The Financial Supervisory Authority of Norway has issued new guidance, replacing Circular 6/2021, on how it interprets and applies the rules on auditors' acceptance and continuation of audit engagements. The guidance applies to all auditors and audit firms under its supervision and makes clear that engagements should be accepted or retained only where the audit can be performed properly, based on concrete assessments of independence, competence, capacity, client integrity and management's willingness and ability to comply with law and facilitate the audit. At firm level, acceptance and continuation must be embedded in a documented quality management system under the Audit Act and International Standard on Quality Management 1, with clear policies on what assessments are required, who makes decisions, how documentation is retained and how compliance and breaches are monitored. Templates are described as useful tools but not a substitute for firm-specific procedures. For new engagements, the incoming auditor must obtain sufficient information about the entity and, before taking on a statutory audit or assurance engagement on mandatory sustainability reporting, ask the previous auditor whether there are circumstances indicating the engagement should not be accepted. Missing or incomplete information cannot be treated as a clean bill of health, and the engagement should not be accepted if the auditor lacks a sufficient basis for a sound assessment. Legal or regulatory breaches should generally be corrected before acceptance. If prompt correction is not possible, the auditor should require a written and realistic remediation plan and document the basis for concluding it is likely to be carried out. The guidance also sets ongoing expectations after acceptance. Conditions attached to acceptance must be followed up immediately rather than left to normal audit procedures. Continuation assessments must be carried out annually and again when new facts emerge, taking into account follow-up to numbered communications, management integrity and major changes in the business, finances or ownership. It further reiterates that an auditor must resign from a statutory audit or mandatory sustainability reporting assurance engagement if material legal breaches identified during the work are not remedied after being raised with the board, and must then notify the Register of Business Enterprises without undue delay.
Norwegian Finanstilsynet2026-07-03
Financial Supervisory Authority of Norway replaces 2021 circular with guidance on auditor acceptance continuation and withdrawal from audit engagements
The Financial Supervisory Authority of Norway has replaced Circular 6/2021 with new guidance on auditor acceptance, continuation and withdrawal from audit engagements. It requires documented, firm-specific quality management procedures, sufficient information gathering including contact with the previous auditor before certain engagements, and annual continuation reviews. Auditors should generally not accept engagements until legal breaches are corrected or covered by a credible written remediation plan, and must resign if material breaches found during the audit are not remedied.