Member | Established: 1912 (merger in 2011 between the former institutes FSR, FRR and REVIFORA) | Member since 1977
FSR was established in 1912 as a voluntary membership organization for accountancy professionals. In 2011, three audit institutes—FSR (chartered accountants), the FRR (Danish Institute of Certified Public Accountants), and the REVIFORA (association for younger accountants or trainees)—merged into one association under the FSR name. Auditors in Denmark are not required to be members of the FSR, but FSR states that the majority of State Authorized Public Accountants in public practice are members. FSR’s responsibilities include (i) prescribing accounting and auditing standards; (ii) establishing and enforcing ethical requirements; (iii) cooperating with DBA for investigation & discipline of FSR members; and (iv) collaborating with the Danish Business Agency and the Danish Financial Supervisory Authority on the establishment of initial and continuing professional development requirements. In addition to being an IFAC member, the FSR is a member of the Accountancy Europe and the Nordic Federation of Accountants.
Statements of Membership Obligation (SMO)
The Statements of Membership Obligations form the basis of the IFAC Member Compliance Program. They serve as a framework for credible and high-quality professional accountancy organizations focused on serving the public interest by adopting, or otherwise incorporating, and supporting implementation of international standards and maintaining adequate enforcement mechanisms to ensure the professional behavior of their individual members.
SMO 1: Quality Assurance
Under the Danish Act on Approved Auditors and Audit Firms (the Audit Act) Consolidated Act No. 1287 of November 20, 2018, the Danish Business Authority (DBA) is responsible for conducting quality assurance (QA) reviews.
FSR supports DBA in implementing a mandatory QA review system for all auditors, which is compliant with the requirements of SMO 1. FSR focuses its activities on training QA inspectors and its members. FSR also provides advice to the DBA on how to improve its QA review system. FSR operates an annual technical training program for inspectors from the Danish Supervisory Authority on Auditing on how to conduct QA reviews. It assists members in complying with applicable auditing and quality control standards through the provision of technical information that addresses the most significant issues or areas of weakness identified during QA reviews. FSR also provides guidance to members in its newsletter on lessons learned from the findings of QA reviews.
To serve the public interest, the FSR’s internal regulations require members to self-report on their website and in their annual financial statements if findings of non-compliance resulted in a referral to the Auditor’s Tribunal.
The FSR excludes members who receive severe penalties or do not adhere to applicable ethical requirements.
The new suite of Quality Management standards that will become effective in 2021-22 will require significant change management for regulators and firms. The FSR is encouraged to prepare members for the changes from quality control standards to quality management standards and update its training programming to ensure that its members are sufficiently prepared for the application of the standards once they become effective.
SMO 2: International Education Standards
Under Act No. 617 of June 12, 2013, the State Authorized Public Accountant (SPA) designation is reserved for statutory auditors. The Danish Business Authority (DBA), the Danish Financial Supervisory Authority (DSFA), and universities share responsibility for establishing and administering Initial Professional Development (IPD) for SPAs in Denmark. Candidates are required to hold a master’s degree, complete three (3) years of practical training and pass a final examination of professional competence (administered by FSR - danske revisorer under the supervision of DBA). Since 2006, members of FSR have been required to complete a minimum of 120 hours of CPD over a 3-year period, and compliance is verified. As of 2020, FSR further reports that the education requirements are aligned with revised 2015 IES.
FSR reports that, while it is not legally mandated, in practice all candidates who plan to apply for a license as a State Authorized Public Accountant (SPA, i.e., auditor) enroll in the FSR’s certification program. Furthermore, the FSR reports that most auditors also take CPD education/courses provided by FSR; however, members may also fulfill CPD requirements by taking training offered by accounting firms that provide CPD in different areas. FSR reports that it addresses all IES requirements on an ongoing basis and works with other stakeholders to ensure that their programs also continue to be aligned with revised IES.
FSR assists with the implementation of an IES-compliant framework through its focus on education and training of candidates and continuing professional development. It coordinates and provides practical training for students and reports to stay abreast of changes to the IES requirements to promote, incorporate, and implement the changes.
Revised requirements of the IES are effective as of 2021. The FSR is encouraged to confirm that is continues its collaboration with other stakeholders involved in the education of professional accountants in the jurisdiction, such as universities and regulators, to incorporate the latest requirements. The Accountancy Education E-Tool developed by IFAC may be useful to identify implementation support materials.
SMO 3: International Standards on Auditing
Article 16 of the Danish Act on Approved Auditors and Audit Firms (the Audit Act) No. 468 of June 17, 2008 and Executive Order No. 968 (2016) on Quality Assurance Reviews stipulate that audits must be conducted in accordance with “generally accepted auditing practices.” In practice, the auditing standards issued by the FSR are applied.
Since 2010, Danish auditing standards are effectively ISA as promulgated by the IAASB and translated by FSR. FSR reports that the translated standards have the same effective dates in Denmark as promulgated by IAASB.
FSR maintains an ongoing process to consider and adopt new/revised ISA and to assist its members with implementation support. FSR has an extensive training program for facilitating proper implementation of the standards. FSR’s Auditing Standards Committee is actively involved in commenting on IAASB Exposure Drafts and hosts relevant seminars to update members and stakeholders on ISA developments and changes.
FSR has demonstrated that, within the scope of its authority, it is committed to meet the SMO 3 obligations and has established ongoing processes to maintain compliance.
SMO 4: Code of Ethics for Professional Accountants
The Danish Act on Approved Auditors and Audit Firms (the Audit Act) Consolidated Act No. 1287 of November 20, 2018 authorizes the Danish Business Authority (DBA) to establish ethical requirements for State Authorized Public Accountants. In practice, the ethical standards issued by FSR are applied.
FSR reports that the IESBA Code of Ethics has been effective in Denmark since 2000. The FSR has an ongoing process to incorporate amendments to the Code and it has adopted and translated the 2018 version of the International Code of Ethics for application by its members. Additional requirements have been included in the Code of Ethics to comply with Danish legal requirements.
FSR supports implementation and raises awareness of the requirements of the Code of Ethics through translation activities and delivery of continuing professional development courses on the topic. For example, in June 2019, FSR completed the translation of the 2018 IESBA Code of Ethics to support members with implementation.
FSR has demonstrated that, within the scope of its authority, it is committed to meet the SMO 4 obligations and has established ongoing processes to maintain compliance.
SMO 5: International Public Sector Accounting Standards
The Danish Ministry of Finance, which is responsible for the adoption of public sector accounting standards, has not adopted IPSAS in Denmark, and there is no timeline for doing so.
While FSR is not the public sector standard-setting authority, and most of its members perform audit functions as opposed to financial reporting, it still supports the adoption of IPSAS in Denmark through participation in the Central Government Accounts Council, which monitors and discusses IPSAS-related issues. FSR continues to engage in dialogue with key government bodies such as the Economy Board of the Ministry of Finance and the Supreme Audit Court. It also participates in discussions and consultations conducted by the Public Sector Committee of Accountancy Europe.
FSR continuously seeks to improve awareness among members, students, and public authorities on best practice for accounting and auditing in the public sector.
FSR has demonstrated that, within the scope of its authority, it is committed to meet the SMO 5 obligations and has established ongoing processes to maintain compliance.
SMO 6: Investigation and Discipline
In accordance with the Danish Act on Approved Auditors and Audit Firms (the Audit Act) Consolidated Act No. 1287 of November 20, 2018, the Danish Business Authority (DBA) established the Auditors’ Tribunal, which together with FSR - danske revisorer, implement the investigative and disciplinary (I&D) system in Denmark for State Authorized Public Accountants (SPA)—statutory auditors. FSR reports that it also investigates suspicious actions performed by members that are not auditors to protect the reputation of its membership.
FSR, which has internal regulations governing members’ professional behavior, may forward cases related to members that are auditors to the DBA’s Tribunal for investigation and, depending on the findings, has the authority to expel its members. According to Section 43 of the Auditors’ Act, FSR is authorized by law to file a complaint against any professional accountant, regardless of whether they are members or not. FSR’s by-laws (articles of association) also cover ethical behavior and compliance among non-auditors. FSR indicates that the I&D processes in the jurisdiction fully align with the revised SMO 6 requirements.
FSR also takes steps to ensure that the I&D system continues to be in line with SMO 6 requirements. It liaises with representatives of the Auditors’ Tribunal and the Danish Business Authority and other relevant enforcement bodies to identify areas of improvement for the I&D system and to promote implementation of those improvements.
FSR provides members with resources on the I&D processes which it publishes on the website. It also continuously comments on I&D decisions in newsletters to members to raise awareness about behaviors that do not comply with current standards.
FSR has demonstrated that, within the scope of its authority, it is committed to meet the SMO 6 obligations and has established ongoing processes to maintain compliance.
SMO 7: International Financial Reporting Standards
The Danish Business Authority (DBA) and the Danish Financial Supervisory Authority (DFSA) are the designated accounting standard setters in Denmark for the entities they oversee. Listed companies in Denmark are required to apply EU-endorsed IFRS in their consolidated financial statements and in separate financial statements for listed non-group companies that do not prepare consolidated statements. DFSA oversees financial reporting of financial institutions in Denmark. Non-listed financial institutions are mandated by DFSA to apply standards defined in the Danish Financial Statements Act alongside DFSA directives. The definitions of elements, recognition criteria, etc. noted in the Danish Financial Statements Act and in the DFSA’s executive orders are identical to the IFRS Framework and standards.
Non-listed companies may choose to apply IFRS or the Danish Accounting Standards developed by the FSR Danish Accounting Standards Committee (DASC). Danish accounting standards issued by DASC and/or IFRS may be applied on a voluntary basis to provide transparency and to fulfill user information needs.
FSR maintains ongoing dialogue with the Danish Business Authority and the Danish Financial Supervisory Authority and provides input on the endorsement and implementation of IFRS. FSR’s DASC provides technical guidance on IFRS and participates in the international standard-setting process by providing comments on exposure drafts and discussion papers issued by the IASB and the European Financial Reporting Advisory Group. DASC also provides technical information on current accounting issues to FSR members. Since 2007, DASC has been developing non-mandatory guidance and standards on IFRS application for companies of all sizes in Denmark.
FSR supports implementation of IFRS by providing up-to-date courses and conferences on new and revised IFRS and Interpretations. It raises awareness of updates and international developments on standard-related topics through publications on its website.
FSR has demonstrated that, within the scope of its authority, it is committed to meet the SMO 7 obligations and has established ongoing processes to maintain compliance.
IFAC bears no responsibility for the information provided in the SMO Action Plans prepared by IFAC member organizations. Please see our full Disclaimer for additional information.
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