The Association of Chartered Certified Accountants (ACCA) has called on the Financial Reporting Council (FRC) to ensure that audit requirements for SMEs in the UK remain proportionate and aligned with international standards.
The call comes as a response to the FRC’s consultation on the SME market study, with ACCA emphasising the need for complexity-based regulations rather than size-based ones.
During a roundtable discussion with FRC members, auditors, and users of audited accounts, participants shared their insights and addressed the challenges of auditing SMEs.
ACCA Policy and Insights director and FRC’s Audit Quality Review team former head Mike Suffield said: “ACCA is strong proponent of globally consistent standards with regard to both corporate reporting and audit and assurance. We believe that it would be valuable and in the public interest for the FRC, as part of its focus on SMEs and audit, to set out clearly the basis for its decision not to adopt the IAASB’s International Standard on Auditing for Audits of Financial Statements of Less Complex Entities (ISA for LCE).
“The FRC should set out its proposed alternative arrangements and allow stakeholders to provide their feedback once it has developed firm proposals.”
ACCA also outlined several recommendations for the FRC to enhance SME audits.
It suggested exploring ways to bridge the expectation gap in the UK audit market, so that the public, investors, and SMEs have a clearer understanding of the auditor’s role.
Additionally, ACCA recommends that the FRC and professional bodies should better communicate the advantages of audits, highlighting the importance of investing time and resources in them.
The ACCA believes that the FRC should reassess the proportionality of the UK International Standards on Auditing (ISAs) and consider the scalability of these standards for SME audits.
In addition, they propose that the FRC should conduct focused research on the application of the ethical standard to SME activities and their audit and assurance arrangements, which could lead to the development of additional guidance for the SME sector.
Earlier in April 2025, ACCA partnered with the Astana International Financial Centre Green Finance Centre to host a seminar in Astana, Kazakhstan.
The event aimed to enhance understanding of sustainability disclosures among regulators and business leaders in Central Asia.
“ACCA urges FRC to ensure audit standards for UK SMEs ” was originally created and published by The Accountant, a GlobalData owned brand.
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