Norway

Norway is not a member of the European Union, but 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 accounting and auditing. New EU rules are continuously made part of the EEA through the agreement and incorporated into Norwegian law.

Accounting Framework

The Accounting Act of 17.07.1997 defines the types of entities that must prepare a complete set of financial statements. The Act provides simplifications for small entities that fall below specific 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 must also 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.

Per the Accounting Act, companies not applying IFRS must prepare financial statements according to the Norwegian Generally Accepted Accounting Principles. The Norwegian Accounting Standards Board, an independent standard setter, sets the accounting standards. The adoption of IFRS for Small- and Medium-sized Entities is under consideration.

Auditing Framework

The Auditors Act of 2020 provides the legal provisions governing the audit of financial statements in Norway. The Act incorporates the EU audit legislation into Norwegian law, including the EU Audit Reform of 2014. 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) 6 million; (ii) a balance sheet total of NOK 23 million; and (iii) an average number of 10 employees.

Audits and statutory assurance services are required under the Auditors 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 adopted as issued and translated into Norwegian.

In Norway, public accountants are regulated at the state level by the Financial Supervisory Authority of Norway (FSA), an integrated financial sector supervisor, in accordance with the Act on the Financial Supervisory Authority of 1956 and the Auditors Act of 2020. The FSA is responsible for: (i) approval, certification and registration of statutory auditors and audit firms; (ii) supervision and implementation of initial and continuous education requirements; (iii) implementation of ethical requirements and regulations; (iv) establishing a quality assurance (QA) review system for the statutory audits of PIEs and supervision of the QA procedures of the Norwegian Institute of Public Accountants (Revisorforeningen) for non-PIEs; and (v) investigative and disciplinary (I&D) system for statutory auditors and audit firms. Regarding standard-setting, FSA has clarified that it does not play the role of standard-setter; however, through its oversight, it influences standards, and supplements and interprets standards.

The Auditors Act of 2020 regulates public accountants (statutory auditors) authorized to perform statutory audits and assurance services in Norway. The Act establishes the initial and continuing professional education requirements to obtain a license, license withdrawals, and the applicable ethical requirements.

State Authorized Public Accountants (SPA–"Statsautorisert Revisor") are required to complete a master's degree in auditing and accounting, have three years of relevant audit practice, pass the Auditor's Test of Practical Ability (administered by the FSA), and maintain a good reputation. The FSA licenses SPAs in accordance with statutory requirements.

The Financial Supervisory Authority of Norway (FSA) is the independent oversight authority responsible for supervising auditors in Norway. The FSA's responsibilities are described in the

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

Norwegian Institute of Public Accountants (Revisorforeningen)

Revisorforeningen is a professional organization for state authorized public accountants (statutory auditors) in Norway. Membership of the institute is voluntary and comprises most of the public accountants in the jurisdiction. The objectives of Revisorforeningen 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.

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

The demand for and importance of sustainability reporting and assurance is growing fast in the Norwegian and European markets. Draft legislation to implement the Corporate Sustainability Reporting Directive (CSRD) into Norwegian law was presented by an expert commission in May 2023. Final legislation is expected to be effective by Q2 2024.

The Financial Supervisory Authority of Norway (FSA) is responsible for the overall quality assurance (QA) review of auditors and audit firms systems in the jurisdiction, in accordance with the Act on the Financial Supervisory Authority of 1956 and the Auditors Act of 2020.

The FSA conducts QA reviews for all PIEs. 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. As reported by the Norwegian Institute of Public Accountants (Revisorforeningen), quality management standards are adopted.

The FSA has delegated the responsibility of QA reviews of individuals that are statutory auditors of non-PIEs to the Revisorforeningen. The QA reviews are part of the overall system of public oversight and are performed on behalf of the FSA.

The Revisorforeningen reports that the QA system is aligned with SMO 1 best practices.

Current Status: Adopted

In Norway, the national legislation regulates the initial and continuing professional development (IPD and CPD, respectively) requirements for State Authorized Public Accountants (SPA; statutory auditors). 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 (Revisorforeningen), and universities. The FSA regulates the public accountants (statutory auditors) at the state level. The universities and business schools provide initial professional education in auditing and accounting.

IPD requirements include educational and practical experience requisites. SPAs are required to complete a master's degree in auditing and accounting, have three years of relevant audit practice, pass the Auditor's Test of Practical Ability, and demonstrate a good reputation. The FSA licenses SPAs in accordance with statutory requirements.

Statutory auditors are required by law to complete 120 hours of verifiable CPD in a three-year period. Revisorforeningen offers a CPD program.

The Revisorforeningen reports that the requirements for SPAs comply with the latest International Education Standard (IES) requirements to date.

Current Status: Adopted

The Auditors Act of 2020 provides the legal provisions governing the audit of financial statements in Norway.

According to the law, audits and statutory assurance services must be performed in accordance with generally accepted auditing and assurance practices. There are not further defined but generally interpreted to mean the standards issued by Revisorforeningen.

De facto, the standards issued by the Auditing Standards Committee of the Norwegian Institute of Public Accountants (Revisorforeningen) are applied. International Standards on Auditing (ISA) and other IAASB pronouncements are adopted as issued and translated into Norwegian.

The Revisorforeningen reports that the 2021 IAASB Handbook requirements have been adopted.

Current Status: Adopted

In Norway, the Auditors Act of 2020 mandates all statutory auditors and audit firms to be subject to principles of professional ethics. The Auditors Act includes independence requirements in line with the EU Audit Directive, which are as stringent as the independence requirements in the International Ethics Standards Board for Accountants (IESBA) Code of Ethics. The EU Audit Regulation sets out additional independence requirements for public interest entity (PIE) audits, which also apply in Norway. In addition to independence, the requirements include provisions on the auditor's role, engagement partner, professional confidentiality, and acceptance and resignation. The Norwegian Institute of Public Accountants (Revisorforeningen) reported that these requirements align with the 2022 International Code of Ethics requirements issued by the IESBA.

The Financial Supervisory Authority of Norway oversees the implementation of ethical requirements and regulations as prescribed in the law.

Current Status: Adopted

The Ministry of Finance (MoF) is responsible for setting public sector accounting standards in Norway. Public sector entities are using national standards on a cash-basis (IFAC/CIPFA International Public Sector Financial Accountability Index 2020).

According to the Norwegian Institute of Public Accountants (Revisorforeningen), the MoF has also developed accrual-basis standards based on International Public Sector Accounting Standards (IPSAS) that public sector entities can apply voluntarily and as supplementary information to the mandatory cash-based statements.

Current Status: Not Adopted

The Act on the Financial Supervisory Authority of 1956 and the Auditors Act of 2020 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 when withdrawing the auditor's license should be considered. The FSA is empowered to temporarily or permanently revoke the license to practice on the grounds of material or repeated misconduct. The Auditors Act of 2020 has introduced additional sanctioning powers for the FSA, including the imposition of administrative fines, the temporary ban on issuing audit reports, and the temporary ban on having a management position in an audit firm or a public interest entity (PIE). The auditor or audit firm has a right to appeal before a special appeal board.

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

The Revisorforeningen reports that the FSA's I&D system aligns with SMO 6 requirements.

Current Status: Adopted

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

Norway has adopted the European IAS Regulation that defines public interest entities as listed companies, credit institutions, and insurance undertakings. Norwegian listed companies prepare consolidated accounts according to International Financial Reporting Standards (IFRS), while banks, insurance undertakings and other credit institutions must 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 the Norwegian Generally Accepted Accounting Principles. The Norwegian Accounting Standards Board, an independent standard setter, sets the accounting standards.

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 for public consultation that would address the adoption of IFRS for SMEs. To date, this process has not resulted in any new legislation.

Current Status: Adopted

Relevant Organizations

• Norwegian Institute of Public Accountants
• Norwegian Accounting Standards Board
• Norwegian Financial Supervisory Authority

Relevant Legislation

• HYPERLINK "https://www.finanstilsynet.no/globalassets/laws-and-regulations/laws/auditors-act.pdf" Norway Audit Act, 2020
• FSA Act on the Supervision of Financial Institutions No.1, December 1956 (last amended December 2012)

Relevant Publications

• Accountancy Europe, Structure and organisation of the profession - key features, 2020.
• --, Definition of Public Interest Entities in Europe (March 2019 update), 2017.
• Revisorforeningen, SMO Action Plan, June 2023.
• OECD/IFAC (2017), Accrual Practices and Reform Experiences in OECD Countries, OECD Publishing, Paris.
• IFIAR, Norway Member Profile, 2023.
• IFRS Foundation, IFRS Application Around the World, Jurisdictional Profile: Norway, July 2016.