Sweden

As a member of the European Union (EU), Sweden is subject to the accounting, auditing and financial reporting legislation, directives, and regulations issued by the European Commission, which have been transposed into national law.

Accounting Framework

The Annual Reports Act of 1995 (as amended in 2016) stipulates the requirements for preparing 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 with statutory authority to develop generally accepted accounting principles for private companies. While IFRS for Small- and Medium-sized Entities (SMEs) has not been adopted in the jurisdiction, Sweden has developed a national accounting standard, BFNAR 2012:1 (K3), based on IFRS for SMEs to be applied for private companies. Small companies may choose to use national accounting standards, BFNAR 2016:10, also developed by BFN, or to apply the K3.

The Finansinspektionen (SFSA) – Swedish Financial Supervisory Authority – is responsible for issuing standards required for financial institutions, while the Rådet för finansiell rapportering (RFR) – Council for Financial Reporting – focuses on listed companies. The EU Regulation EC 1606/2002 and national legislation require companies to apply EU-endorsed IFRS, which are required for the consolidated financial statements of all Public Interest Entities (PIEs), which include listed companies, credit institutions, and insurance companies.

Auditing Framework

The auditing requirements in Sweden are set in the Auditing Act of 1999, the Companies Act of 2005, and the Auditors Act of 2001, which transposes the Audit Directive No 2014/56. Furthermore, the EU Regulation No 537/2014 is applicable.

Swedish legislation stipulates that any entity required to prepare financial statements is also subject to statutory audit. An audit exemption applies to most small companies that meet more than one of the following characteristics: (i) operating income less than Swedish Krona (SEK) 3 million; (ii) assets below SEK 1.5 million; and (iii) an average number of 3 employees.

Audits services are required to be performed in accordance with generally accepted auditing principles. According to the Acts, FAR is responsible for issuing recommendations and pronouncements on what "generally accepted auditing principles" are. The Revisorsinspektionen (RI) — Swedish Inspectorate of Auditors — has the mandate to interpret and evaluate the recommendations and pronouncements issued by FAR and thus determine "good auditing practice." FAR reports that the 2021 Handbook requirements have been adopted, except for ISAE 3400, ISAE 3410, and ISRS 4410.

In Sweden, authorized public accountants and approved public accountants (both considered statutory auditors) are regulated at the state level by the Revisorsinspektionen (RI) — Swedish Inspectorate of Auditors — in accordance with the Auditors Act of 2001. The RI is amongst other responsible for: (i) providing guidance regarding authorization and approval of statutory auditors and registration of audit firms; (ii) supervising auditing practices, statutory auditors and registered audit firms; (iii) ensuring that generally accepted accounting, auditing and ethical principles are developed in a goal-oriented manner; (iv) monitoring and enforcing initial and continuing professional development requirements (IPD and CPD, respectively) of statutory auditors in the jurisdiction (100 hours over five years); (v) investigating and disciplining (I&D) system for statutory auditors and audit firms; and (vi) establishing a quality assurance (QA) review system for the statutory audits of public interest entities (PIEs) and supervision of the QA procedures of the FAR for non-PIEs.

The Auditors Act establishes the IPD and CPD requirements to become statutory auditors. All individuals pursuing the statutory auditors must fulfill the following criteria: reside in Sweden or another state within the EEA; acquire a bachelor’s degree, have three years’ of practical experience, and complete another two years of either relevant university studies or practical experience to qualify for the final examination run by the RI.

In addition to statutory auditors, other segments of the accountancy profession, such as accounting consultants, payroll consultants, and tax consultants, may voluntarily join a professional accountancy organization (PAO) and therefore become subject to the PAO's membership requirements and internal regulations. The FAR is a PAO that unites accountancy professionals and firms voluntarily.

FAR's responsibilities include (i) translating and issuing international standards such as ISA and the IESBA Code of Ethics; (ii) conducting quality assurance reviews on behalf of RI of members providing services to non-PIEs; (iii) monitoring and enforcing mandatory 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 the implementation of accounting and auditing and other professional standards; and (vi) conducting an investigative and disciplinary system for its members.

FAR offers qualifications such as authorized accounting consultants (AAC), authorized tax advisors (ATA), and authorized payroll consultants (APC) to professionals that meet specific education and work experience criteria, and they must also pass specialized examinations.

To obtain the qualification as AAC, individuals must acquire a bachelor's degree or complete a FAR-approved education of two years of higher vocational education, complete three years of practical experience, and have substantial experience in accounting. To obtain the APC qualification, individuals must acquire a bachelor's degree or complete a FAR-approved education higher vocational education, complete three years of practical experience, and have substantial experience in payroll. To become an ATA, individuals must acquire a bachelor's degree, have five years of relevant work experience, and be active consultants or specialists in the industry. The ATAs must also pass an examination on ethical standards.

All FAR members must complete at least 120 hours of relevant CPD within three years (minimum of 20 hours per year)—60 hours must be verifiable. In addition, the AAC or APC title must be renewed every six years by passing the quality assurance reviews arranged by FAR.

Another PAO operating in Sweden is Srf Konsulterna (HYPERLINK "https://srfkonsult.se/"Srf). Srf offers an accounting consultant qualification, and individuals are subject to an exam and must complete three years of practical experience. Members with at least eight years of experience may apply for the authorized accounting consultant (AAC) qualification. Srf requires members to complete 60 hours of CPD over three 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 every six years.

The Revisorsinspektionen (RI) – Swedish Inspectorate of Auditors– is the independent oversight authority responsible for supervising auditors in Sweden. The RI's responsibilities are described in the

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

FAR

FAR was founded in 1923 and, at the time, only included authorized public accountants as members. 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 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 the 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, and providing education programs 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 Konsulterna (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.

FAR was involved in the passage of the CSRD at the EU-level and is now engaged in implementing the directive into national legislation in Sweden. FAR has an expert appointed within the governmental group to implement the EU directive.

The Revisorsinspektionen (RI) – Swedish Inspectorate of Auditors — is responsible for the overall quality assurance (QA) review of auditors and audit firms systems in the jurisdiction, in accordance with the Auditors Act of 2001 (as amended 2018).

The RI conducts QA reviews for all PIEs. The RI has delegated the responsibility of QA reviews of non-PIEs to the FAR. As reported by the FAR, quality management standards are adopted.

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

Current Status: Adopted

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 (RI) – Swedish Inspectorate of Auditors.

All individuals pursuing the statutory auditors must fulfill the following criteria: reside in Sweden or another state within the EEA; acquire a bachelor’s degree, have three years’ of practical experience, and complete another two years of either relevant university studies or practical experience to qualify for the final examination run by the RI.

In addition, statutory auditors, other segments of the accountancy profession, such as accounting consultants, payroll consultants, and tax consultants, may voluntarily join a professional accountancy organization (PAO) and therefore become subject to the PAO's membership requirements and internal 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. To attain and maintain such a license, the auditor must meet certain criteria, i.e., relevant audit experience and CPD within the financial sector. An agreement between FAR and Finansinspektionen (Sweden's financial supervisory authority) makes this license is mandatory.

All FAR members must complete at least 120 hours of relevant CPD within three years (minimum of 20 hours per year)—60 hours must be verifiable.

Another PAO is operating in Sweden is Srf Konsulterna (HYPERLINK "https://srfkonsult.se/"Srf). Srf offers an accounting consultant qualification, and individuals are subject to an exam and completed three years of practical experience. Srf requires members to complete 60 hours of CPD over three years to renew their authorization license and adhere to the Code of Ethics as issued by FAR.

FAR reports that the national education requirements comply with the latest International Education Standard (IES) requirements to date.

Current Status: Adopted

Audits services are required under the Auditors Act of 2001 (as amended in 2018) to be performed in accordance with generally accepted auditing principles. According to the Acts, FAR is responsible for issuing recommendations and pronouncements on what "generally accepted auditing principles" are. The Revisorsinspektionen (RI) – Swedish Inspectorate of Auditors – has the explicit mandate to interpret and evaluate the recommendations and pronouncements issued by FAR and thus determine "good auditing practice." FAR reports that standards in the 2021 Handbook have been adopted, except for ISAE 3400, ISAE 3410, and ISRS 4410.

Current Status: Adopted

In Sweden, the Auditors Act of 2001 (as amended in 2018) mandates all authorized public accountants and approved public accountants (statutory auditors) and audit firms to be subject to principles of professional ethics. In line with the Auditors Act, FAR translates and issues ethical standards. The Revisorsinspektionen (RI) – Swedish Inspectorate of Auditors – interprets the standards for application by authorized public accountants.

FAR adopts the latest version of the IESBA Code of Ethics on an ongoing basis, with the same effective dates set by the IESBA. RI has endorsed the standards.

FAR requirements are applicable to all statutory auditors under the oversight of RI and its members. 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

Public sector accounting rules in Sweden are determined by two entities: the Rådet för Kommunal redovisning – accounting standards board for local government and the Ekonomistyrningsverket (ESV) – the Swedish national financial management authority for central government. Public sector entities are using national accrual standards with reference to IPSAS (IFAC/CIPFA International Public Sector Financial Accountability Index 2020).

Current Status: Partially Adopted

The Auditors Act of 2001 (as amended 2018) establishes the mechanisms for investigating and disciplining (I&D) authorized public accountants and approved public accountants (statutory auditors). In accordance with the law, the Revisorsinspektionen (RI) – Swedish Inspectorate of Auditors – has established an I&D system aligned with the best practices of SMO 6, as reported by FAR.

The disciplinary board at the RI, which has two members from FAR, initiates investigations based on findings from quality assurance reviews. 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 because of any violations. Furthermore, the RI is required to publish disciplinary actions on its website.

In addition, accounting professionals may voluntarily join FAR or Srf Konsulterna (Srf)—PAOs operating in the jurisdiction—and be subject to its regulation. FAR has its disciplinary committee to deal with cases that do not fall under the RI's jurisdiction and publishes its decisions on its website. Srf also has procedures in place to monitor its members.

FAR conducted a self-assessment of its I&D system and reported that it largely aligns with SMO 6 requirements.

Current Status: Adopted

The Annual Reports Act of 1995 (as amended in 2016) stipulates the requirements for preparing 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 with statutory authority to develop generally accepted accounting principles for private companies. While IFRS for Small- and Medium-sized Entities (SMEs) has not been adopted in the jurisdiction, Sweden has developed a national accounting standard, BFNAR 2012:1 (K3), based on IFRS for SMEs to be applied for private companies. Small companies may choose to use national accounting standards, BFNAR 2016:10, also developed by BFN, or to apply the K3.

The Finansinspektionen (SFSA) – Swedish Financial Supervisory Authority – is responsible for issuing standards required for financial institutions, while the Rådet för finansiell rapportering (RFR) – Council for Financial Reporting – focuses on listed companies. The EU Regulation EC 1606/2002 together with national legislation require companies to apply EU-endorsed IFRS. These are required for the consolidated financial statements of all Public Interest Entities (PIEs), which include listed companies, credit institutions, and insurance companies.

Current Status: Adopted

Relevant Organizations

• Bokforingsnamnden (BFN)
• Ekonomistyrningsverket (ESV)
• Finansinspektionen (SFSA)
• FAR
• Rådet för Kommunal redovisning (RKR)
• Revisorsinspektionen (RI)
• Srf Konsulterna (Srf)

Relevant Legislation

• Accounting Act of 1995 (in Swedish)
• Auditing Act of 1995 (in Swedish)
• Auditors Act of 2001 (in Swedish)
• Board of Auditors' Regulation of 1995
• Bookkeeping Act of 1999 (in Swedish)
• Companies Act of 2005 (in Swedish)
• Companies Act of 2005 (in English, unofficial)
• EU Directive 2014/56/EU of the European Parliament and of the Council on Statutory Audits of Annual Accounts and Consolidated Accounts

Relevant Publications

• Accountancy Europe, Definition of Public Interest Entities in Europe: State of Play After the Implementation of the 2014 Audit Reform, March 2019.
• Accountancy Europe, Structure and organization of the profession – key features, 2020
• Accountancy Europe, Member State Implementation of Directive 2014/95/EU, September 2017.
• Accountancy Europe, Member States' Implementation of New EU Audit Rules, December 2017.
• FAR, SMO Action Plan, 2023.
• IFRS Foundation, IFRS Application Around the World, Jurisdiction Profile: Sweden, July 2016.
• International Forum of Independent Audit Regulators, IFIAR Member Profile: Sweden, 2023.