Sweden

Member Organizations

Member Organization Associate Other PAOs

  FAR

Legal and Regulatory Environment

  • Overview of Statuatory Framework for Accounting and Auditing

    As a member of the European Union (EU), Sweden is subject to the accounting, auditing and financial reporting requirements established in EU Regulations and Directives as transposed into national law.

    Accounting Framework

    The Annual Reports Act of 1995 (as amended 2016) in Sweden stipulates the requirements for the preparation of financial statements, including applicable accounting standards and financial reporting thresholds. In accordance with the law, the Bokföringsnämnden (BFN; Swedish Accounting Standards Board) is the governmental body that has statutory authority to develop generally accepted accounting principles in Sweden, while the Finansinspektionen (SFSA; Swedish Financial Supervisory Authority) is responsible for issuing standards required for financial companies. The focus of the Rådet för finansiell rapportering (RFR; Council for Financial Reporting) is on companies whose securities are traded in a regulated market while the focus of the BFN is on private companies. As of the date of the assessment, EU-endorsed IFRS are required for the consolidated financial statements of all companies whose securities trade in a regulated market and for other Public Interest Entities which include credit institutions and insurance companies.

    While IFRS for Small- and Medium-sized Entities (SMEs) has not been adopted in the jurisdiction, Sweden has developed a national accounting standard, known as BFNAR 2012:1 (K3), based on IFRS for SMEs to be applied for large entities whose securities are not publicly traded. Small companies may choose to apply national accounting standards, BFNAR 2016:10, also developed by BFN, or to apply the same standards that large entities use.

    The professional accountancy organization, FAR, has published the EU Commission’s official translation of the EU-endorsed IFRS that it offers to its members titled IFRS Volume 2018.

    Auditing Framework

    The Auditing Act of 1995 (as amended in 2016), the Companies Act of 2005 and laws for other legal entities subject to mandatory statutory audits require the auditor to perform an audit in accordance with “good auditing practice” (“god revisionssed”). According to the Auditors Act of 2001 (as amended 2018) the Swedish Inspectorate of Auditors (RI) shall “be responsible to ensure that generally accepted accounting principles and generally accepted auditing principles are developed in a goal-oriented manner”. According to the preparatory documentation (commentary) to the Act, the professional organization (i.e. FAR) is responsible for issuing guidance in the form of recommendations and pronouncements as to what “generally accepted auditing principles” are. RI, in turn, has the explicit mandate to interpret and evaluate the recommendations and pronouncements issued by FAR and thus determine “good auditing practice”. RI exercises this authority mainly by issuing decisions in individual disciplinary cases. Ultimate responsibility for determining good auditing practice lies with the courts of law. FAR translated the 2016–17 Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements, in line with the IFAC translation policy for application in the jurisdiction.

    Legislation also requires mandatory audit firm rotation every ten years for financial companies. For public interest entities that are not financial companies, firm rotation is required every ten years, but can be extended to twenty years after a procurement process. In the case of joint audits, the rotation period can be extended to 24 years. Key auditors are required to rotate after seven years. Furthermore, the fee cap for non-audit services is maintained at 70%, as established in the EU legislation.

  • Regulation of Accountancy Profession

    The Auditors Act of 2001 (as amended 2018) establishes the Swedish Inspectorate of Auditors, Revisorsinspektionen (RI) as the independent audit oversight authority in Sweden.

    The Act also stipulates the criteria to become approved public accountants and authorized public accountants. All individuals who apply for authorized public accountants examinations described in sections 4 and 5 of the Auditing Act must first fulfill the following requirements: (i) acquire a bachelor’s degree; (ii) complete three years of practical training, which includes audit training, in a state within the European Economic Area (EEA) under the supervision of an individual with the authority to conduct statutory audits. To obtain the title of authorized public accountant, individuals must also reside in Sweden or in another state within the EEA; complete at least 1,500 hours of audit activities during the five years immediately preceding the application submission; and work at an audit firm.

    All authorized public accountants qualified to perform statutory audits (i.e. auditors) are subject to the investigation and disciplinary mechanisms established by RI. Furthermore, in accordance with the Auditors Act of 2001 (as amended 2018), RI carries out inspections on audit firms by which public interest entities (PIEs) are audited. RI and FAR signed an agreement that delegates FAR with the responsibility to conduct quality assurance reviews on auditors and audit firms that are members of FAR and do not audit PIEs.

    RI’s additional regulatory and oversight responsibilities include: (i) providing guidance regarding authorization and approval of public accountants and registration of audit firms; (ii) supervising auditing practices, authorized and approved public accountants and registered audit firms; (iii) ensuring that generally accepted accounting principles and generally accepted auditing principles are developed in a goal-oriented manner; and (iv) monitoring and enforcing initial and continuing professional development requirements (IPD and CPD, respectively) of auditors in the jurisdiction (100 hours over a five-year period).

    According to the preparatory documentation (commentary) to the Auditors Act, the professional organization (i.e. FAR) is responsible for issuing guidance in the form of recommendations and pronouncements as to what “generally accepted auditing principles” are. RI, in turn, has the explicit mandate to interpret and evaluate the recommendations and pronouncements issued by FAR and thus determine “good auditing practice”. Ultimate responsibility for determining “god revisionssed” lies with the courts of law. In Sweden, segments of the accountancy profession such as accounting consultants, tax consultants and payroll consultants, are not regulated by law. However, these categories of professionals along with those described above, may voluntarily join in the membership of FAR and become subject to its regulations.

    FAR offers qualifications such as authorized accounting consultants (AAC), authorized tax advisors (ATA) and authorized payroll consultants (APC) to professionals that meet certain education and work experience criteria and they must also pass specialized examinations. FAR also licenses auditors who audit financial companies. In order to attain and maintain such a license, the auditor must meet certain criteria, i.e, relevant audit experience and CPD within the financial sector. Pursuant to an agreement between FAR and Finansinspektionen (Sweden’s financial supervisory authority), this license is mandatory.

    In order to acquire the AAC or APC qualifications, candidates must be active in an accounting or audit company; hold an undergraduate degree in business; and complete three years of practical experience. Applicants must pass the AAC or APC examinations to obtain the titles. In order to maintain the titles, members are required to complete at least 120 hours of relevant CPD within a three-year period (minimum of 20 hours per year)—60 hours must be verifiable. The AAC or APC title must be renewed every six years, by passing the quality assurance reviews arranged by FAR.

    As for ATAs, candidates must possess a master’s degree; five-years of relevant work experience; and they must be active consultants or specialists in the industry. The ATAs must also pass an examination on the ethical standards.

    Lastly, the accounting profession is self-regulated. Accountants may voluntarily join Srf Konsulterna (Srf) and be subject to its regulation. Srf offers an accounting consultant qualification to members who meet the institute’s theoretical knowledge requirements and completed three (3) years of practical experience in the profession. Members with at least eight (8) years of experience in the profession may apply for the authorized accounting consultant qualification. Applicants may not receive the authorized accounting consultant qualification until after they pass the final authentication exam. All accounting consultants are required to complete 60 hours of CPD over 3 years to renew their authorization license and adhere to the code of ethics as issued by FAR. Furthermore, members of this institute are subject to quality checks by Srf consultants every six years.

  • Audit Oversight Arrangements

    The independent audit oversight authority in Sweden is the Swedish Inspectorate of Auditors, Revisorsinspektionen (RI). RI’s regulatory and oversight responsibilities include: (i) providing guidance regarding authorization and approval of public accountants and registration of audit firms; (ii) supervising auditing practices, authorized and approved public accountants and registered audit firms; (iii) ensuring that generally accepted accounting principles and generally accepted auditing principles are developed in a goal-oriented manner; (iv) conducting regular quality assurance reviews as well as risk based inspections on audit firms by which public interest entities are audited; (v) monitoring and enforcing initial and continuing professional development requirements of auditors in the jurisdiction (100 hours over a five-year period); and (vi) determining disciplinary matters and measures related to auditors and registered audit firms.

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

  • Professional Accountancy Organizations

    FAR

    FAR was founded in 1923 and at the time, only included authorized public accountants as members. However, in 2006, the organization merged with Svenska Revisorsamfundet (SRS) to include approved public accountants in the membership base. Since then, FAR has extended its membership scope to also include other professional accountants in public practice, such as authorized accounting consultants, authorized tax consultants and authorized public consultants. Membership in FAR continues to be voluntary.

    FAR’s responsibilities include (i) translating and issuing international standards such as ISA and the IESBA Code of Ethics; (ii) conducting quality assurance reviews of members, except for those who perform statutory audits of public interest entities; (iii) monitoring and enforcing mandatory continuing professional development (CPD) requirements for members as well as compliance with auditing, accounting and ethical standards; (iv) conducting examinations for members who qualify to become authorized accounting consultants, authorized payroll consultant and authorized tax consultants as well as licensing auditors to perform audits of financial entities; (v) promoting implementation of accounting and auditing and other professional standards; and (vi) conducting an investigative and disciplinary system for its members. FAR’s commercial activities include arranging conferences and seminars, producing books, journals, and digital products, as well as providing education programs both at IPD and CPD levels.

    In addition to being a member of IFAC, FAR is a member of Accountancy Europe and the Nordic Federation of Public Accountants.

    Srf Konsulter (Srf)

    Srf is a voluntary membership professional accountancy organization established in 1936 for authorized accountants and payroll consultants. Srf offers accounting consultant qualifications as well as authorized accounting consultant qualifications to members. Srf monitors and enforces mandatory CPD requirements for members and conducts quality checks every six years. Its members adhere to the Code of Ethics as issued by FAR.

    Srf is not a member of IFAC.

  • Projects or Other Information

Adoption of International Standards

  • Quality Assurance

    In accordance with the Auditors Act of 2001 (as amended 2018), the Revisorsinspektionen (RI) carries out inspections on audit firms by which public interest entities (PIEs) are audited. RI’s QA review system has been operational since 2003 and covers approximately 100 auditors that are not members of FAR.

    RI and FAR signed an agreement that delegates FAR with the responsibility to conduct QA reviews on auditors and audit firms that are members of FAR and do not audit PIEs. FAR’s QA review system has been operational since 2009 and its activities are monitored by the RI. FAR reports to the RI on any serious breaches of auditing standards or professional ethics.

    FAR reports that the QA review systems in the jurisdiction are in line with SMO 1 requirements.

    Current Status: Adopted

  • International Education Standards

    The Auditors Act of 2001 (as amended 2018) outlines the initial and continuing professional development (IPD and CPD, respectively) requirements for auditors authorized to perform statutory audits. At a minimum, all auditors are required to complete at least 100 hours of verifiable CPD in a five-year period which are verified by the Revisorsinspektionen.

    All individuals who apply for authorized public accountants examinations described in sections 4 and 5 of the Auditors Act must first fulfill the following requirements: (i) acquire a bachelor’s degree; (ii) complete three years of practical training, which includes audit training, in a state within the European Economic Area (EEA) under the supervision of an individual with the authority to conduct statutory audits. To obtain the title of authorized public accountant, individuals must also reside in Sweden or in another state within the EEA; complete at least 1,500 hours of audit activities during the five years immediately preceding the application submission; and work at an audit firm.

    FAR offers qualifications such as authorized accounting consultants (AAC), authorized tax advisors (ATA) and authorized payroll consultants (APC) to professionals that meet certain education and work experience criteria and they must also pass specialized examinations. FAR also licenses auditors who audit financial companies. In order to attain and maintain such a license, the auditor must certain criteria, i.e, relevant audit experience and CPD within the financial sector. Due to an agreement between FAR and Finansinspektionen (Sweden’s financial supervisory authority), this license is mandatory.

    In order to acquire the AAC or APC qualifications, candidates must be active in an accounting or audit company; hold an undergraduate degree in business; and complete three years of practical experience. Applicants must pass the AAC or APC examinations to obtain the titles. In order to maintain the titles, members are required to complete at least 120 hours of relevant CPD within a three-year period (minimum of 20 hours per year)—60 hours must be verifiable. The AAC or APC title must be renewed every six years, by passing the quality assurance reviews arranged by FAR.

    As for ATAs, candidates must possess a master’s degree; five-years of relevant work experience; and they must be active consultants or specialists in the industry. The ATAs must also pass an examination on the ethical standards.

    In Sweden, segments of the accountancy profession such as accounting consultants, tax consultants, payroll consultants, and bookkeepers are not regulated by law. However, these categories of professionals may voluntarily join in the membership of a professional accountancy organization and become subject to its IPD and CPD requirements. In addition to FAR, accountants may voluntarily join Srf Konsulterna (Srf) and be subject to its regulation. Srf offers an accounting consultant qualification to members who meet the institute’s theoretical knowledge requirements and completed three (3) years of practical experience in the profession. Members with at least eight (8) years of experience in the profession may apply for the authorized accounting consultant qualification. Applicants may not receive the authorized accounting consultant qualification until after they pass the final authentication exam. All accounting consultants are required to complete 60 hours of CPD over 3 years to renew their authorization license. Furthermore, members of this institute are subject to quality checks by Srf consultants every six years.

    While some requirements of the 2010 IES seem to have been incorporated into Sweden’s national educational requirements for the spectrum of accountancy professionals, plans to incorporate and address the changes to learning-outcome approaches within the revised 2015 IES requirements remain to be clarified by the respective organizations.

    Current Status: Partially Adopted

  • International Standards on Auditing

    The Auditors Act of 2001 (as amended 2018), the Companies Act of 2005 and laws for other legal entities subject to mandatory statutory audits require the auditor to perform an audit in accordance with “good auditing practice” (“god revisionssed”). According to the Auditors Act of 2001 (as amended 2018) the Swedish Inspectorate of Auditors (RI) shall “be responsible to ensure that generally accepted accounting principles and generally accepted auditing principles are developed in a goal-oriented manner.” According to the preparatory documentation (commentary) to the Auditing Act, the professional organization (i.e. FAR) is responsible for issuing guidance in the form of recommendations and pronouncements as to what “generally accepted auditing principles” are. RI, in turn, has the explicit mandate to interpret and evaluate the recommendations and pronouncements issued by FAR and thus determine “good auditing practice”. Ultimate responsibility for determining “god revisionssed” lies with the courts of law.

    As of the date of the assessment, FAR issued and translated the 2016–17 Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements, in line with the IFAC translation policy for application in the jurisdiction. FAR reports that ISA are routinely translated and issued before the date of entry into force stipulated by IFAC.

    Current Status: Adopted

  • Code of Ethics for Professional Accountants

    In line with the Auditors Act of 2001 (as amended 2018), FAR translates and issues ethical standards for its members which include authorized public accountants, approved public accountants, and other professional accountants in public practice, such as authorized accounting consultants, authorized tax consultants and authorized public consultants.

    The Swedish Inspectorate of Auditors interprets the standards for application by authorized public accountants (i.e. auditors authorized to perform statutory audits).

    FAR adopted the 2016 IESBA Code of Ethics and reports any serious breaches of professional ethics to the RI. As of the date of the assessment, FAR translated the 2016 Handbook for the Code of Ethics for Professional Accountants into Swedish in line with the IFAC translation policy for application in the jurisdiction.

    Additionally, there are segments of the accountancy profession such as accounting consultants, tax consultants and payroll consultants that are not regulated by law. However, these categories of professionals may voluntarily join in the membership of professional accountancy organizations and become subject to their regulations. In addition to FAR, accounting professionals may voluntarily join Srf Konsulterna (Srf) and be subject to its regulation. Members of Srf adhere to the code of ethics issued by FAR.

    Current Status: Adopted

  • International Public Sector Accounting Standards

    Public sector accounting rules in Sweden are determined by two entities: the accounting standards board for local government known as Rådet för Kommunal redovisning and the Swedish national financial management authority for central government known as Ekonomistyrningsverket (ESV). IPSAS have not been adopted for application in the jurisdiction, and it is unclear if the Swedish government has established a timeline with an objective of converging national standards with IPSAS.

    Nevertheless, in 2011, the government of Sweden commissioned ESV to compare the accounting rules and regulations applied in the Swedish Central Government with IPSAS. According to the results of the study, the government rules largely correspond with accrual-basis IPSAS as they relate to basic principles and definitions. The professional institute in Sweden, FAR, also reports that the government accounting standards are based on an accrual basis of accounting.

    Current Status: Partially Adopted

  • Investigation and Discipline

    The Auditors Act of 2001 (as amended 2018) establishes the mechanisms for investigating and disciplining (I&D) authorized public accountants (i.e. those authorized to perform statutory audit). In accordance with the law, the Revisorsinspektionen (RI) initiates investigations when inspections reveal material breaches of auditing standards or professional ethics.

    The board of disciplinary procedure at the RI, which has two members from FAR, initiates investigations based on findings from quality assurance reviews conducted by FAR as per a signed agreement. Based on the results of the investigations, the RI issues warnings, withdraws approvals/authorizations, or removes registration licenses (in the case of an audit firm). Decisions by the RI may be appealed by a general administrative court. Auditors and registered audit firms are required to publish annual reports containing overviews of actions taken as a result of any violations. Furthermore, the RI is required to publish disciplinary actions on its website.

    There are additional segments of the accountancy profession such as accounting consultants, tax consultants, payroll consultants and bookkeepers that are not regulated by law. However, these categories of professionals may voluntarily join in the membership of a PAO and become subject to its regulations which include I&D. FAR has its own disciplinary committee to deal with cases that do not fall under the RI’s jurisdiction and publishes its decisions on its website. Furthermore, accounting professionals who voluntarily join Srf Konsulterna (Srf) are subject to random checks by Srf consultants every six years to ensure compliance with the institute’s rules and requirements.

    In 2018, FAR conducted a self-assessment of its I&D system, as well as RI’s I&D system, against the SMO 6 components and reported that they are generally in line with SMO 6 requirements. More information is needed to determine whether or not Srf conducts an I&D system for all members, and if the system is in line with SMO 6 requirements.

    Current Status: Partially Adopted

  • International Financial Reporting Standards

    The Annual Reports Act of 1995 (as amended 2016) in Sweden stipulates the requirements for the preparation of financial statements, including applicable accounting standards and financial reporting thresholds. In accordance with the law, the Bokföringsnämnden (BFN; Swedish Accounting Standards Board) is the governmental body that has statutory authority to develop generally accepted accounting principles in Sweden, while the Finansinspektionen (SFSA; Swedish Financial Supervisory Authority) is responsible for issuing standards required for financial companies. The focus of the Rådet för finansiell rapportering (RFR; Council for Financial Reporting) is on companies whose securities are traded in a regulated market while the focus of the BFN is on private companies. As of the date of the assessment, EU-endorsed IFRS are required for the consolidated financial statements of all companies whose securities trade in a regulated market and for other public interest entities which include credit institutions and insurance companies.

    While IFRS for Small- and Medium-sized Entities (SMEs) has not been adopted in the jurisdiction, Sweden has developed a national accounting standard, known as BFNAR 2012:1 (K3), based on IFRS for SMEs to be applied for large entities whose securities are not publicly traded. Small companies may choose to apply national accounting standards, BFNAR 2016:10, also developed by BFN, or to apply the same standards that large entities use.

    A professional accountancy organization in Sweden, FAR, has published the EU Commission’s official translation of the EU-endorsed IFRS that it offers to its members titled IFRS Volume 2018.

    Current Status: Adopted

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Methodology

Methodology
Last updated: 11/2018
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