Norwegian Financial Supervisory Authority finds audit evidence and reporting breaches in Ernst & Young public interest entity audit

The Norwegian Financial Supervisory Authority (Finanstilsynet) published an inspection report on Ernst & Young AS covering its audit of a public interest entity, concluding that the engagement breached the Norwegian Auditor Act and related EU Audit Regulation requirements. The findings focus on insufficient audit evidence supporting revenue recognition for fixed-price projects, alongside deficiencies in the statutory audit report and the additional report to the audit committee. The inspection (18 August–4 September 2025) reviewed the 2024 audit, with work testing centred on revenue, intangible assets, consolidation and auditor independence. Finanstilsynet found that the auditor did not perform specific procedures to gain assurance over the completeness and accuracy of recorded hours used to measure progress and recognise revenue on fixed-price projects, and that sampling work on 16 projects was insufficient because adequate procedures were documented for only five of them (ISA 530). It also identified shortcomings in retrospective testing of estimates (ISA 540). Separately, the 2024 audit report omitted mandatory disclosures on auditor tenure and the body that selected the auditor, and the additional report to the audit committee did not adequately document and explain the effect of delivered tax services, meaning the condition for lawful provision of those services was not met. The report reflects Finanstilsynet’s preliminary report of 29 September 2025 and Ernst & Young AS’s comments of 15 October 2025. The firm indicated it had initiated remediation activities and measures, including steps intended to prevent recurrence of the reporting error.