Pursuant to the Supervision of Public-Interest Entities (Audit) Act (2016:429), FI is responsible for conducting certain audit supervision activities. FI has conducted an investigation into this supervisory area in 2017. This report provides an overview of the investigation’s results and describes FI’s view on how the regulations can be applied.
The aim of the investigation was to review whether public-interest entities (PIEs) have established an audit committee or have decided that the board of directors will perform the duties of such a committee, and whether at least one member of the committee or the board has the stipulated accounting or auditing expertise. FI noted that the firms investigated are complying in a satisfactory manner with the requirement to establish an audit committee or to have given the duties of the committee to the board of directors. However, FI would like to underline the fact that the legislative history of the amendment to the Swedish Companies Act (2005:551), which was implemented due to the EU directive concerning auditors and audit, states that the establishment of an audit committee, or allowing the entire board of directors to perform the duties of the committee, should be decided on by the board.
FI is able to ascertain that the firms investigated have generally interpreted the act's requirement for expertise in accounting or auditing as a requirement for an education within economics, combined with experience from working in a senior management position. It is FI's understanding that it is possible to comply with the requirement for expertise through relevant education and/or through relevant professional experience. In cases where the expertise is founded in education alone, without supplementary relevant professional experience, FI believes that it is preferable if this education is at university level and specialised in areas related to accounting or auditing. The legislative history states that experience of company management can provide sufficient insight into accounting and auditing issues to meet this requirement. FI believes that experience of working at an accounting firm is also an example of relevant professional experience. Furthermore, FI is of the opinion that the stipulated expertise is held by those who have the ability to contribute to what the audit committee is intended to contribute to as specified in the applicable acts and directives.
The investigation did not result in FI intervening in or issuing sanctions against any firm. Instead, FI will be continually monitoring developments relating to how PIEs will be applying and complying with the applicable provisions.