The Financial Supervisory Authority of Norway has published an inspection report on SMR Revisjon AS finding breaches of the Auditors Act in the firm’s acceptance of an audit engagement and its assessment of going concern in the 2024 audit of a client referred to as Engagement A. The authority concluded that the auditor did not perform sufficient procedures before taking over the mandate and did not obtain sufficient appropriate audit evidence for the company’s ability to continue as a going concern. The case concerned an engagement taken on after the previous auditor resigned in September 2024, having issued a disclaimer on the 2023 financial statements and highlighted material uncertainty over going concern. SMR Revisjon was appointed in December 2024 and later issued an unmodified opinion on the 2024 accounts, while still drawing attention to material uncertainty over going concern, the loss of share capital and late filing of the accounts. In reviewing the engagement acceptance, the authority found no documented written commitment before acceptance for the planned debt conversion to restore negative equity, no documented deadline beyond a general requirement to remedy issues within a reasonable time, and no sufficiently documented assessment that the planned measures were realistic, time-bound, binding and adequate. On going concern, it found the auditor relied on delayed property sales and a debt conversion that only partly covered the negative equity, without a written board commitment for further conversion, amounting to a breach of the Auditors Act read with ISA 570. SMR Revisjon stated in its response to the preliminary report that it has implemented measures intended to prevent the breaches from being repeated.

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