The Financial Supervisory Authority of Norway criticises Kappa Revisjon ANS after finding breaches of the Auditor Act in a foundation audit

The Financial Supervisory Authority of Norway (Finanstilsynet) published an inspection report on Kappa Revisjon ANS’s audit of a foundation’s 2023 financial statements, identifying several breaches of the Auditor Act that it says warrant criticism. The review was triggered by the auditor’s 2023 report referencing significant disagreement within the foundation’s board, including objections from a lifetime board member. Finanstilsynet’s inspection focused on how the auditor handled allegations that a Norwegian Tax Administration decision was not correctly reflected in the accounts and that the foundation and its wholly owned property subsidiary had unusually high management and board costs, as well as the auditor’s evidence for statements on governance and distributions, communication with the foundation and the Norwegian Foundation Authority (Stiftelsestilsynet), and independence. Key findings included insufficient audit evidence to support not recognising a tax claim and inadequate related note disclosure, and insufficient and inappropriate evidence and documentation to support the conclusion that alleged excessive remuneration and related governance concerns could not affect the 2023 accounts. Finanstilsynet also found shortcomings in the auditor’s written communications about the conflict and the underlying allegations, and noted documentation weaknesses in testing of expenses and in the sampling approach for reviewing distributions (total distributions in 2023 were NOK 14,950,500), even where the overall evidence for some areas was ultimately assessed as sufficient. Finanstilsynet stated that assessing the consequences of these breaches under the Foundation Act, including issues linked to the foundation’s choice of auditor, lies outside its remit and sits with Stiftelsestilsynet.