Audits of Less Complex Entities (LCEs)

lce

 

This consultation examines the possibility of adopting the ISA for LCE auditing standard, tailored to fit New Zealand conditions.

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

 

Events

We are running a series of events relating to this consultation, such as:

Sign up on our events page.

 

How to provide feedback

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

Comments must be submitted by 27 February 2025.

 


 

We intend on 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 2020 also applies.