you will lose. We need to look at the standards because the product that we are delivering today is not the right one it is not tailored to the needs of the SMEs.

Read the full report here:
To audit or not to audit, that is the question