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	ISSUE 4 \| APRIL 2025


	At-A-Glance With the release in recent months of American and international updates of financial reporting and auditing standards for smaller or less complicated entities, attention has been drawn to the importance of practical and pertinent guidance for this large and growing sector of the world economy. This issue of the Audit & Accounting Alert highlights the developments that have been made. Also, our Worldwide Update covers news from organizations across the globe.


	Gerald Herter - Editor


	Financial Reporting and Audits of Less Complex Entities Practical guidance promotes consistency


	In December 2023, the IAASB (International Auditing and Assurance Standards Board) issued The International Standard on Auditing for Audits of Financial Statements of Less Complex Entities (ISA for LCE). That was followed in September 2024 by an Adoption Guide and in March 2025 by a First-Time Implementation Guide. The challenge of developing accounting standards that were practical for smaller entities was addressed by the International Accounting Standards Board (IASB) in 2009 with the release of International Financial Reporting Standard for Small and Medium-sized Entities, IFRS for SMEs. The third edition of this pronouncement, totaling 246 pages, was issued in February 2025. The document is a comprehensive treatment of the issues geared toward this sector. The American Institute of Certified Professional Accountants (AICPA) followed with the 188-page Financial Reporting Framework for Small- and Medium-Sized Entities (FRF for SMEs) in June 2013. A Decision Tool for Adopting an Accounting Framework was published in November 2017 to assist with whether FRF for SMEs was appropriate for use. Then in March 2018, Financial Reporting Framework for Small- and Medium-Sized Entities - Comparisons of the FRF for SMEs Reporting Framework to Other Bases of Accounting (Comparison Guide), set out significant differences with three other bases of accounting. Along with tax basis and US GAAP, the other basis of accounting compared was the IFRS for SMEs. The IAASB indicated in the First-Time Implementation Guide that the objective was “to help understand and apply” the new standard. ISA for LCE is a separate standalone standard, covering 158 pages, that is designed to provide reasonable assurance that financial statements are fairly presented. The goal is to “set high quality standards that are understandable, clear and capable of consistent application. thereby serving to enhance the quality and uniformity of practice worldwide.” The AICPA Comparison Guide notes that both FRS for SMEs and IFRS for SMEs “are intended to be simplified, relevant, and cost-effective financial reporting frameworks for SMEs. In addition, both contain targeted financial statement disclosures and contain less prescriptive guidance.” Nevertheless, IFRS for SMEs is based on GAAP, while FRS for SMEs uses a special purpose framework and has different criteria defining users. The Guide includes a table describing about two dozen areas where the two frameworks differ. For example, FRS for SMEs does not require comparative financials but allows the LIFO inventory basis, while IFRS for SMEs requires comparative financials but does not permit LIFO. The effective date of ISA for LCE is for audits of years beginning after December 15, 2025, while IFRS for SMEs goes into effect for years beginning on January 1, 2027, or later. Since the AICPA guidance is optional, there is no effective date. Further details can be found at Financial Reporting Framework for Small and Medium-Sized Entities and IFRS for SMEs Accounting Standard Update.


	Worldwide Update Periodic roundup of recent and upcoming actions and activities by auditing and accounting organizations throughout the world.


	International IASB – International Accounting Standards Board (www.ifrs.org) No new developments. IFAC – International Federation of Accountants (www.ifac.org) No new developments. IFR4NPO - International Financial Reporting for Non-Profit Organisations (www.ifr4npo.org) No new developments. IOSCO – International Organization of Securities Commissions (www.iosco.org) Artificial Intelligence in Capital Markets: Use Cases, Risks, and Challenges, consultation report published March 5, 2025, “addresses the rise of Artificial Intelligence (AI) use in capital markets and its impact on investors globally.” ACCA – Association of Chartered Certified Accountants (www.accaglobal.com) Gender responsive budgeting: unlocking the potential, report published March 7, 2025, identifies the crucial role professional accountants play to promote gender equality through a variety of approaches.


	Africa, Europe, India and the Middle East (AEIME) FRC – Financial Reporting Council of the UK (www.frc.org.uk) Introduction to auditing standards, summary document published March 19, 2025, “setting out the role International Standards on Auditing (ISAs) play in delivering transparent and accountable capital markets, and setting out the process for the development of standards in both the UK and international context.” ICAEW - Institute of Chartered Accountants in England and Wales (https://www.icaew.com/) No new developments. EC – European Commission (https://ec.europa.eu/) No new developments. EFRAG – European Financial Reporting Advisory Group (www.efrag.org) No new developments.


	Americas, Asia, Australia and New Zealand (AAANZ) AICPA & CIMA – American Institute of Certified Public Accountants (www.aicpa.org) Why nature matters to accountants: A guide to building resilience and value through nature-positive action, issued March 24, 2025, “to help accountants integrate nature-related issues into their work.” FASB – Financial Accounting Standards Board (www.aicpa.org) Presentation and Disclosure of Retainage for Construction Contractors, Staff Educational Paper published April 1, 2025, “to (a) clarify the presentation and disclosure requirements in current generally accepted accounting principles (GAAP) about retainage for construction contractors and (b) provide example voluntary disclosures of retainage that would currently be permissible under GAAP and would provide users with more detailed information about contract asset and contract liability balances.” GASB – Governmental Accounting Standards Board (www.gasb.org) Financial Reporting Framework Requirements for State and Local Governments: Evaluating GAAP Choice, staff study published March 24, 2025, to “identify financial reporting requirements for states, counties, municipalities, and special districts…and find that larger governments, those governments with debt including the issuance of public debt subject to filing with the Municipal Securities Rulemaking Board and subject to a Single Audit as a result of federal funding, are more likely to utilize GAAP. Furthermore, governments in states with a well-developed alternative to GAAP are less likely to utilize GAAP. COSO - The Committee of Sponsoring Organizations of the Treadway Commission (www.coso.org) No new developments. PCAOB – Public Company Accounting Oversight Board (www.pcaob.org) Audit Focus: Form AP, staff publication released March 13, 2025, “highlights key reminders for auditors from the PCAOB rules, standards, and staff guidance related to Form AP; provides the staff’s perspectives on common deficiencies in auditors’ work; and shares good practices that the staff has observed.” SASB – Sustainability Accounting Standards Board (www.sasb.org) No new developments SEC – Securities and Exchange Commission (www.sec.gov) Statement on Stablecoins, issued April 4, 2025, “addresses stablecoins that are designed to maintain a stable value relative to the United States Dollar, or “USD,” on a one-for-one basis, can be redeemed for USD on a one-for-one basis (i.e., one stablecoin to one USD), and are backed by assets held in a reserve that are considered low-risk and readily liquid with a USD-value that meets or exceeds the redemption value of the stablecoins in circulation.”


	Additional A&A News Continuous auditing: A new era or a challenge to tradition? AI in accounting: Weighing the pros and cons Amendment clarifies CPAs’ financial statement preparation engagements Why Reporting Accounting Fraud Will Lead to Future SEC Whistleblower Awards Is gen AI a SOX gamechanger? How suppliers should be supporting their customers’ carbon accounting


	Audit & Accounting Alert is a publication of Integra International intended to highlight emerging issues in the profession. The goal is to give Integra members an awareness of developments impacting the practice of Audit & Accounting enabling them to stay on the forefront of industry trends.This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice. Editor Gerald E. Herter Email: [email protected] www.Integra-International.net © 2021 Integra International. All Rights Reserved. If you wish to stop receiving email from us, you can simply remove yourself by visiting @@unsubscribe_url@@.