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 Our events have concluded. You can also watch a recording of our Walk-through Webcast or our Panel discussion below.

Walk-through Webcast

 

Panel discussion

On 17 February we held a panel discussion event to delve into key aspects of our consultation. 

 

Consultation closed on 27 February 2025.

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Written submissions received

Written submissions were received via our website, email, or e-forms.

Angela Giddy	Craig Fisher
Ashton Wheelans Limited	Cranford Hospice
Assoc Prof Dr Radiah Othman	Deloitte
Auckland Regional Amenities Funding Board	Michael A Burt
Audit Assistant	Ministry of Education
Audit Plus Accounting Services Ltd	Moore Markhams Wellington Audit
Baker Tilly Staples Rodway	Office of the Auditor General
BDO NZ	PwC
CAANZ CPA Australia	Smith and Jack Ltd
CATAS Limited	Sport NZ
Charities Services	Te Omanga Hospice Trust
Chrissie Murray	The Invisible Office Company Ltd

Read our feedback statement for a summary of what we heard:

ISA for LCE Feedback Statement