The leading global accountancy body is urging the UK’s corporate regulator to make the reporting and auditing regime as simple as possible for the struggling mid-market sector.
ACCA (the Association of Chartered Certified Accountants) is calling on the Financial Reporting Council (FRC) to make the corporate governance regimes fit for purpose by making rules which focus on the complexity of the organisation rather than just on its size.
Glenn Collins, head of technical and strategic engagement, ACCA UK, said: “ACCA’s overarching, consistent message is that the focus should be on complexity rather than size – a business may be large but that doesn’t mean it is complicated.
“We also encourage the FRC to place greater emphasis on a ‘think small first approach’ in applying audit standards to smaller and non-complex entities.”
Responding to the FRC’s Small and medium-sized enterprises market study, ACCA is calling on the FRC to formally consult on the IAASB’s ISA for LCE or provide a clear explanation for its decision whether or not to adopt it.
Joe Fitzsimons, policy lead, UK and EEMA, said: “The FRC should formally consult on the IAASB’s International Standard on Auditing for Audits of Financial Statements of Less Complex Entities. We believe securing stakeholder feedback in the UK would show the depth of feeling that exists across the profession about the need for a more scalable, proportionate approach to auditing and reporting on smaller and less complex businesses.”
Lloyd Powell, head of ACCA Cymru/Wales, said: “We are also suggesting that the FRC considers providing more comprehensive guidance for all types of SME businesses. This includes sector-specific guidance reflecting the operational realities of different industries. This would be good input for the vital small business sector in Wales.”
The ACCA has asked that the FRC does more to address the audit expectation gap – the misunderstanding of the purpose of an audit – by improving public, investor and SME understanding of audit work.
