This document outlines the standards for auditing financial statements of small entities in France. It aims to provide guidance tailored to the specific characteristics of small entities, while maintaining the same audit objectives and required diligences as larger audits. The standards cover engagement letters, quality control, fraud consideration, laws and regulations, communication with governance, internal controls, risk assessment, materiality, evidence, estimates, related parties, subsequent events, going concern, representations, and the auditor's report. Procedures are to be adapted based on the auditor's judgment of the small entity's context, focusing on limiting constraints while achieving audit goals.

1. Google translation (+ some clean up) from French by Lasse Åkerblad HT
STANDARD FOR THEAUDITENGAGEMENT
OFFINANCIAL STATEMENTS IN A SMALLENTITY (NP 2910)
French national standard: Standard approved of 13March2017. Applicable from 01 July 2017.
INTRODUCTION 1-3
OBJECTIVES OF ENGAGEMENT 4
DEFINITIONS 5
REOUIRED DILIGENCES 6-42
Engagement Letter 7-9
Quality control of an audit of the financial statements 10
Documentation 11
Takinginto account the possibility of fraud in the audit of financial statements 12-13
Consideration of laws and regulations
During the audit of the financial statements communication with constituents 14
Corporate governance 15-16
Communicating weaknessesin internal controlto perole constitutins corporate governance and management 17
Planning an Audit of Financialstatements 18
ldentification and risk assessment of misstatements
Significant throush knowledge of the entity and its environment 19
Materiality when planning and performing an audit
Respondent's response to assessed risks 21
Factors to consider when auditing an entity using a service company 22
Evaluation of misstatements found during an audit 23
Evidence 24
Evidence - Additionalconsiderations on specific aspects 25
Externalconfirmations 26
Initial audit engagements- opening balances 27
Analytical Procedures 28
Audit Sampling 29-30
Audit of accounting estimates 31
Related parties 32
Subsequent events 33
Going Concern 34
Written Representations 35
Use of the work of internalauditors 36
Use ofwork of expert appointed by auditor37
Basis of opinion and audit report on financial statements 38-40
Comparative information – Comparative information and Comparative FinancialStatements 41
The auditor's obligations with regard to other information ln documents containing audited
financial statements 42

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PRACTICAL APPLICATIONS AND OTHER COMMENTSA1-A16
CORRESPONDENCE TABLE WITH ISA ISA 200 TO 720
lntroduction
Scope
1 - The auditor's objectives are independent of the characteristics of the entities and in particular of
their size. Standards are generalin nature, enabling the auditor to achieve his or her goals regardless of
the contextin which he or she performs his or her duties. lt thereforeapplies the samestandards
regardless of the characteristics of the entity.
However, it adapts its approach, its approach and the choice of its techniques to take account of the
particularities of the small entity for which it must take care to limit the constraints imposed with
regard to the organizational capacity of the entity.
2 - ln order to clarify the specific aspects concerning audits of small entities, the term "small
entity"refers to an entity that typically has qualitative characteristicssuch as:
• Concentration of ownership and directionin the hands of a small number of people (often a
single person - either a natural person or another entity that holds the entity provided that
its owner has the samequalitative characteristics)and
• One or more of the following attributes:
• Simple or uncomplicated transactions,
• A simple accounting,
• A Little diversifiedactivity or few products in the product Lines,
• Restricted internal controls,
• Few levels of management but with responsibilities over the various controls, or
• Few employees, many with very large jobs.
These qualitative characteristics are not exhaustive, they are not limited to small entities, and they
do not necessarily have allof these characteristics (Ref A1).
Effective Date
3 - This auditor standard approved by ministerial decree of 13 March 2017 is applicable to the 01 July
2017.
Objectives of the engagement
4 - The objectives pursued by the auditor performing an audit of the financial statements of a smallentity are
independent of the characteristics of the entity and in particularof its size.Thus the auditor who carries out an
audit of the financial statements of a small entity has the following objectives:
• To obtain reasonable assurance whether the financial statements taken as a whole are free of
materialmisstatement, whether due to fraud or error and, therefore, to be able to express an
opinion as to whether the financial statements have been prepared, in all materialrespects, in
accordance with the applicable financial reporting framework,
• To issue a report on the financial statements and to make the disclosures required by the ISAs based on its findings.
The auditor performs the due diligence required by the lntenational Financial Reporting Standards (lAS) 1for
the audit of the financial statements that it knows and for which it adapts the procedures for its
implementation on the basis of its auditor judgment and Auditor standard (Ref A2). ln the event of a conflict of
standards with the aforementioned standards or absence of provisions in this standard, the auditor applies the
procedures set out in the lnternational Financial Reporting Standards ("IFRSs").
Definitions
5 - An excerpt from the definitions derived from the ISAstandards is appended to this standard for

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educationalpurposes.
Required Diligences
6 - ln order to understand the objectives and to correctly apply the required due diligence, the auditor
must be aware of the full text of an ISA, including its application and other explanatory information (A3) .
Engagement letter
7 - The auditor accepts or pursues an audit engagement only in cases where the conditions on the basis
of which the audit will be carried out have been agreed:
• Ensuring that the preconditions for anaudit are met, and
• After confirmation that there is a mutual understanding between the auditor and the
management and, where appropriate, the persons constituting corporate governance, of the
terms of the audit engagement.
8 - The conditions precedent concern the use by management of an accounting standard acceptable for
the preparation of the financial statements and the agreement of the latter and, where appropriate,
persons constituting corporate governance, principles on The basis of which an audit is carried out.
9 - The auditor explicitly refers to this standard in his letter of assignment and adopts, according to his
auditor judgment, a wording appropriate to the context of the audited entity (A4).
Quality control of an audit of financialstatements
10 - The auditor practice structure sets up a quality control system for audit engagements according to
criteria defined by it (Ref A5).
Documentation
11 - The auditor takes the provisions of this standard into account and adapts the documentation of his
file to the size and characteristics of the entity audited and the complexity of the assignment (Ref A6).
Considerationof the possibility of fraud in the audit of the financial statements
12 - The auditor:
• ldentifies and assesses the risks that the financial statements contain material misstatements
arising from fraud (Ref A7),
• Gathers sufficient and appropriate evidence against the assessed risks of significant
misstatements arising from fraud through the design and implementation of appropriate
responses,
• Provides appropriate responses to identified or suspected fraud.
13 - Although fraud is a broad legal concept, for the purposes of ISAs the auditor is concerned only with
fraud resulting in a significant anomaly in the financial statements. The auditor is interested in two types
of intentional misstatements: misstatements resulting from the development of false financial
information and misstatements resulting from a misappropriation of assets. Although the auditor may
suspect or, in rare cases, the occurrence of fraud, it does not have to characterize the act to determine
whether fraud actually exists in the legal sense of the term.
Considerationof lawsand regulations inthe audit of financial statements

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14 - The auditor:
• Gathers sufficient and appropriate audit evidence regarding compliance with laws and
regulations that are recognized to have a direct impact on the determination of material figures
and the disclosures in the financial statements,
• lmplement specific audit procedures to identify cases of non-compliance with other laws and
regulations that may have a materialimpact on the financial statements, and
• Provides an appropriate response to proven or suspected cases of non-compliance with the
laws and regulations identified during the audit.
Communicating with people in charge of corporate governance
15 - The auditor:
• Clearly communicates to the persons responsible for corporate governance the responsibilities of
the auditor with respect to the audit of the financial statements and provides an overview of the
scope of the audit work and the timetable for completion,
• Obtains from the persons making up corporate governance information relevant to the audit,
• Provides timely feedback to auditors who are of relevance and interest to the persons who
constitute corporate governance in relation to their responsibility to oversee the financial
reporting process, and
• Promotes a process of effective exchange between the auditor and those who constitute
corporate governance .
16 - ln the case of auditing small entities, the auditor adapts the terms of his communication with the
personsconstituting the corporate governance (RefA8).
Communicating weaknesses in internal control to those charged with governance and
management
17 · The auditor communicates appropriately to those charged with governance and management the
weaknesses in internal control that he has identified during the course of the audit and which, in his
auditor judgment, are sufficiently important to merit their respective attention (Ref A9).
Planning an audit of financial statements
18 - The auditor plans the audit so that the engagement is carried out effectively. lt defines a general
audit strategy for the engagement specifying the scope, timing and approach of the audit as well as the
guidelines for the establishment of the work program (Ref A10).
ldentificationand evaluation of the risks of significant misstatements through
knowledge of the entity and its environment
19 - The auditor identifies and assesses the risks of material misstatement, due to fraud or resulting from
errors, in financial statements and assertions, knowledge of the entity and its environment, including
internal control, Thus providing a basis for designing and implementing responses to the assessed risks of
significant misstatements (Ref A11).
Materiality when planning and conductingan audit
20 - The auditor applies the concept of materiality when planning and carrying out the audit (Ref A12).
Auditor Response to Risk Assessed
21 - The auditor collects sufficient and appropriate audit evidence about the assessed risks of material
misstatement, defining and implementing appropriate responses to these risks. For this

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purpose, it uses substance controls, procedural tests or a combination of both (Ref A13).
Factors to consider when auditing an entity that uses a service company
22 - When the entity uses a service company, the auditor:
• Acquires knowledge of the nature and extent of the services provided by the service company and
their impact on the internal control of the user entity relevant to the audit sufficient to identify
and assess the risk of misstatements significant, and
• Designs and implements audit procedures to address these risks (Ref A14).
Evaluation of misstatements found during the audit
23 - The auditor evaluates:
• The impact on the audit of identified misstatements, and
• The impact on the financial statements of unhedged misstatements, if any.
Evidence
24 - The auditor develops and implements audit procedures to enable it to obtain sufficient and
appropriate evidence to draw reasonable conclusions on which to base its audit opinion.
Evidence - additional considerations on specific aspects
25 - The auditor collects sufficient and appropriate evidence concerning:
• The existence and status of inventories if material to the financial statements, ,
• Completeness of the enumeration of Litigation and Litigation involving the entity, and
• The presentation of the disclosures concerning, where applicable, segment information in
accordance with the applicable financial reporting framework.
External Confirmations
26 - Where the auditor decides to use external confirmation procedures, he must retain control over
requests for external confirmations, which implies, in particular:
• To determine what information should be confirmed or requested,
• Select appropriate third parties to confirm,
• To design requests for confirmation, taking care to ensure that requests are addressed to the
right recipient and specify the information necessary for the replies to be returned directly to the
recipient, and
• To send requests to third parties, and to follow up where necessary.
lnitial Audit Engagements- Opening Balances
27 - ln performing an initial audit engagement, the auditor shall obtain adequate and appropriate audit
evidence regarding the opening balances to determine:
• lf the opening balances contain misstatements that have a material impact on the financial
statements for the current period, and
• lf appropriate accounting policies reflected in the opening balances have been applied on a
permanent basis for the preparation of the financial statements for the current period, or if
the changes in methods have been appropriately accounted for, information in these
statements, in accordance with the applicable financial reporting framework.
Analytical Procedures
28- The auditor:

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• lmplements analytical procedures during the identification and evaluation phase of the risks of material
misstatements by the knowledge of the entity and its environment,
• Can gather relevant and reliable evidence from the implementation of analytical substance procedures,
and
• Designs and implements analytical procedures close to the end of the audit to help it base an overall
conclusion that the financial statements are consistent with its knowledge of the entity.
Audit sampling
29 - The auditor who usesaudit sampling must have a reasonable basis from which to drawconclusions
about the population from which the sample is extracted.
30 - Sampling allow the auditor to collect and evaluate evidence on some of the attributes of the
selecteditems in order to establish, or help to base, a conclusion regarding the population from which the
sample was extracted. Sampling can be implemented using a non- statisticalapproach or a
statisticalapproach.
Audit of accountingestimates
31 -The auditor collects sufficient and appropriateevidence to verify that:
• The accounting estimates included in the financialstatements, whether recorded or provided for
information are reasonable and, ,
• The information provided in the financial statements concerning them is relevant, in the
context of the applicable financial reporting framework.
Related parties
32 -The auditor:
• Acquires sufficient knowledge of the relationships and transactions with relatedparties,
whether or not the applicable financial reporting framework establishes rules in this area, to be
able to:
• ldentify fraud risk factors, if any, arising from relationships and transactions with related
parties that are relevant to the identification and assessment of the risks of
materialmisstatement due to fraud , And
• Conclude, on the basis of the evidence gathered, whether the financial statements, insofar
as they are affected by such relationships and transactions:
• Are presented sincerely (where the accounting re quire ment is based on the
principleof sincere presentation ), or
• Are not misleading (where the accounting reference is based on the concept of
conformity ), and
• ln addition, where the applicable financial reporting framework contains related party rules,
collects sufficient and appropriate evidence to determine whether relationships and
transactions with related parties have been properly identified and accounted for in
the financial statements and whether relevant information Have been provided in them.
Subsequent events
33 -The auditor:
• Collects sufficient and appropriate evidence to show that events that occurred between the
date of the financial statements and the date of its financial statements that required an
adjustment or disclosure in the financial statements were processed ln the financial
statements in accordance with the applicable financial reporting framework, and
• Shall deal in an appropriate manner with the events which have come to his or her
knowledge after the date of his report and which, if he had known of them before that date,
could have led him to amend his report.

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Going Concern
34 - The auditor:
• Gathers sufficient and appropriate audit evidence af the appropriateness af management's
application of the going concern assumptionin the preparation of the financial statements,
• Draws conclusions, on the basis of the evidence gathered, as to whether or not there is
significant uncertainty related to events or conditions that could east a significant doubt on the
entity's ability to continue to operate, and
• Determines the implications for its report (Ref A15).
Wrltten declarations
35 -The auditor:
• Obtains written representations from management and, where necessary, persons charged with
corporate governance , confirming that the auditor (s) believes that it has met its responsibilities
for the preparation of financial statements and To the completeness of the information provided
to it,
• Supports other audit evidence relating to the financial statements or specific statements
contained therein by means of written representations if deemed necessary by the auditoror
required by other ISAs, and
• Responds appropriately to written statements provided by management and, where appropriate,
by those charged with governance, or to situations in which management or, as the case may be,
persons (Do not) provide the statements he has requested.
Useof the work of internal auditors
36 - Where an internal audit function exists within the entity for which the auditorhas concluded
that it is likely to be usefulfor the purposes of the audit, the auditorshall:
• Determines whether and to what extent it can use specific work performed by the internal
auditors and,
• lf used, determines whether the specific work of the internal auditors is adequate for the
purposes of the audit.
Useof the work of an expert appointedby the auditor
37 - The auditor:
• Determines whether or not to use the work of an expert appointed by it, and
• Determines, if it decides to use the work of an expert whom it has designated, whether these are
adequate in the light of the needs of the audit.
Basis of opinion and audit report on financial statements
38 - The auditor:
• Prepares an opinion on the financial statements based on an assessment of the conclusions
drawn from the evidence gathered, and
• Clearly expresses this opinian in a written report which also describes the basis of it.
39 - Clearly expresses an appropriate modified opinion (with reserve, unfavorability or inability to
express anopinion) on the financial statements:
• When it concludes, on the basis of the evidence gathered, that the financial statements taken as
a whole contain material misstatements or,
• When it is unable to obtain sufficient and appropriate evidence to conclude that the financial
statements taken as a whole are free of material misstatement.

8. 15.6.2017 Slandards af reference af theOrder et Acca.ntants
40- lf the auditor considers it necessary to draw the attention of users to a point presented or
mentioned in the financial statements which, in his/her judgment, is of such importance that it is
essential for their understanding of the financial statements, lt shall include an observation
paragraph in its audit report provided that it has obtained sufficient and appropriate evidence
that the item presented or mentioned in the financial statements is free of material
misstatement. Such a paragraph should only refer to the information presented or referred to in
the financial statements.
Comparative Figures-Comparative Figures and Comparative Financial Statements
41 - The auditor determines whether the financial statements include the comparative data required
by the applicable GAAP and whether this information is properly disclosed. To that end, it shall assess
whether:
• The comparative data is consistent with the figures and other information provided for the
previous period or, if necessary, has been restated, and
• The accounting policies applied to the comparative data are similar to those applied for the
current period or, if there have been changes in accounting policies, if they have been properly
accounted for and are presented and reported appropriately.
The auditor's obligations with regard to other information in documents
containingaudited financial statements
42 - Where documents containing audited financial statements and the audit report thereon include
other information that could affect the credibility of these financial statements and the auditor's
report, the auditor shall read such other information ln order to identify material inconsistencies, if
any, with the audited financial statements (Ref A16).
Practical application and other comments
Scope of application (Part 2)
A1 Specific aspects concerning small entities included in ISAs have been developed primarily for
unlisted entities.
Objectives ofthe Engagement (Ref:Para 4)
A2 Knowledge of ISA and auditor judgement
The ISAs have been drafted to cover the audit of financial statements and certain other information of
all entities, regardless of size. The audit of small entities has many characteristics that differ, for
example, from the audit of a large publicly traded company. The auditor must have knowledge of and
comply with all ISA requirements at each audit by adapting them to the size and characteristics of the
entity using its auditorjudgment.
Requfred Diligence(Ref 6)
A3 ln addition to the required objectives and procedures (the due diligence is expressed in the ISA
standards by the verb "shall"), an ISA standard contains related guidelines in the form of application
rules and other explanatory information. lt may also include introductory explanations that provide
background information for a proper understanding of the ISA, and definitions. As a result, the full text
of an ISA is relevant to an understanding of the objectives set out in an ISA standard and the correct
application of thestandard required by the standard. Although such guidelines do not in themselves
constitute due diligence, they are relevant to the proper application of the due diligence required by
an ISA. lmplementation and other explanatory information may also provide elements that explain the
context of some issues addressed in an ISA.
Letter of Engagement (Ref.9)
A4 One of the aims of agreeing on the terms of the audit engagement is to avoid any
misunderstandings concerning the respective responsibilities of the management and the auditor. For
example, where a third party has been involved in the preparation of the financial statements, it may
be useful to remind management that the preparation of the financial statements in accordance with
the applicable financial reporting framework remains the responsibility of the third party.
Quality Control of an Audit of the Financial statements (Ref.10)

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A5 A quality control review of the assignment is required for audit engagements that meet the criteria
defined by the structure and which subject the engagements to a quality control review of the
engagement. ln the case of small entities, where the engagement is not classified as high risk by the
auditor, the quality control review of each engagement is not required. lt should be noted that the
auditor quality control standard, which addresses the obligations of the auditor practice structure for its
quality control system applicable to all its engagements, nevertheless applies, such as the cyclical
inspection covering Minus one engagement completed for each auditor engagement leader (Ref .:48 of
the NPMQ).
Documentation (Ref 11)
A6 Audit documentation on auditing small entities is generally less extensive than auditing Larger
entities. tk.Jreover, in the case of an audit where the auditor performs all the audit work himself, the
documentation will not include the points that would have to be documented for the sole purpose of
informing the members of the team assigned to the engagement or to give instructions to them, or to
indicate the review of the work by other team members (for example, there will be no trace of questions
concerning discussions with the team Or supervision). He 1 she must, however, respect the obligation to
prepare audit documentation that can be understood by an experienced auditor, insofar as the latter is
liable to be reviewed by a third party outside Regulatory or other purposes.
When preparing the audit documentation for a small entity, the auditor may also find it
more useful and efficient to combine various aspects of the audit into a single document by cross-
referencing the corresponding working papers • The points that can be grouped together within the
same document in the context of the audit of a small entity are, for example, knowledge of the entity
and its internal control, the general audit strategy And the program of work, the threshold of
significance, the assessed risks, the important points identified during the audit and the conclusions
drawn.
Consideration of the possibility of fraud in the audit of the financial statements
(Ref.12)
A7 When identifying and assessing the risk of material misstatement resulting from fraud in the financial
statements, the auditoruses the knowledge that it has of the context and the economic fabric in which
the entity operates.
The direct communication with the head of the entity, within the framework of his missoi n, can
enable him to understand the auditor behavior and ethics of the entity.
ln small entities, management's assessment can be focused on the risks of fraud committed by
employees or on the misappropriation of assets.
ln the case of a small entity, some or all of these considerations may be inapplicable or less relevant. For
example, a small entity may not have a formalized code of good conduct but instead have developed a
corporate culture that emphasizes the importance of integrity and ethical behavior through Oral
communication and the example given by management. The fact that the steering is assumed in a small
entity by one person does not mean in itself, as a rule, a failure of management to display and
communicate an appropriate attitude in terms of internal control and the development process financial
information. ln some entities, the requirement to obtain authorization management can offset controls
deficient and also reduce the risk of fraud by employees. Nevertheless, the fact that the management of
the entity or in a single hand can be a potential weakness of internal control as management has the
opportunity to ericumvent controls.
Communicationwith those charged with governance (Ref.Par.16)
A8 ln the case of audits of smaller entities, the auditorcan communicate with those charged with
governance Less structured than in the case of listed entities or larger.

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Communication of weaknesses in internal control to those charged with governance and management
(Ref.Par. 17)
A9 Small entities often have fewer employees which may limit the practical level, the possibility of
separation of duties. However, in a small entity run by its owner, the owner­ manager may be able to
exercise more effective oversight than in a larger entity. This higher level of supervision will need to be
balanced with greater opportunity for management override of controls.
Planning an Audit of Financial statements (Ref.Par.18)
A10 ln audits of small entities, the entire work can be carried out by a small team. Many of these audits
are conducted by an auditor in charge of the engagement (which may be a sole practitioner title) working
with one person (or only). With a smaller team, coordination and communication between members are
easier. For these entities, the establishment of the overall audit strategy is not a complex or time-
consuming exercise; it will vary with the size of the entity, the complexity of the audit and the size of the
team assigned to the engagement. For example, a brief memorandum prepared at the end of the
previous audit on the basis of a review of important work files and identifying issues highlighted at the
completion of the audit, updated for the current period based on discussions with the owner-manager,
can serve the strategy documentation audit for the current audit engagement if it covers the matters
noted below.
ln establishingthe overall audit strategy, the auditor must:
• identifying characteristics of the engagement that define the extent,
• ensurethe objectives of the engagement in terms of ratio to transmit to plan the timing of
the audit and the nature of the requestedcommunications,
• take into account the factors that auditorjudgment, are important to guide the work to be
performed by the team assigned to the engagement,
• take into account the results of preparatory work in planning the engagementand already
made, where appropriate, whether the experience gained on other tasks performed for the
entity by the auditor in charge of the engagementis relevant and
• ascertain the nature, timing and extent of resources necessary to perform the engagement.
When the audit is conducted entirely by the auditor in charge of the engagement management issues
and supervising team members assigned to the engagement and review of their work do not arise. ln
such situations, the auditor in charge of the engagement, who personally participated in all aspects of
the work, will be able to know all the significant matters. Forming an objective assessment of the validity
of judgments made during the audit can present practical problems when the same person conducting
the audit as a whole. When particularly complex or unusual issues are involved, and the audit is
performed by a sole practitioner title, it may be desirable to consult with other qualified experienced
auditors or auditor body to which he belongs.
A brief memorandum respondingto the lens can be used to document the audit strategy in a small
entity. Regardingthe work program standard programs or control questionnaires may be used provided
they are adapted to the circumstances of the engagement, including the results of the risk assessment
by the auditor.
ldentification and assessment of risks of materia( misstatement through understanding the entity and its
environment (Ref.Par.19)
A11Diligence Requirements
Analytical procedures
Some smaller entities may not have dividers or monthly data can be used for purposes of analytical
procedures. ln these situations, although the auditor may be able to achieve Limited analytical
procedures in order to plan the audit or obtain some information through requests for information, it can
be helpful to plan the implementation analytical procedures to identify and assess the risks of material
misstatement when a first set of preliminary financial statements is available.

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Discussions between members of the team assigned to the engagement
Number of audits are conducted entirely by the auditor in charge of the engagement (which may be a sole
practitioner). ln such situations, it is the latter, who personally planned the audit, to consider the possibility
that the financial statements are materially misstated due to fraud or error.
Measurement and analysis of the financial performance of the entity
Small entities usually have no metrics and analysis of financial performance. Requests for information from
management may reveal that the entity relies on certain key indicators for evaluating financial
performance and taking appropriate action. lf such requests indicate the absence of measurement tools or
performance analysis, it can be a higher risk of undetected misstatements and uncorrected.
General characteristics and internal control Nature
Smaller entities may use less structured means and simpler processes and procedures to achieve their
objectives.
They often few employees, which may limit the practical possibilities of segregation of duties.
However, in a small entity owned by its leader, the owner·manager may be able to exercise overall control
of the most effective activity in a larger entity. This overall control can therefore compensate for the
generally more limited possibility of segregation of duties. Conversely, the owner-manager may be more
able to override controls because of a less structured control system. This situation is taken into account by
the auditor when identifying the risks of material misstatement due to fraud.
Components af lnternal Control ·Control Environment
The control environment within small entities is likely to be different from that of the largest. For example,
those charged with governance in small entities may not indude an independent or outside member, and
the role of governance may be assumed directly by the owner-manager where there are no other holders
capital. The nature of the control environment may also influence the significance of other controls, or
their absence. For example, the active participation in the management of an owner-manager may mitigate
some of the risks resulting from a lack of segregation of duties; it can, conversely, increase other risks, such
as to override the controls.
Moreover, evidence regarding the elements of the control environment in smaller entities may not be
available in a documented form, especially when communication between management and other
employees is informal, well than effective. For example, small entities might not have a written code of
conduct but, instead, develop a culture that emphasizes the importance of integrity and ethical behavior
through oral communication and example given direction. Consequently, the attitudes, awareness and
actions of management or the owner-manager are of particular importance for understanding by the
auditor of the control environment in a small entity.
Components of lnternal Control - the risk assessment process by the entity
ln a small entity is unlikely that there is an established process for assessing risk. ln such a case, it is likely
that management will identify risks through an active personal involvement in the course of business.
However, whatever the circumstances, requests for information concerning identified risks and how they
are managed by management are also needed.
Components of lnternal Control - The information system, including related business processes, relevant to
the development of financial reporting and disclosure
lnformation systems and operational processes related to the preparation of financial reporting
in small entities are likely to be less sophisticated than in larger, but their role is just as important. The
small entities in which management has an active participation in management may not need a detailed
description of accounting procedures, sophisticated accounting systems or written policies. The knowledge
of the system and of the entity’s procedures may therefore be easier in an audit of smaller entities and be
based on requests for information on the literature review. The need to acquire this knowledge, however,
remains important. Communication may be less structured and easier in a small entity than in a larger
because of far fewer levels of responsibility and a greater visibility and availability management.
The fundamental concepts of controls in small entities are likely similar to those in larger entities, but the
formality with which they are applied may vary. Further, small entities may find that certain types of
control measures are not relevant because of controls by management. For example, the only management
approval to grant payment terms to customers or to approve significant purchases can provide strong
control over account balances and transactions, thus reducing or eliminating the need for further control
measures.
Relevant control measures for the audit of a smaller entity are likely related to the main flow of operations
such as product purchases or personnel costs.

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Components of internal control - Monitoring of controls
Management's monitoring of controls is often accomplished through the active participation of
management or the owner-manager in management. This participation will often identify gaps with
forecasts or inaccuracies in the financial data leading to corrective actions of the control in place.
Significance at the planning and implementation of an audit (Ref. Par.20)
A12 When the profit before tax is marginal steadily, as might be the case in an entity owned and run by the
same person and which the latter withdrew the bulk of the profit before tax in the fonn of remuneration, a
point reference as profit before tax and before compensation can be more relevant.
Auditor responses to the assessed risks (Ref. Par.21)
A13 ln the case of very small entities, it may be that the control measures that can be identified by the auditor
be few or the extent of documentation kept by the entity relating to their materialization or their operation is
limited. ln such situations, it may be more efficient for the auditor to implement further audit procedures
primarily focused on substantive procedures. ln rare cases, however, the lack of control or other components
of the control measures may make it impossible to obtain sufficient appropriate audit evidence.
Considerationsfor the auditof an entity using a servicecompany (Ref.Par. 22)
A14 Smaller entities may use external services to keep their accounts, ranging from the processing of certain
transactions (eg payment of social security contributions) and their bookkeeping, until the establishment of
their state financial. Using a service company for the preparation of financial statements does not relieve
management of an entity and, where applicable, those charged with governance, accountability on the
financial statements.
Continuity of operation (Ref. Par.34)
A15 The size of an entity may affect its ability to cope with adverse conditions. Small entities may be able to respond
quickly to exploit opportunities, but may lack the resources to support the business. Situations particularly affecting
small entities include the risk that banks and other lenders may cease to support the entity, as well as the loss of a
principal supplier, major customer, key employee, or the right to exercise licensed under franchise or other legal
authorization.
The obligations of the auditorin relation to other information in documents
containing audited financialstatements (Ref. Par. 42)
A16 Except as required by law or regulation, it is unlikely that small entities publish documents containing
audited financial statements. However, such a document may be, for example, when there is a legal
requirement for those charged with governance to issue a report accompanying the financial statements. A
detailed income statement or management report is an example of other information that can be included in a
document containing the audited financial statements of a small entity.
Lookup table with ISA (ISA 200-720)
Section 2910 NP Title of the corresponding ISA Number of
ISA
Scope of application Overall Objectives of the Independent Auditor
and the Conduct of an Audit in Accordance
with International Standards on Auditing
ISA 200Date of entry into force
Engagement Objectives
Definitions Includedin each ISA ISA200 to
ISA 720
Engagement letter Agreeing the Terms of Audit Engagements ISA210
Quality Control for an Audit of
Financial Statements
Quality Control for an Audit of
Financial Statements
ISA220

13. 15.6.2017
Documentation Audit Documentation ISA230
Getting consideration of the possibility of fraud
during the audit of financial statements
The Auditor's Responsibilities Relating to Fraud
in an Audit of Financial Statements ISA240
Consideration of Laws and Regulations in an
Audit of Financial Statements
Consideration of Laws and Regulations in an
Audit of Financial Statements ISA250
Communication with those charged with
governance of the company
Communication with those charged with
governance of the company
ISA260
Communication of weaknesses control internal
ole those charged with governance and
management
Communicating Deficiencies in Internal Control
to Those Charged with Governance and
Management
ISA265
Planning an Audit of Financial
Statements
Planning an Audit of Financial
Statements
ISA300
Identifying and Assessing the Risks of
Material Misstatement through
Understanding the Entity and Its
Environment
Identifying and Assessing the Risks of Material
Misstatement through Understanding the Entity
and Its Environment
ISA315
Characteristics significant era in planning and
conducting an audit
Materiality in Planning and Performing an
Audit
ISA320
Responses to the auditor risk assessed Auditor's Responses to Assessed Risks ISA330
Factors to be considered in the audit of an
entity using a service company
Audit Considerations Relating to an Entity Using
a Service Organization ISA402
Evaluation of Misstatements Identified
during the Audit
Evaluation of Misstatements Identified
during the Audit
ISA450
Audit Evidence Audit Evidence ISA500
Audit Evidence-Specific Considerations for
Selected Items
Audit Evidence-Specific Considerations for
Selected Items
ISA501
External Confirmations External Confirmations ISA505
Initial Audit Engagements-Opening Balances Initial Audit Engagements-Opening Balances ISA510
Analytical Procedures? Analytical Procedures ISA520
Audit Sampling Audit Sampling ISA530
Auditing Accounting Estimates Auditing Accounting Estimates, Including
Fair Value Accounting Estimates, and
Related Disclosures
ISA540
Related Parties Related Parties ISA550
Subsequent Events Subsequent Events ISA560
Going Concern Going Concern ISA570
Written Representations Written Representations ISA580
no correspondence
Special Considerations-Audits of Group Financial
Statements (Incl. Work of Component Auditors)
ISA 600
Using the Work of internal Auditors Using the Work of internal Auditors ISA 610
Using the work of an expert
appointed by the auditor
Using the Work of an Auditor's Expert ISA 620
Basis of opinion and audit report on financial
statements
Forming an Opinion and Reporting on
Financial Statements ISA 700
Modifications to the Opinion in the Independent
Auditor's Report ISA 705
Emphasis of Matter Paragraphs and Other
Matter Paragraphs in the Independent
Auditor's Repor
ISA 706

14. 15.6.2017
Comparative Information-Corresponding
Figures and Comparative Financial
Statements
Comparative Information-Corresponding Figures
and Comparative Financial Statements
ISA 710
The Auditor's Responsibilities Relating to
Other Information in Documents Containing
Audited Financial Statements
The Auditor's Responsibilities Relating to
Other Information in Documents Containing
Audited Financial Statements
ISA 720