The International Federation of Accountants has spoken out in
support of ISAs as the single set of global auditing standards,
including for the audit of SMEs.

At a European Federation of Accountants’ (Fédération des Experts
Comptables Européens – FEE) SME/SMP congress in Denmark last month,
there was significant debate about whether different audit
standards are needed for different sized companies, or whether
audit is a suitable tool for small companies.

At the event the Danish Institute of State Authorised Public
Accountants (Foreningen af Statsautoriserede Revisorer – FSR) noted
it is currently preparing a draft set of simplified audit
standards. The institute’s president, Kurt Gimsing, said he
believed the use of the ISA framework for SME audits was

However, the IFAC policy paper notes ISAs are designed to be
applicable to audits of financial statements of entities of all
sizes and highlights the ways in which the International Auditing
and Assurance Standards Board (IAASB) considered the SME
perspective when developing those standards.

IAASB chair John Kellas said he would urge jurisdictions to
stick with ISAs. Kellas also noted that no matter what size a
company is, to get an appropriate level of assurance, you
essentially need the same process.

For example, in the matter of risk management, Kellas said: “A
large entity will have a risk management process of some kind. A
one-man-band will not, but the question is still relevant – does
the proprietor understand the principle risks to the finance
statements and the business? There ought to be a discussion about
that between the auditor and clients.”

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The IFAC paper notes the IAASB provides an alternative to an
audit in the shape of a review of financial statements and Kellas
pointed out that the IAASB will review the reviews next year.

“If we do it with an open mind we might be able to produce
something that takes the reviews forward and provides a useful
service,” he said.