Audit of Less-Complex Entities: Challenges and Opportunities in Increasing Good Corporate Governance in Indonesian MSMEs Jaswadi (a*), Hari Purnomo (b), Sumiadji (b)
Accounting Department, State Polytechnic of Malang, Malang, Indonesia
*jaswadi[at]polinema.ac.id
Abstract
The existence of a new International Auditing Standard for less complex entities issued by the International Auditing and Assurance Standards Board (IAASB) provides opportunities and challenges for public accountants in the adoption process in Indonesia. The audit standard for Less Complex Entities (LCE) such as MSMEs is a form of IAASB^s response to the problem of the complexity of audit procedures for entities that are not too large, such as corporations. This study uses quantitative methods by using surveys to collect data from Public Accounting Firms (PAFs). The sample of this research is 465 PAFs throughout Indonesia which are registered with the Ministry of Finance and are still active. The results of this study indicate that overall, the implementation of the International Standards on Auditing for LCE, intellectual resources, financial resources, and organizational resources have an effect on MSME governance. This research can contribute academically as a new literature on the application of auditing standards for MSMEs. In addition, this research is also expected to contribute ideas for the auditors and management of MSME entities in understanding the impact of implementing new audit standards.
Keywords: audit- public accountant- less-complex entities- corporate governance- MSMEs
