The International Auditing and Assurance Standards Board (IAASB) today published the International Standard on Auditing for Audits of Financial Statements of Less Complex Entities, known as the ISA for LCE. The ISA for LCE is a standalone global auditing standard designed specifically for smaller and less complex businesses and organizations. Built on the foundation of the International Standards on Auditing (ISAs), audits performed using this standard provide the same level of assurance for eligible audits: reasonable assurance. The standard is effective for audits beginning on or after December 15, 2025 for jurisdictions that adopt or permit its use.

“The ISA for LCE underscores the IAASB’s commitment to ensuring the credibility and reliability of financial reporting for entities of all sizes. By leveraging the International Standards on Auditing as our starting point, we are cultivating an environment where audits are performed in a globally consistent and high-quality way for the smallest entities. The IAASB’s actions seek to inspire greater confidence and contribute to the overall stability and trustworthiness of information in the external reporting ecosystem. We have also heard that this standard should provide an impetus for the evolution of auditing in developing economies,” said IAASB Chair Tom Seidenstein. “We now turn to each jurisdiction and their oversight authorities and regulators to decide whether to adopt the standard. We encourage practitioners and others to reach out to the authorities in their jurisdictions to advocate for the ISA for LCE’s adoption.”

Released alongside the ISA for LCE are a Basis for Conclusions, which details feedback from the public consultation period, a high-level fact sheet, and a frequently asked questions document. Additional materials to help jurisdictions navigate adoption will be issued in 2024, including supplementary guidance, a fact sheet on adoption, and a first-time implementation guide. All materials can be accessed on the IAASB website: iaasb.org/ISAforLCE

About the IAASB
The International Auditing and Assurance Standards Board develops auditing, assurance, related services, and quality management standards and guidance in the public interest that support consistent performance of quality engagements. Along with the International Ethics Standards Board for Accountants, the IAASB is part of the International Foundation for Ethics and Audit. The Public Interest Oversight Board oversees IAASB and IESBA activities and the public interest responsiveness of the standards. For copyright, trademark, and permissions information, please visit Permissions

The ISA for LCE is a standalone global auditing standard designed specifically for smaller and less complex businesses and organizations. Built on the foundation of the International Standards on Auditing, audits performed using this standard provide the same level of assurance for eligible audits: reasonable assurance.

The standard is effective for audits beginning on or after December 15, 2025 for jurisdictions that adopt or permit its use.

As the global voice of the accountancy profession, IFAC has long supported the establishment of the International Sustainability Standards Board (ISSB) to develop a comprehensive global baseline of sustainability disclosures—now endorsed by IOSCO and ready to be adopted and implemented around the world.  To demonstrate our commitment to seeing this initiative succeed, IFAC signed on as an inaugural member of The ISSB Partnership Framework for Capacity Building, launched one year ago at COP27 in Sharm El-Sheikh, to support preparers, investors and other capital market stakeholders to use IFRS Sustainability Disclosure Standards.

One year later, the IFRS Foundation’s new Knowledge Hub is being launched to help fill the “knowledge gaps” which must be addressed in the short-, medium- and long-term to achieve the goal of a harmonized system for high-quality sustainability-related financial information, a global baseline established via the ISSB Standards.

Education materials, like the forthcoming IFRS Foundation e-learning curriculum and the content IFAC and others contribute to the IFRS Foundations new Knowledge Hub, will assist professional accountants, and others, in applying IFRS S1 and IFRS S2 and can provide a starting point for IFAC Member Bodies who plan to promote sustainability competency and learning amongst their professional membership.

IFAC’s policy, advocacy, and thought leadership work—including benchmarking of sustainability-related financial disclosures and assurance practice, advocacy for adoption of IFRS S1 and IFRS S2 using a Building Blocks approach, and guidance for professional accountants working inside of companies—all contribute towards building capacity within the accountancy profession and we urge our Member Bodies around the world to join in this effort. 

IFAC CEO Kevin Dancey said, “Professional accounting organizations (PAOs) and the largest global accountancy networks (i.e., the Forum of Firms) must be leaders in capacity building and education.  Professional accountants—who are subject to the IESBA Code of Ethics—have a critical role to play in transforming high-quality standards into high-quality information, and then providing assurance on that information in accordance with standards developed by the International Auditing and Assurance Standards Board.”

The role of the accountancy profession will come into sharper focus as sustainability-related reporting and its assurance transitions from voluntary practice to mandatory requirements around the world.  IFAC’s new publication on integrated internal control, Building Trust in Sustainability Reporting: The Urgent Need for Integrated Internal Control, demonstrates the critical role and expertise of professional accountants related to data, systems, processes, and internal controls—all necessary for companies to deliver high-quality, decision-useful information for investors, capital markets, and all stakeholders.

IFAC Contributions to ISSB Knowledge Hub:

• Building Trust in Sustainability Reporting – The Urgent Need for Integrated Internal Control
• Greenhouse Gas Reporting Building Blocks for Accountants
• A Building Blocks Approach for Reporting Sustainability-Related Information
• How Global Standards Become Local: Using the Sustainability Building Blocks
• The State of Play:  2019 – 2021 Trends & Analysis
• The State of Play, Beyond the G20
• Getting to Net Zero: A Global Review of Corporate Disclosures
• The Role of the CFO and Finance Function in the Climate Transition

About IFAC

IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 180 members and associates in more than 135 jurisdictions, representing millions of professional accountants in public practice, education, government service, industry, and commerce.

Through an integrated internal control environment based on an integrated mindset, companies will achieve greater connectivity of functions, processes and systems leading to enhanced data quality to improve decision making on strategy, risk, opportunity management and governance-related matters. This is the foundation for transitioning to a more sustainable business model and enhancing investor and stakeholder confidence in sustainability performance.

This research from ACCA, IFAC and PwC underlines organisations’ urgent need for strategies and transition plans to combat climate change, remain successful and meet stakeholder expectations

Based on a survey of 1,000 senior finance professionals around the world, this research reveals that almost half of respondents (46%) have yet to produce a plan for reducing their carbon emissions.

As world leaders gather for COP 28, ACCA (the Association of Chartered Accountants), IFAC (the International Federation of Accountants) and professional services firm PwC released a new report: The role of the CFO and finance function in the climate transition: driving value and sustainability, based on a survey of 1,000 senior finance professionals around the world.

The research reveals that almost half of respondents (46%) have yet to produce a plan for reducing their carbon emissions. Alarmingly, 70% of those respondents without an emissions plan say they currently have no intention of developing one. This is a significant problem given that successful transition planning to a low carbon business starts with the development of a robust emissions reduction plan.

The report also says that that involving CFOs and finance teams in the emissions reduction planning is likely to accelerate progress. They should embrace this because, although they may not always be the ‘owner’ of the sustainability agenda, CFOs can embed climate transition priorities into business planning and resource allocation, and enable high-quality sustainability reporting internally and externally.

The research recommends that finance teams need to develop the right skills and expertise to continue increasing their contribution to a climate transition. For CFOs, balancing the short-term operational priorities of the finance team whilst simultaneously upskilling and equipping the team to support the wider organization’s net zero initiatives longer term must now be a critical imperative.

Helen Brand, chief executive of ACCA said: ‘The accountancy and finance profession can enable organizations to achieve their net-zero ambitions in a fair and inclusive way. They can also support the just transition to a low-carbon economy by helping their organizations to seize the associated business benefits. As COP28 begins, this report is a call to action for professional accountants everywhere to play their part in helping their organizations to reduce their carbon emissions and support the climate transition.’

Asmaa Resmouki, President of IFAC, commented: "The expertise of accounting and finance professionals in combatting climate change is absolutely essential if we are to make the progress the planet so desperately needs."

"This report corroborates IFAC’s prior research into corporate disclosures on emissions targets and transition plans for achieving them. Companies need to improve the decision-usefulness of their transition plans and how they communicate them to stakeholders."

David Russell, Finance Transformation Leader, PwC, added: "This report highlights a critical gap where some businesses lack a clear roadmap to meet their emissions targets and the ability to measure and report progress against their goals. It’s imperative for finance leaders not just to drive the change towards sustainability but also to build trust in the reporting of progress towards sustainability goals. CFOs can play a pivotal role in integrating environmental considerations into strategy, planning and reporting – ensuring that businesses not only contribute positively to the climate agenda but also adapt and thrive in a rapidly changing economic landscape."

About IFAC

IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 180 members and associates in more than 135 jurisdictions, representing millions of professional accountants in public practice, education, government service, industry, and commerce.