The Nordic Federation of Public Accountants (NRF) has released for consultation the Standard for Audits of Smaller Entities (SASE) which aims at strengthening the value proposition of the audit profession to SME clients.

A year and a half in the making, SASE was released earlier this summer by the NRF which comprises the institutes of public accountants in Sweden, Denmark, Finland, Iceland and Norway. With audit thresholds rising all over the world, audit and assurance services seemed to be less valuable for SMEs, NRF’s standard was developed to support the belief that auditing is and will remain a valuable service for small entities.

"A prerequisite for the auditor to remain relevant for this group is however that an audit can be performed efficiently and with high quality. International Standards on Auditing (the ISAs), which apply to all audits today, have become more and more extensive and increasingly difficult to tailor for an efficient audit of small entities," NRF said in a statement.

SASE has less detailed requirements than the ISAs and puts greater emphasis on the use of the auditor’s professional judgement, according to NRF. "This is reflected in the standard with more generic requirements and that the auditor will have to consider certain specific circumstances when designing audit procedures rather than having to perform specific predefined procedure."

Speaking at DFK International annual conference, the Institute for the Accountancy Profession in Sweden (FAR) secretary general Dan Brännström said the new standard had the potential to be ground-breaking and if adopted in the Nordic region, could most certainly be rolled out to other countries.

"Many audit and accounting firms have been successful for a long period with traditional business models and now is the right time to review those models and come up with more modern solutions and develop new services," Brännström warned.

The standard is out for consultation until 19 October 2015, and can be consulted here

Related article:

To audit or not to audit, that is the question