Value of an audit to small, medium-sized businesses

provide other stakeholders with some confidence (rather than assurance) that the financial information produced by SMEs is reliable.

In the March 2010 International Auditing and Assurance Standards Board’s Staff Project Update, various general observations about the environment in which assurance and related services other than financial statement audits are undertaken are described.
“The needs of SMEs in relation to financial information and financial reporting reflect the different environmental circumstances of such entities. Relevant factors include ownership and related governance and accountability arrangements as well as sources of funding and financing.

“Related information needs of owners, creditors, and other stakeholders with an interest in an entity’s operations, including national authorities that have the ability to impose taxes or other types of levies and the capacity such entities have to effectively address the complexities of financial reporting are included. Often, SMEs engage professional accountants to assist them in fulfilling their financial reporting obligations”.

Assurance and other related services that are being considered by the IAASB are reviews and compilations. However, the March 2010 IAASB Staff Project states: “While the objective of the IAASB’s project at this stage is to revise the existing review and compilation standards, the IAASB understands that these services should be considered in terms of how they can be used in combination with other services to meet user needs.

“At present, reviews and compilations are able to be combined with agreed-upon procedures, when appropriate, to address an entity’s unique needs in the area of financial reporting. The IAASB intends that its revised standards should continue to allow flexible use of reviews and compilations in combination with other services”.

About Baker Tilly International
Baker Tilly International is the world’s eighth largest accountancy and business advisory network by combined fee income of its independent members. It is represented by 147 independent firms in 114 countries with combined fee income of US$3,13 billion and 26 000 people worldwide.

Its members are high quality, independent accountancy and business advisory firms, all of whom are committed to providing the best possible service to their clients, both in their own marketplace and across the world.
For more information, visit www.bakertillyinternational.com