Norway

Member Organizations

Member Organization Associate Other PAOs

  Den norske Revisorforening

Legal and Regulatory Environment

  • Overview of Statuatory Framework for Accounting and Auditing

    Norway is not a member of the European Union but, together with Iceland and Liechtenstein, the country belongs to the European Economic Area (EEA), comprising a single market. The EEA agreement provides for the inclusion of EU Directives and Regulations in the areas of accounting and auditing. Through the agreement, new EU-rules are continuously made part of the EEA and incorporated into Norwegian law.

    Accounting Framework

    The Accounting Act of 17.07.1997 defines the types of entities that must prepare a full set of financial statements. The Act provides simplifications for small entities that fall below certain size and turnover thresholds.

    Norway has adopted the European IAS Regulation that requires Norwegian listed companies to prepare consolidated accounts according to IFRS. Banks, insurance undertakings, and other financial institutions are also required to prepare consolidated and individual accounts according to IFRS (with certain exemptions applied to the individual accounts). All other companies in Norway have the option to apply IFRS.

    According to the Accounting Act, companies not applying IFRS must prepare financial statements according to the Norwegian Generally Accepted Accounting Principles. The accounting standards are set by the Norwegian Accounting Standards Board. In addition, the adoption of IFRS for Small- and Medium-sized Entities is under consideration.

    Auditing Framework

    The Act on Auditing and Auditors of 15.01.1999 (Audit Act) provides the legal provisions governing the audit of financial statements in Norway. The Audit Act stipulates that any entity required to prepare financial statements is also subject to statutory audit by an authorized public accountant. An audit exemption applies to most small companies with the following characteristics: (i) operating income less than Norwegian Krone (NOK) 5 million; (ii) balance sheet total NOK 20 million; and (iii) average number of 10 employees.

    Audits and statutory assurance services are required under the Audit Act to be performed in accordance with generally accepted auditing and assurance practices. The ISAs are acknowledged as binding standards under this legal requirement. ISA and other IAASB pronouncements are translated into Norwegian without any add-ons or carve outs.

    Norway is in the process of implementing the EU Audit Reform into national law. The current Audit Act is under review and the new legislation is expected to be implemented by 2020.

  • Regulation of Accountancy Profession

    In Norway, public accountants are regulated at the state level by the Financial Supervisory Authority of Norway (FSA), an integrated supervisor of the financial sector.

    The Act on Auditing and Auditors of 15.01.1999 (Audit Act) regulates public accountants who are authorized to perform statutory audits and statutory assurance services in Norway (statutory auditors). The Act establishes initial and continuing professional development, education and practice requirements to obtain a license, ethical requirements, public oversight, and withdrawal of license.

    There are two categories of public accountants in Norway: State Authorized Public Accountants (“Statsautorisert Revisor”) and Registered Public Accountants (“Registrert Revisor”). State Authorized Public Accountants are required to have completed a master’s degree in auditing and accounting, while Registered Public Accountants are required to have completed a bachelor’s degree in the same fields. In addition, both types of public accountants are required to have three years of relevant audit practice, pass the Auditor’s Test of Practical Ability ("Eksamensutvalget for praksisprøven") as administered by the FSA, and to demonstrate good reputation in order to obtain a license.

    There is no difference in the types of professional services these two categories of statutory auditors are allowed to render to the public. Listing requirements on the Oslo Stock Exchange demands, however, that the auditor of publicly listed companies is a State Authorized Public Accountant.

  • Audit Oversight Arrangements

    The Financial Supervisory Authority of Norway (FSA) is the independent oversight authority that is responsible for the supervision of public accountants and auditing in Norway. The FSA is responsible for:

    • approval, certification and registration of statutory auditors and audit firms;
    • supervision and implementation of initial and continuous education requirements;
    • implementation of ethical requirements and regulations;
    • supervision and implementation of the overall quality assurance (QA) including supervision of the QA activities of the Norwegian Institute of Public Accountants (DnR);
    • the QA review system for public interest entities (PIEs); and
    • investigative and disciplinary (I&D) system for statutory auditors and audit firms.

    In terms of standard-setting, FSA has clarified that the authority does not play the role of standard-setter, however through its oversight, it influences standards and supplements and interprets standards.

    FSA is a member of the International Forum of Independent Audit Regulators.

    The DnR conducts QA reviews of its non-PIE members under supervision from the FSA.

  • Professional Accountancy Organizations

    Norwegian Institute of Public Accountants (DnR)

    DnR is a professional organization for registered and state authorized public accountants (statutory auditors) in Norway. Membership of the institute is voluntary and comprise most of the public accountants in the jurisdiction. The objectives of DnR are to raise the professional standards of its members, ensure that its members observe adopted ethical standards, represent its members' interests in relation to the authorities and to the general public, express opinions on professional matters, and promote the education of prospective auditors.

    DnR is a member of the International Federation of Accountants, Accountancy Europe, and the Nordic Federation of Public Accountants.

  • Projects or Other Information

    The adoption of IFRS for Small- and Medium-sized Enterprises (SMEs) is under consideration. In September 2015, the Norwegian Ministry of Finance issued an exposure draft of a new Norwegian Accounting Act for public consultation. Under the proposal, the accounting standards required for companies whose securities do not trade in a regulated market would be as follows:

    Consolidated financial statements: Companies would be required to use either (a) new national standards based on the IFRS for SMEs Standard or (b) IFRS as adopted by the EU.

    Individual financial statements: Companies would be required to use either (a) new national standards based on the IFRS for SMEs Standard or (b) IFRS as adopted by the EU or (c) an entity that applies IFRS at group level will be able to apply simplified disclosure requirements in the individual accounts.

    As of the date of the assessment, the Ministry of Finance is still considering the proposals. It is not clear when final action will be taken.

    In terms of audit regulation, Norway is in the process of implementing the EU Audit Reform into national law. The current Audit Act is under review and the new legislation is expected to be implemented by 2020.

Adoption of International Standards

  • Quality Assurance

    The Financial Supervisory Authority of Norway (FSA) is responsible for the overall quality assurance (QA) review of auditors and audit firms system in the jurisdiction, in accordance with the Act on the Financial Supervisory Authority of 17.12.1956 and the Act on Auditing and Auditors (Audit Act) of 15.01.1999.

    The Audit Act requires all statutory auditors to be subject to quality assurance every six years, and all audit firms with public interest entity (PIE) engagements to be subject to inspections every three years.

    The FSA has an extensive QA review program that includes annual on-site thematic inspections which address specific topics including anti-money laundering, and biennial off-site supervision of all registered auditors and audit firms. The FSA alone is responsible for performing these QA reviews. In addition, ISQC 1 is mandated as the quality control standard.

    In addition, the FSA has delegated certain responsibilities to the Norwegian Institute of Public Accountants (DnR) such as performing the QA reviews of its members who are statutory auditors of non-PIEs and authorized accountants. The QA reviews are part of the system of public oversight, and are performed on behalf of the FSA.

    Authorized accountants are also subject to the QA review program of FSA. DnR performs quality assurance reviews of its members who are authorized accountants.

    DnR conducted a self-assessment of its QA system against the revised SMO 1 requirements and reports that its QA system is in line with the revised SMO 1 requirements.

    Current Status: Adopted

  • International Education Standards

    In Norway, the national legislation regulates the initial and continuing professional development (IPD and CPD, respectively) requirements for auditors and accountants.

    The Act on Auditing and Auditors of 15.01.1999 (Audit Act) outlines the IPD and CPD requirements for public accountants (statutory auditors). IPD requirements include educational and practical experience requisites.

    Several institutions are engaged in the implementation of IPD and CPD requirements, such as the Norwegian Ministry of Education and Research, the Ministry of Finance, the Financial Supervisory Authority of Norway (FSA), the Norwegian Institute of Public Accountants (DnR), and universities.

    The FSA regulates the public accountants (statutory auditors) at the state level. The universities and business schools provide initial professional education in the area of auditing and accounting.

    DnR operates a CPD program for its members—statutory auditors. Statutory auditors are required by law to complete 105 hours of verifiable CPD in a three year period.

    DnR conducted a self-assessment of the learning-outcome approaches within the 2015 revised IES and reports that the Norwegian national educational requirements for the spectrum of accountancy professionals is in line with the revised requirements.

    Current Status: Adopted

  • International Standards on Auditing

    The Act on Auditing and Auditors of 15.01.1999 (Audit Act) provides the legal provisions governing the audit of financial statements in Norway.

    According to the law, audits and statutory assurance services are required to be performed in accordance with generally accepted auditing and assurance practices which are not defined.

    De facto, the standards issued by the Auditing Standards Committee of the Norwegian Institute of Public Accountants (DnR) are being applied. DnR prepares Norwegian translations of ISA and decides on their effective date in the jurisdiction.

    DnR reports that the recognition of the international standards is demonstrated through consistent application in the profession and consistent enforcement by the audit oversight authority, the Financial Supervisory Authority of Norway and legal courts.

    DnR has taken responsibility for the translation of ISA and other IAASB pronouncements into Norwegian without any add-ons or carve outs. The institute also reports that it has completed the translation and implementation of the new and revised ISA (ISA 700 series).

    Current Status: Adopted

  • Code of Ethics for Professional Accountants

    In Norway, the Act on Auditing and Auditors of 15.01.1999 (Audit Act) mandates all statutory auditors (public accountants) and audit firms to be subject to principles of professional ethics.

    The Financial Supervisory Authority of Norway is responsible for the implementation and oversight of the ethical requirements and regulations as prescribed in the law.

    The IESBA Code of Ethics is not adopted by law in the jurisdiction, however, according to the Norwegian Institute of Public Accountants (DnR), the Audit Act includes detailed independence requirements which are as stringent as the independence requirements in the 2016 IESBA Code of Ethics. In addition, DnR has adopted a Code of Ethics for its members which covers other requirements of the 2016 IESBA Code.

    Furthermore, the institute reports that together with the requirements in the Audit Act and other reporting obligations, the current regime is in all material respects in line with the requirements of the 2016 IESBA Code.

    Ethical requirements in Norwegian audit legislation are to be reassessed in connection with national implementation of the EU Audit Directive. New legislation is expected to be completed in 2020.

    Requirements to respond to non-compliance with laws and regulations (NOCLAR) include statutory reporting obligations to those charged with governance (TCWG), to the police relating to anti money laundering and terror financing, and to the Financial Supervisory Authority relating to financial institutions. The auditor is required by law to assess the appropriateness of the response of management/TCWG, and resign the engagement if it is deemed inappropriate.

    Current Status: Adopted

  • International Public Sector Accounting Standards

    The Ministry of Finance is responsible for setting public sector accounting standards in Norway. According to the Norwegian Institute of Public Accountants (DnR), cash-based accounting is still applied at the state level however agencies can voluntarily prepare accrual-based financial statements as supplementary information to the mandatory cash-based statements.

    The Ministry has also developed non-mandatory accrual-based public sector accounting standards. According to the DnR, these standards are based on IPSAS.

    Current Status: Partially Adopted

  • Investigation and Discipline

    The Act on the Financial Supervisory Authority of 17.12.1956 and the Act on Auditing and Auditors of 15.01.1999 grant authority to the Financial Supervisory Authority of Norway (FSA) to issue regulations for the establishment of a system of investigation and discipline (I&D) for the detection, correction, and prevention of inadequate execution of statutory audits.

    Those not complying with the professional standards or other legal requirements are reported to the FSA, particularly in cases where withdrawal of the auditor’s license should be considered.

    The FSA is empowered to temporarily or permanently withdraw the license to practice on the grounds of material or repeated misconduct. The auditor or audit firm have a right to appeal before a special appeal board.

    The members of the Norwegian Institute of Public Accountants (DnR) are subject to the I&D system of FSA. The FSA collaborates closely with DnR as the institute’s quality assurance reviews generates reports to the FSA in cases where withdrawal of the auditor’s license should be considered. FSA investigates as necessary.

    The DnR has conducted a self-assessment of the FSA’s I&D system against the SMO 6 requirements and reports that the I&D system is in line with the requirements.

    Current Status: Adopted

  • International Financial Reporting Standards

    The Accounting Act of 17.07.1997 defines types of entities that must prepare full set of financial statements and provides exemptions for small entities that fall below certain size and turnover thresholds.

    Norway has adopted the European IAS Regulation that requires Norwegian listed companies to prepare consolidated accounts according to IFRS. Banks, insurance undertakings and other financial institutions are also required to prepare consolidated and individual accounts according to IFRS (some adaptations apply to the individual accounts). All other companies in Norway have the option to apply IFRS.

    Companies not applying IFRS, must prepare financial statements according to Norwegian GAAP as set out in the Accounting Act and accounting standards set by the Norwegian Accounting Standards Board.

    In addition, the adoption of IFRS for Small- and Medium-sized Entities is under consideration. In September 2015, the Norwegian Ministry of Finance issued an exposure draft of a new Norwegian Accounting Act. As per Q2 2018 these proposals are still under consideration by the Ministry.

    Current Status: Adopted

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Methodology

Methodology
Last updated: 11/2018
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