Document ID: chunk:federal_register_of_legislation:F2022C01186:reg:14:p25
Version: federal_register_of_legislation:F2022C01186
Segment Type: reg
Provision Reference: reg 14 (pt 25/30)
Character Range: 82874–86159

A67.         An Auditing Standard may include, in a separate section under the heading "Definitions," a description of the meanings attributed to certain terms for purposes of the Australian Auditing Standards.  These are provided to assist in the consistent application and interpretation of the Australian Auditing Standards, and are not intended to override definitions that may be established for other purposes, whether in law, regulation or otherwise.  Unless otherwise indicated, those terms will carry the same meanings throughout the Australian Auditing Standards.  The AUASB Glossary[* ]contains a complete listing of terms defined in the Australian Auditing Standards.  It also includes descriptions of other terms found in Australian Auditing Standards to assist in common and consistent interpretation and translation.

A68.         When appropriate, additional considerations specific to audits of smaller entities and public sector entities are included within the application and other explanatory material of an Auditing Standard.  These additional considerations assist in the application of the requirements of the Auditing Standard in the audit of such entities.  They do not, however, limit or reduce the responsibility of the auditor to apply and comply with the requirements of the Australian Auditing Standards.

Scalability Considerations

A69.         Scalability considerations have been included in some Auditing Standards (e.g., ASA 315), illustrating the application of the requirements to all entities regardless of whether their nature and circumstances are less complex or more complex. Less complex entities are entities for which the characteristics in paragraph A71 may apply.

A70.         The "considerations specific to smaller entities" included in some Australian Auditing Standards have been developed primarily with unlisted entities in mind.  Some of the considerations, however, may be helpful in audits of smaller listed entities.

A71.         For purposes of specifying additional considerations to audits of smaller entities, a "smaller entity" refers to an entity which typically possesses qualitative characteristics such as:

(a)                Concentration of ownership and management in a small number of individuals (often a single individual – either a natural person or another enterprise that owns the entity provided the owner exhibits the relevant qualitative characteristics); and

(b)                One or more of the following:

(i)                 Straightforward or uncomplicated transactions;

(ii)               Simple record‑keeping;

(iii)             Few lines of business and few products within business lines;

(iv)             Simpler systems of internal controls;

(v)                Few levels of management with responsibility for a broad range of controls; or

(vi)             Few personnel, many having a wide range of duties.

    These qualitative characteristics are not exhaustive, they are not exclusive to smaller entities, and smaller entities do not necessarily display all of these characteristics.

A72.         The Australian Auditing Standards refer to the proprietor of a smaller entity who is involved in running the entity on a day‑to‑day basis as the "owner‑manager."

Aus A72.1 When the