The Nordic standard for audits of small entities - consultation paper
Attached is a draft of the Nordic standard for audits of small entities ("the Nordic standard"). The Nordic standard has been developed by the Nordic Federation of Public Accountants (NRF) and are released for consultation by the institutes of public accountants in Sweden, Denmark, Finland, Iceland and Norway.
We are convinced that auditing is, and will remain, a valuable service also for small entities. A prerequisite for the auditor to remain relevant for this group is however that an audit can be performed efficiently and with high quality. International Standards on Auditing (the ISAs), which apply to all audits today, have become more and more extensive and increasingly difficult to tailor for an efficient audit of small entities.
In the beginning of 2014 NRF initiated a project to develop a principles based stand-alone audit standard, tailored specifically to high quality audits of small entities. An audit performed according to the Nordic standard is an audit that enables the auditor to express an opinion with the same level of assurance as an audit performed in accordance with the ISAs.
The Nordic standard is based on general auditing principles and uses a risk-based approach. Since the standard is principles based, the auditor's professional judgment will have a more prominent role.
Use of the Nordic standard is limited to audits of entities below the thresholds for small entities in the EU Accounting Directive. These are entities that do not exceed two out of three of the following thresholds: Annual turnover of €10 million, total assets of € 10 million and 50 employees.
Request for Comments:
We are looking for your feedback on all areas of the Nordic standard including factors you consider relevant for further development and adoption of this standard. In addition we ask for your comments on the following questions:
- How do you rate the draft Nordic standard to be suitable for audits of small entities?
- In what way do you think application of this standard will affect the quality of audits of small entities?
- Do you think practitioners will need specific guidance in order to use the standard? If “yes”, please describe what kind of guidance is needed?
- What kind of training do you think that the practitioners will need training in order to use the standard?
Comments due
Please send your comments to [email protected] by October 19th 2015.
The responses to the specific questions together with any other comments received, will form the basis for further development of a final Nordic standard.