Financial Supervisory Authority of Norway publishes inspection report finding Statsautorisert revisor Olafsen AS breached audit engagement acceptance and continuance rules

The Financial Supervisory Authority of Norway has published an inspection report on Statsautorisert revisor Olafsen AS assessing compliance with the Norwegian Auditor Act and good auditing practice in accepting and continuing audit engagements. The review concluded that the firm’s acceptance and continuance assessments for the engagements tested were not performed in line with the Auditor Act and ISA 220, and that the firm’s quality management policies and procedures in this area were insufficient. The inspection covered three audit engagements and the firm’s internal guidance. For two 2023 engagements, Finanstilsynet found the firm lacked a sufficiently documented basis to accept the audits, including where clients had persistent negative equity and significant going concern and documentation issues (one client had negative equity of NOK 3.6 million at 31 December 2022, later received an adverse audit opinion for 2023, and was declared bankrupt on 18 December 2024). For a third engagement, Finanstilsynet concluded that the firm should have withdrawn much earlier and treated continuation for 2021–2023 as gross breaches of the duty to withdraw under section 9-6(1) of the Auditor Act. The report also identified weaknesses in the firm’s quality management arrangements for acceptance and continuance assessments under section 7-1(2) of the Auditor Act and ISQM 1. The firm acknowledged most of the findings and reported that it has completed a root-cause analysis, prepared an action plan, and updated its quality management documentation. Finanstilsynet indicated it may follow up implementation of the action plan at a later stage.