Simplifying Audits
Simplifying Audits
Unveiling IAASB's ISA for Less Complex Entities
International Auditing and Assurance Standards Board (IAASB) has launched a global standard for auditing less complex entities, known as the International Standard on Auditing for Audits of Less Complex Entities, or ISA for LCE. This groundbreaking standard marks a significant milestone in addressing the specific needs of audits for smaller and less complex businesses.
ISA for LCE is an independent global auditing standard designed specifically for smaller and less complex companies. Built on the foundations of the International Standards on Auditing (ISAs), audits conducted using this standard provide the same level of assurance for eligible audits: reasonable assurance.
It is a proportional and tailored independent standard for the specific needs of less complex entity audits, making it easy to navigate for professionals supporting such engagements.
This standard will contribute to maintaining confidence in financial reporting and promoting consistent application of auditing standards to less complex entities, reducing the risk of jurisdictional divergence by driving global consistency and comparability. It recognizes the importance of smaller businesses and their specific audit needs.
ISA for LCE can be used in jurisdictions that have adopted the standard. The nature of the business determines whether this standard can be used. Are business activities, organizational and ownership structures, financial function, technology, accounting, and reporting less complex?
However, it cannot be used by listed entities or those with characteristics of public interest. In this case, it is crucial to refer to the standard for more details on when ISA for LCE can be used.
To support the adoption and implementation of this new standard, during 2024, IAASB will issue:
This standard applies to audits of financial statements for periods beginning on or after December 15, 2025.
For more information, visit: www.iaasb.org/focus-areas/isa-lce-standard-audits-less-complex-entities
At BDO, we are here to address any concerns or provide guidance. You can contact us here.
ISA for LCE is an independent global auditing standard designed specifically for smaller and less complex companies. Built on the foundations of the International Standards on Auditing (ISAs), audits conducted using this standard provide the same level of assurance for eligible audits: reasonable assurance.
It is a proportional and tailored independent standard for the specific needs of less complex entity audits, making it easy to navigate for professionals supporting such engagements.
This standard will contribute to maintaining confidence in financial reporting and promoting consistent application of auditing standards to less complex entities, reducing the risk of jurisdictional divergence by driving global consistency and comparability. It recognizes the importance of smaller businesses and their specific audit needs.
ISA for LCE can be used in jurisdictions that have adopted the standard. The nature of the business determines whether this standard can be used. Are business activities, organizational and ownership structures, financial function, technology, accounting, and reporting less complex?
However, it cannot be used by listed entities or those with characteristics of public interest. In this case, it is crucial to refer to the standard for more details on when ISA for LCE can be used.
To support the adoption and implementation of this new standard, during 2024, IAASB will issue:
- Supplementary guidance on standard authority and reporting.
- Adoption fact sheet.
- First-time implementation guide.
- Webinars on scope and authority, general guidance, and implementation.
This standard applies to audits of financial statements for periods beginning on or after December 15, 2025.
For more information, visit: www.iaasb.org/focus-areas/isa-lce-standard-audits-less-complex-entities
At BDO, we are here to address any concerns or provide guidance. You can contact us here.