IAASB ED

  • Auditing

Audits of Less Complex Entities (LCEs)

There has been growing concern about the length, scalability, and understandability of the International Standards on Auditing (ISAs)­, and their application to audits of Less Complex Entities (LCEs), including whether they can be applied in a cost-effective manner to all audits.

Some countries have taken actions in their jurisdictions to address these challenges by following different approaches (e.g. by issuing a national standard for LCEs). However, alternative standards in different jurisdictions may lead to inconsistencies in quality and cause confusion for users of audit reports.

Subsequent to consultation with its stakeholders, the International Auditing and Assurance Standards Board (IAASB) decided that, amongst other measures (such as digitisation of standards), a separate, standalone standard, designed to be proportionate to the typical nature and circumstances of an audit of the financial statements of an LCE could help LCEs and their auditors.

This proposed standard is intended to serve the public interest by:

  • Maintaining confidence in financial reporting of LCEs.
  • Assisting auditors of LCEs undertake consistent, effective, and high-quality audits.
  • Being responsive to stakeholder needs.
  • Promoting a more consistent application of the auditing standards to audits of LCEs.

The proposed standard is intended to provide reasonable assurance in the circumstances of an audit of the financial statements of an LCE. The new stand-alone standard for audits of less complex entities:

  • Is designed specifically for audits of a less complex entities
  • Is based on the underlying concepts from International Standards on Auditing
  • Was developed to be understandable, clear and concise
  • Reduces the risk of jurisdictional divergence by driving consistency and comparability globally
  • Will achieve a quality audit engagement

The IAASB has now exposed this proposed standard for comment, and we have issued the consultation documents on this page for our stakeholders. 



Commenting on the Proposals

The NZAuASB encourages you to read the Exposure Draft and to comment on the proposals. 

We particularly need to know whether:

  • The proposed standard should be adopted in New Zealand. Would the standard by useful for New Zealand auditors and their clients? In what context?
  • New Zealand stakeholders support the proposed standard’s decision framework for determining the types of entities for which the ISA for LCE is not intended.
  • New Zealand auditors agree that the proposed standard is the clear, understandable and practical for auditing LCEs.
  • New Zealand stakeholders have concerns regarding audits conducted in accordance with the proposed ISA for LCE?

Send your comments—both formal and informal—by 5 November  2021 to the NZAuASB using the form below.


Upload your submission here

Please use this secure online form.

It has been designed to make your upload safe, quick and easy. 

You can:

  • Upload an MS Word document (and a PDF file, if you wish); or
  • Write your comments below in the space provided.

You can upload up to TWO documents. 

Please note:

  • We would appreciate receiving a copy of your comments in electronic form (preferably Microsoft Word format).  This helps us to more efficiently collate and analyse comments. Please also specify the exposure draft number and title in your electronic file. 

  • Tell us on whose behalf you are making the comments (for example on behalf of a group or an entity).

  • We intend publishing all comments on the XRB website, unless they may be defamatory. If you have any objection to this, we will not publish them. However, they will remain subject to the Official Information Act 1982 and, therefore, may be released in part or in full. The Privacy Act 1993 also applies.

  • If you have an objection to the release of any information contained in your comments, we would appreciate you identifying the parts of your comments to be withheld, and the grounds under the Official Information Act 1982 for doing so (for example, that it would be likely to unfairly prejudice the commercial position of the person providing the information).