ICAI Issues Exposure Draft of Standard on Auditing for Audits of Financial Statements of Less Complex Entities (LCEs)

The Institute of Chartered Accountants of India (ICAI) has recently released its exposure draft of a new Standard on Auditing (SA) for Audits of Financial Statements of Less Complex Entities (LCEs). This draft has been issued by the Auditing and Assurance Standards Board, ICAI, New Delhi.

The exposure draft provides an auditing framework for audits for less complex entities. The proposed standard aims to help the auditors get the reasonable assurance that the financial statements of the less complex entities are free from material misstatements caused by fraud or error.

The SA for LCE requires the auditors to exercise professional judgment and maintain professional skepticism during the audit. It should be noted that the use of SA for LCE is optional. So, even if an entity qualifies as an LCE, the auditors may choose to follow the full set of existing Standards on Auditing instead of SA for LCE. In such a case, the audit must be planned, performed, and reported as per the applicable Standards on Auditing, and the auditor must not represent compliance with the SA for LCE in the auditor’s report.

The institute has asked the members to submit their opinions and comments on this exposure draft by March 20, 2026. ICAI has stated that the feedback will be most useful if it clearly mentions the specific relevant paragraph, provides reasons for the comment, and gives a suggestion for alternative wording.

The comments can be submitted either by email ([email protected]) or by post to the following address:

Secretary, Auditing and Assurance Standards Board, ICAI Bhawan, A-29, Sector 62, Noida – 201309.

Refer to the Official Draft for More Information.