The Financial Supervisory Authority of Norway has published an inspection report on an audit firm covering selected parts of one statutory audit engagement and concluded that inadequate follow-up of identified fraud risks contributed to the auditor not obtaining sufficient appropriate audit evidence to support the 2023 audit opinion. The shortcomings also led to an insufficient basis for the auditor’s attestation of the 2023 business tax return (næringsoppgave) and control statement (kontrolloppstilling). The review found weaknesses in addressing fraud risks linked to sales revenue and management override of internal controls, as well as failures to obtain audit evidence for related-party transactions and recorded sales revenue. The authority assessed several deficiencies as breaches, including gross breaches, of the Auditor Act (revisorloven), with references to relevant International Standards on Auditing and SA 3801, including unsupported conclusions on material lease costs paid to the owner/CEO, lack of documented work on costs related to vehicles made available to related parties, and revenue testing that relied on an inadequately supported gross margin analysis and did not reflect the assessed fraud risk, including missing external audit evidence and incomplete or undocumented procedures on receivables and revenue cut-off. The audit firm acknowledged the weaknesses and submitted an action plan to correct and improve audit performance, and the authority indicated it may follow up the firm’s implementation at a later stage.
Norwegian Finanstilsynet 2025-06-26
Financial Supervisory Authority of Norway identifies gross audit shortcomings in fraud risk work and 2023 revenue evidence at an audit firm
Norway's Financial Supervisory Authority's inspection of an audit firm revealed inadequate fraud risk follow-up, leading to insufficient audit evidence for the 2023 audit opinion and tax return. Breaches of the Auditor Act included unsupported conclusions on material costs and inadequate revenue testing. The firm acknowledged deficiencies and submitted an improvement action plan, with potential follow-up by the authority.