Auditors’ Perceptions and Implementation of ISA for LCE : An Empirical Study of Knowledge, Expectations, and Implementation in Sweden

Sammanfattning

The international standard on auditing for less complex entities (ISA for LCE) was introduced to provide a more proportionate and scalable auditing framework for engagements involving less complex entities. As the standard is new, only a little is known about how auditors perceive it or how audit firms approach its implementation. This study examines authorized auditors’ perceptions of ISA for LCE and explores the factors influencing early implementation decisions within the Swedish audit market. Three research questions guide the analysis: (1) How do auditors perceive ISA for LCE? (2) What is the current implementation status among Swedish audit firms? and (3) Which factors influence the likelihood of implementation? The study employs a quantitative research design based on a survey distributed to authorized auditors in Sweden. A total of N = 72 responses were collected, providing insights into auditors’ familiarity with the standard, their perceptions of the benefits and challenges of ISA for LCE, and firms’ implementation status. Descriptive statistics and regression analyses were used to examine the relationships between knowledge, demographic characteristics, organisational context, and perceptions of ISA for LCE. The findings show that auditors are generally well informed about ISA for LCE and hold moderately positive perceptions of the standard. Respondents particularly emphasised benefits related to proportionality, documentation simplification, and scalability. However, perceptions were more cautious regarding potential improvements in audit quality or reductions in audit effort, suggesting that auditors view ISA for LCE primarily as a structural simplification rather than a fundamentally different audit approach. Knowledge emerged as the strongest and most consistent predictor of positive perceptions, whereas demographic factors such as experience, gender, and role showed limited explanatory value. Regarding implementation, the findings suggest that ISA for LCE remains in an early adoption phase in Sweden, with most respondents reporting that implementation is still under consideration. In addition, firm type did not significantly predict the likelihood of implementation, suggesting that implementation decisions are driven more by organisational readiness, methodological considerations, and uncertainty than by client portfolio characteristics. Overall, the study contributes empirical evidence on how auditors perceive ISA for LCE and how audit firms navigate its early implementation. The findings highlight the central role of knowledge and organisational engagement in shaping acceptance and implementation, offering insights for regulators, standard setters, and audit firms as the standard continues to gain traction.