The Financial Supervisory Authority of Norway published an inspection report on LST Revisjon AS based on a review of a single statutory audit engagement for a company developing a housing project. The supervisor concludes that the engagement acceptance assessment was not performed in line with the Norwegian Audit Act and good auditing practice, and that the audit reports issued for the 2022 and 2023 financial statements were incorrect. In accepting the engagement, the auditor did not carry out a sufficient pre-acceptance assessment under the Audit Act section 9-4 and ISA 220, including not following up factors weighing against acceptance after the predecessor auditor resigned and advised against taking the client, citing deficiencies in the 2022 financial reporting and the use of the predecessor’s audit report to obtain approval of unaudited 2023 accounts. The report also notes that the auditor did not adequately assess the integrity and potential conflicts of interest of a company representative who was a state-authorised accountant promised a share of project profits, and that documentation of the business rationale for the project and share transfer was insufficient at the time of acceptance. On audit reporting, LST Revisjon issued qualified opinions for both 2022 and 2023 despite being unable to obtain sufficient appropriate audit evidence for material items, notably inventory representing the entire balance sheet (NOK 62.0 million in 2022 and NOK 42.1 million in 2023) and, for 2023, the completeness and validity of supplier payables. The supervisor concludes the possible effects were material and pervasive and that ISA 705 required a disclaimer of opinion, making the issued reports a gross breach of the Audit Act section 9-7(2)(c). LST Revisjon stated that it accepts the conclusions and has implemented measures intended to prevent recurrence.
Norwegian Finanstilsynet 2025-03-31
Financial Supervisory Authority of Norway finds LST Revisjon breached client acceptance requirements and issued incorrect audit opinions on 2022 and 2023 accounts
Norway's Financial Supervisory Authority released an inspection report on LST Revisjon AS, highlighting deficiencies in a statutory audit for a housing project. The auditor failed to perform a sufficient pre-acceptance assessment and issued incorrect audit reports for 2022 and 2023, lacking adequate evidence for material items. LST Revisjon has accepted the findings and implemented corrective measures.