The Financial Supervisory Authority of Norway published findings from its inspection of Ernst & Young AS, limited to the 2025 audit of one public-interest entity. It concluded that the auditor breached audit law by failing to obtain sufficient appropriate evidence for the valuation of goodwill and by applying insufficient professional skepticism to this key audit matter. The auditor did not adequately challenge management's impairment assumptions despite declining revenue, negative results, high estimation uncertainty and a market value significantly below book equity. The authority also found deficiencies in the group audit, including misleading instructions to component auditors, insufficient review of their work and failure to communicate material going-concern uncertainty. Documentation of general IT controls was also inadequate and did not clearly connect identified access-control weaknesses with the auditor's assessments and conclusions.
Norwegian Finanstilsynet2026-08-05
Financial Supervisory Authority of Norway finds audit law breaches in Ernst & Young's 2025 public-interest entity audit
The Financial Supervisory Authority of Norway found audit law breaches in Ernst & Young's 2025 audit of a public-interest entity. The auditor obtained insufficient evidence and showed inadequate professional skepticism over goodwill valuation, while deficiencies also affected the group audit and documentation of general IT controls.