Article: Audit of less-complex entities: challenges and opportunities in increasing good corporate governance in Indonesian SMEs Journal: Afro-Asian Journal of Finance and Accounting (AAJFA) 2026 Vol.16 No.2 pp.156 - 179 Abstract: This study aims to explore the readiness of public accountants' resources, especially in terms of micro, small and medium enterprises (SMEs) audits, on the adoption of international standard on auditing for less complex entities (ISA for LCEs). This research was conducted at public accounting firms (PAFs) throughout Indonesia, which consisted of 85 auditors registered as members of the public accounting firms. These findings provide a new research direction regarding the opportunities and challenges in preparing for the adoption of ISAs for LCE through empirical evidence and documentary studies. The regression results show that the availability of intellectual capital resources, financial resources, and organisational resources simultaneously affect the governance of SMEs in Indonesia and the implementation of the ISA for LCEs. This is important because the complexity of the industry can affect the process of adopting new audit standards, both theoretically and empirically. This paper is, to the best of the authors' knowledge, the first to examine the readiness of auditors in developing countries in implementing new auditing standards. Inderscience Publishers - linking academia, business and industry through research

Title: Audit of less-complex entities: challenges and opportunities in increasing good corporate governance in Indonesian SMEs

Authors: Jaswadi Jaswadi; Hari Purnomo; Sumiadji Sumiadji; Anin Dyah Luthfiani

Addresses: School of Accounting, State Polytechnic of Malang, Malang, Indonesia ' School of Accounting, State Polytechnic of Malang, Malang, Indonesia ' School of Accounting, State Polytechnic of Malang, Malang, Indonesia ' School of Accounting, State University of Malang, Malang, Indonesia

Abstract: This study aims to explore the readiness of public accountants' resources, especially in terms of micro, small and medium enterprises (SMEs) audits, on the adoption of international standard on auditing for less complex entities (ISA for LCEs). This research was conducted at public accounting firms (PAFs) throughout Indonesia, which consisted of 85 auditors registered as members of the public accounting firms. These findings provide a new research direction regarding the opportunities and challenges in preparing for the adoption of ISAs for LCE through empirical evidence and documentary studies. The regression results show that the availability of intellectual capital resources, financial resources, and organisational resources simultaneously affect the governance of SMEs in Indonesia and the implementation of the ISA for LCEs. This is important because the complexity of the industry can affect the process of adopting new audit standards, both theoretically and empirically. This paper is, to the best of the authors' knowledge, the first to examine the readiness of auditors in developing countries in implementing new auditing standards.

Keywords: corporate governance; international standard on auditing for less complex entities; ISA-LCE; small and medium enterprises; SME.

DOI: 10.1504/AAJFA.2026.152389

Afro-Asian Journal of Finance and Accounting, 2026 Vol.16 No.2, pp.156 - 179

Received: 12 Jul 2023
Accepted: 04 Mar 2024
Published online: 18 Mar 2026 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article

Title: Audit of less-complex entities: challenges and opportunities in increasing good corporate governance in Indonesian SMEs

Keep up-to-date