ICAI Practitioner’s Guide to Audit of Small Entities (Revised 2020)
Naturally speaking, audit of small entities is relatively easier than the audit of large entities. However, auditors has to understand and consider typical features associated with small entities.
In small entities, generally there is lack of internal control, no separation between ownership and management etc.
Presently, not only entities in corporate sector are required to get their accounts audited, even in case of non-corporate sector also, audit is mandatory under various laws and regulations.
Audit of Smaller entities is challenging in view of the mandatory compliance of Standards on Auditing (SAs) irrespective of the nature, size and complexity of the entity. These SAs unlike accounting standards have to be applied to the audits of not only the large entities but to the smallest entities also
As a result, auditors of these small entities often face difficulty of scaling the requirements of SAs as per the size and nature of the entity.
To address the above issue, the Auditing and Assurance Standards Board (AASB) of Institute of Chartered Accountants of India (ICAI) had brought out a publication “Practitioner’s Guide to Audit of Small Entities” in 2008. The publication was last revised in 2010.
Now AASB has released revised edition of the “Practitioner’s Guide to Audit of Small Entities”. The said Guide contains ready to use audit programme templates for audit of small entities.
The Appendices to the Guide contain illustrative checklist to verify compliance with various Standards on Auditing. The Appendices also contain illustrative formats of various letters and confirmations required in course of audit of small entities
It has been stated that the purpose of this Guide is to provide a practical approach to implementation of the Standards on Auditing that may be followed while carrying out audit of small entities. Since the Guide is in the form of a checklist duly supplemented by appropriate documentation of the audit work.
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