Small entity
A small entity is an organisation whose scale or complexity is limited in the relevant context. Size-based legal thresholds vary by jurisdiction and purpose. Its auditor considers the actual governance, controls, resources and reporting requirements rather than assuming a single uniform model.
Worked example
An owner-managed business has few staff and informal controls; the auditor assesses the effect on audit evidence and segregation of duties.
Common mistake
Small size alone does not establish statutory audit exemption or eligibility to use the ISA for LCE.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AA | Supporting | September 2026–June 2027 |