Norwegian Financial Supervisory Authority finds gross breaches in Revisjon 1 AS audit engagement acceptance and deficient routines

The Norwegian Financial Supervisory Authority has published an inspection report on audit firm Revisjon 1 AS, concluding that the auditor’s acceptance assessments for new audit engagements were seriously deficient and, in one case, amounted to a gross breach of the requirements. The review also found shortcomings in documentation of acceptance work and in the firm’s routines for acceptance of engagements. The inspection examined the acceptance assessment for an audit engagement for “Entity A”, as well as acceptance documentation for three other engagements (Entities B, C and D), alongside documentation relating to customer due diligence under the Anti-Money Laundering Act and the firm’s quality and risk management. For Entity A, the auditor accepted and registered the engagement the same day as the initial approach, without obtaining relevant written information from the predecessor auditor or performing and documenting other basic acceptance work, such as gathering information about the client’s business and conducting external checks. Finanstilsynet concluded this was a gross breach of the Auditor Act requirements on acceptance assessments and good auditing practice, and noted that acceptance documentation for Entities B, C and D was also superficial, not aligned with the firm’s own routines, and did not adequately document independence assessments. Finanstilsynet has asked the firm to identify the causes of the breaches and describe corrective measures. The auditor has reported steps to strengthen acceptance procedures, including introducing a requirement to obtain written confirmation from the predecessor auditor before accepting a new engagement, and Finanstilsynet expects acceptance work to be fully documented and correctly dated in working papers.