Audits of Less Complex Entities (LCEs)

The International Auditing and Assurance Standards Board (IAASB) has issued a new auditing standard, the International Standard on Auditing for Audits of Financial Statements of Less Complex Entities (ISA for LCE). The ISA for LCE is a stand-alone auditing standard available for auditors to use when auditing less complex entities. 

The standard contains all requirements necessary to obtain reasonable assurance about whether the financial statements of a less complex entity are free from material misstatements. 

While the auditing standards (ISA (NZ)) are scalable, we have heard concerns that these standards are getting increasingly complex and written in the context of highly regulated, large, listed entities. In New Zealand, the type of entities that are required to have an audit varies considerably. There are many less complex entities that have audits, including charities and sports clubs, schools and early childhood centres. 

The ISA for LCE is aimed at addressing concerns that the auditing standards are getting too long and complex for the audits of less complex entities.  During the development of the ISA for LCE we consulted with stakeholders and heard mixed views regarding its use in New Zealand as well as support from many for adoption.

Now that the ISA for LCE has been issued globally, we have developed a proposed New Zealand equivalent and want stakeholder feedback on:

• Who would use the ISA (NZ) for LCE if it is adopted in New Zealand
• The applicability of the standard in New Zealand.
• If and how to incorporate the audit of service performance information within the New Zealand Standard.

Further information Consultation Document, with consultation questions on page 16. Exposure Draft of the ISA (NZ) for LCE. A Introductory video series, a factsheet and other resources on the ISA for LCE are also available on the IAASB’s website.

Events We are running a series of events relating to this consultation, such as: Virtual feedback forum for auditors Virtual feedback forum for users and preparers of audited financial statements Panel discussion on the standard Drop in sessions to provide feedback Sign up on our events page.

 

 

Users and preparers of audited financial statements

We’re interested in your views on whether we adopt this standard.

A high-level summary of our consultation is here. 

To share your views, we have designed a feedback form tailored with questions for you here.

How to provide feedback

There are a number of ways you can provide your views:

• Emailing assurance@xrb.govt.nz 
• Completing our feedback form
• Users and preparers of audited financial statements can complete a tailored feedback form
• Commenting on LinkedIn
• Using the form below

Comments must be submitted by 27 February 2025.

 

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