The ICAI has issued Exposure Draft of ‘Standard on Auditing for Audits of Smaller and Less Complex Entities (SASE) 200’ relating to “Overall Objectives of the Independent Auditor and the Conduct of an Audit” for comments/ suggestions, latest by 17 Jan. 2018, as under:
The comments may be sent via post to: The Secretary, Auditing and Assurance Standards Board, The Institute of Chartered Accountants of India, ICAI Bhawan, A-29, Sector-62, NOIDA, Uttar Pradesh – 201 309 or thru email at: email@example.com
It may be noted that the Auditing and Assurance Standards Board (AASB) of ICAI has decided to issue separate set of standards for audits of smaller and less complex entities. The concern behind this as discussed was that the Standards on Auditing have been developed keeping in mind the public interest and consequently the listed entities.
Since Standards are principal based these were made applicable to all entities. Concern was raised internationally that the audits of small and medium enterprises (SMEs) particularly audits of less complex entities do not require the compliances as per Standards in place.
The International Auditing and Assurance Standards Board (IAASB) also recognized the issue and held a specific Conference in Paris in January 2017 and thereafter had regular meetings and discussions on the issue and finally the Agenda was taken to address the challenges being faced by SMPs in case of audit of SMEs. It was also discussed that to simplify the Standards, it should be suitable for implementation in case of audit of SMEs ensuring the quality in reporting.
In the Indian scenario, there are large numbers of SMEs and audits of SMEs are conducted by large number of SMPs. In India, all entities particularly those in corporate sector are required to get their accounts audited and even in case of non-corporate sector also, the audit is mandatory under tax laws and other laws. AASB therefore took the view to address the issue by having a separate set of Standards for audits of smaller and less complex entities. AASB also discussed that the need is only to simplify the Standards for effective implementation and that the quality in reporting shall be maintained, in the same series of the extant SA’s part of the existing framework.
To start with, AASB has prepared the draft of SASE 200, “Overall Objectives of the Independent Auditor and the Conduct of an Audit in accordance with Standards on Auditing for Audits of Smaller and Less Complex Entities” in a simplified manner which is easy to understand and implement based on which further Standards will also be formulated and exposed for comments. The Board also decided that nomenclature of these standards will be “Standard on Auditing for Audits of Smaller and Less Complex entities (SASE)”.