The Norwegian Financial Supervisory Authority has published an inspection report on BDO AS covering firm governance, audit execution and compliance with anti-money laundering rules. It identifies recurring weaknesses in high inherent risk areas, particularly engagement acceptance and continuance work and the audit of deferred tax assets, and concludes that BDO has not ensured its quality management system operated effectively, including failing to update the risk assessment and audit plan for a public interest entity. The review formed part of the supervisor’s quality control of audit firms that audit public interest entities and included selected work on one public interest entity audit and 45 other engagements, as well as assessment of independence, resourcing, audit fees, cyclical engagement quality reviews, sustainability assurance routines and anti-money laundering obligations. In testing 13 acceptance and continuance assessments selected using publicly available information, the Authority found partly material deficiencies in 10 cases, including inadequate documentation and conditions before accepting or continuing engagements, shortcomings in written communication to boards about legal breaches and their audit implications, and failures to assess withdrawal where issues persisted over multiple years. The report also records serious findings on audit execution, including insufficient audit evidence and professional scepticism supporting recognition of deferred tax assets in four of five tested engagements, and shortcomings in obtaining evidence over inventory existence and condition across five of 16 tested engagements, including not attending physical counts or documenting why physical attendance was not practicable when using digital counts. BDO AS provided comments on the Authority’s preliminary report and set out measures it has implemented to prevent the identified issues from recurring.
Norwegian Finanstilsynet 2025-12-15
Norwegian Financial Supervisory Authority finds pervasive high-risk engagement and deferred tax audit weaknesses at BDO AS
The Norwegian Financial Supervisory Authority published an inspection report on BDO AS, highlighting recurring weaknesses in high-risk areas such as engagement acceptance and audit of deferred tax assets. The report found material deficiencies in 10 out of 13 acceptance assessments, including inadequate documentation and communication. BDO AS responded with measures to address these issues.