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Hi Mike,
I have a doubt regarding audit for small and medium sized companies where they are producing financial statements but not in complete adherence to IFRS. So what actually happens is that auditors who are expert in this themselves prepare exactly as per the requirements of IFRS. So, wont there be any independence threat (self review) arising as a result of this? I ask this because I have seen this happening in my company as well.
What is your opinion on this?
Thank you in advance.
It IS allowed for auditors to prepare financial statements for small / medium sized entities
Why would a self-review threat arise as a result of an auditor preparing in accordance with IFRS
Would it not equally arise if the auditor prepares financial statements NOT in accordance with IFRS
I’m not sure where IFRS is relevant in your post
Surely the question could completely ignore IFRS and simply ask “Is it acceptable for auditors to report on financial statements that they, the auditors, have prepared?”
And the answer to that is clearly a resounding “NYes, but it’s not ideal”
However, the concept of small and medium sized entity rules recognises that the only people likely to be at all interested in the figures are the active participants themselves – the directors and their families. The concept accepts that there is unlikely to be an unknown vast number of anonymous shareholders out there desperately waiting for the audited financial statements
Yes, you’re correct – it’s not ideal. But it’s better that qualified professionals be involved in the preparation than not
OK?
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