The document discusses proportionately applying International Standards on Auditing (ISAs) to micro-entity audits. It notes that while an audit is an audit, a proportionate approach is possible. Only relevant ISA requirements and relevant ISQC1 requirements must be complied with. For example, in a typical micro-entity audit there are only 102 relevant ISA requirements out of 572 total. It provides examples of how ISA 210 and ISQC1 can be applied proportionately. The document advises auditors to read the standards fully to understand what can be left out and offers tips like automating practices and specializing to efficiently conduct micro-entity audits.

1. The ISAs and micro-entity
audits
Proportional application for effective and
efficient audits
Phil Cowperthwaite
Singapore March 19, 2012 Page 1 | Confidential and Proprietary Information

2. Assurance and related services for micro-entities
Audit? – ISAs and ISQC1
Review? – ISRE 2400 and ISQC 1
Compilation? – ISRS 4410 and ISQC1
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3. The ISAs and micro-entity audits
An audit is an audit is a fundamental principle
of IFAC
Is a proportionate approach ever possible?
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4. The ISAs and micro-entity audits
You only need to comply with:
A) Relevant ISAs [200.18]
B) Relevant Requirements [200.22]
But you do need to comply with all of these in every audit
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5. The ISAs and micro-entity audits
Total number of ISA requirements (2010) 572
Not usually relevant in a micro-entity audit (470)
Relevant in every micro-entity audit 102
e.g. #1 ISA 210, Terms of Engagement
Total number of ISA requirements (2010) 16
Not usually relevant in a micro-entity audit (13)
Relevant in every micro-entity audit 3
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6. The ISAs and micro-entity audits
e.g. #2 ISQC1 – Is it relevant?
It requires
o Ethical behaviour
o Know your client
o Competent audit team members
o Have time to do the work properly
o Adequate and timely documentation
o Self evaluation annually
Low risk micro-entity engagements need no EQCR
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7. The ISAs and micro-entity audits
How to #1:
Read and understand the standards.
You cannot know what to leave out if you do not know what
is in there in the first place
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8. The ISAs and micro-entity audits
How to #2:
o Automate your practice
o Staff appropriately
o Do the work on site
o Specialize if you can
o Communicate/communicate/communicate
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9. The ISAs and micro-entity audits
The career of a professional accountant in public practice is
and always has been one of life long learning.
Thank you for your attention.
Wishing you happy and profitable auditing

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10. www.ifac.org