The Auditing and Assurance Standards Committee ("AASC") of the Hong Kong Institute of Certified Public Accountants ("Institute" or "HKICPA") is inviting comments on the
Proposed Hong Kong Standard on Auditing for the Audits of Financial Statements of Less Complex Entities ("HKSA for LCE").
In December 2023, the International Auditing and Assurance Standards Board (“IAASB”) issued the
International Standard on Auditing for Audits of Financial Statements of Less Complex Entities (“ISA for LCE” or the “standard”), which is tailored to meet the specific audit needs of smaller and less complex businesses and organizations. The Authority of the standard in Part A sets out the intended scope of the ISA for LCE. Decisions about the required or permitted use of the ISA for LCE rest with legislative or regulatory authorities or relevant local bodies with standard-setting authority in individual jurisdictions.
To help users in determining the appropriate situations to use the standard, the IAASB has also issued “
The ISA for LCE – Authority of the Standard Supplemental Guidance” which further explains matters and circumstances that may be relevant in determining the appropriate use of the ISA for LCE in accordance with Part A of the standard.
In February 2024, the Institute’s AASC approved in principle the adoption of the ISA for LCE as the HKSA for LCE. Consequently, the AASC proposes to modify Part A,
Authority of the standard concerning the scope of the proposed HKSA for LCE in a local context. The proposed modifications include:
- Refining the classes of entities prohibited from using the proposed HKSA for LCE to entities having public interest characteristics within a Hong Kong context.
- Establishing quantitative thresholds to determine the appropriate use of the proposed HKSA for LCE within a Hong Kong context.
The AASC's exposure draft ("ED") to the proposed HKSA for LCE includes only the proposed Part A,
Authority of the proposed HKSA for LCE, which has incorporated the AASC’s proposed modifications outlined above, for public consultation.
The ED does not encompass the Preface, Parts 1 to 10, and Appendix 1 to 7 of the proposed HKSA for LCE, on which the Institute requested feedback from HKICPA members and interested parties in
July 2021 and
January 2023 during the IAASB consultation period. Consequently, the Institute will converge the Preface, Parts 1 to 10 and Appendix 1 to 7 from the ISA for LCE into the corresponding sections of the HKSA for LCE following the Institute’s due process with minimal alterations.
This survey seeks to solicit feedback on the proposed local amendments to the
Authority of the proposed HKSA for LCE. The ED should be read in conjunction with the accompanying Explanatory Memorandum ("EM"), both of which are available on the
Institute's website.
All responses to this survey are anonymous. The results of the survey will be considered by the Institute in finalizing the proposed HKSA for LCE for local adoption.
The survey is open until
17 November 2024.
If you would like to provide further written comments, please email to
standardsetting@hkicpa.org.hk.