Confidence in smaller companies’ performance benefits us all. Especially since they contribute more to the EU economy than large enterprises do. An audit of financial statements (hereafter: audit) can instil such trust as auditors check if historical financial information is reliable.
But should auditing a small or non-complex entity with e.g. 20 employees follow the same standards as a large company with 50,000 people? The current International Standards on Auditing (ISAs) have become too complex for the needs of smaller entities because audit regulators and standard setters focus on protecting capital markets. However, since smaller entities are major contributors to growth, they must not overlook them when dealing with auditing standards.
As the difficulties of applying the ISAs in this environment become more apparent, the status quo is not an option. This Cogito publication explores different solutions to help the IAASB find an efficient way to deal with small or non-complex entity audits. We aim to open the debate, so all stakeholders can work towards a way forward on this strategic issue.