The Norwegian Financial Supervisory Authority published a supervisory report on a newly established audit firm focusing on its procedures for accepting new audit engagements and a review of seven completed acceptance assessments. The review found gross breaches of the Auditor Act in two of the acceptance assessments because the auditor’s acceptance work was not adequately supported by relevant documentation. In one case highlighted in the report, the previous auditor had issued a qualified audit opinion and later resigned after raising concerns including revenue and cost cut-off, potential losses on receivables, and non-compliance with rules on tax withholding and VAT reporting. Finanstilsynet found that the incoming auditor relied largely on an email and references to board decisions describing planned remedial measures, without obtaining evidence that these measures had been implemented before accepting the engagement. The authority concluded that the acceptance assessment did not demonstrate the required role understanding and constituted a gross breach of the Auditor Act provisions on acceptance and good auditing practice, with reference to ISA 220 requirements.
Norwegian Finanstilsynet 2025-11-05
Norwegian Financial Supervisory Authority finds gross breaches of the Auditor Act in audit firm’s client acceptance work
The Norwegian Financial Supervisory Authority released a report on a new audit firm, highlighting gross breaches of the Auditor Act in two acceptance assessments due to inadequate documentation. One case involved reliance on insufficient evidence from an email and board decisions without verifying remedial measures, violating ISA 220. The authority concluded these actions demonstrated a lack of role understanding and good auditing practice.