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    Country by Country Financial Reporting and Auditing Framework

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    Norway – Crowe Horwath Norway (prepared January 2015)

     Preparation of and Filing of Statutory Financial Statements

     

    The following enterprises have a statutory obligation to keep accounts and shall for each financial year prepare and file annual accounts and a directors’ report in accordance with the obligations of the Norwegian Accounting Act:

    • Limited liability companies (AS) and public limited liability companies (ASA), 
    • Foreign enterprises which carry on or participate in activities in this country or on the Norwegian continental shelf, and which are taxable to Norway pursuant to Norwegian internal law. 
    • State-owned corporations, 
    • Others:  
      • Foundations, certain partnerships, financial institutions, investment funds and other enterprises which are subject to supervision relating to the Banking, Insurance and Securities Commission investment funds, 
      • Consumer co-operatives with revenue exceeding NOK 2 million (kEUR 225), and co- operative building associations, housing co-operatives and owner-tenant section joint ownerships  
      • Other associations and societies that annually has total assets to a value of more than NOK 20 million (kEUR 2.250) or an average of more than 20 employees, 

    The annual accounts and directors’ report shall be adopted not later than six months after the expiry of the financial year (and filed within 1 month later or if the filing is electronic within 2 months).  

     

    The entities are required to prepare full financial statements comprising a balance sheet, an income statement, a cash flow statement and explanatory notes to the financial statements. Small enterprises (corporations which on the balance sheet date do not exceed the limits of two of the following three conditions: revenue of NOK 70 million (kEUR 7.900), balance sheet total of NOK 35 million (kEUR 3.950) and average number of employees during the financial year of 50 man-labour years) are not required to prepare a cash flow statement and there are separate and less extensive requirements regarding the notes.  Large- (public listed companies, listed on a stock exchange, or similar market place) and medium- (enterprises which are not small and not large) sized groups are required to prepare and file consolidated financial statements including a directors’ report for the group.

    Financial Reporting Framework

     

    All enterprises with a statutory obligation to prepare annual accounts shall for each financial year prepare annual accounts and a directors’ report in accordance with the requirements in the Norwegian Accounting Act.

     

    Listed companies in Norway are required to prepare their group financial statements in accordance with International Financial Reporting Standards (IFRS). The EEA Agreement (regulation (EC) no. 1606/2002 regarding the application of international financial accounting standards with adaptations to the EEA Agreement) applies as law. These companies will still have to follow certain defined disclosure requirements in the Norwegian Accounting Act in addition to the IFRS requirements (for example remuneration to management, pension, etc.), and prepare a directors’ report in compliance with the Norwegian Accounting Act.

     

    Enterprises subject to statutory preparation of annual accounts that are not covered by regulation (EC) no. 1606/2002, have the option to prepare annual accounts in accordance with the IFRS (the Norwegian Accounting Act has incorporated regulations on simplified application of international accounting standards based on IFRS SME).

     

    Audit Requirements for Corporations Registered in Norway

    All enterprises with a statutory obligation to keep accounts shall ensure that their annual financial statements are audited by an authorized public accountant or a state authorized public accountant.

     

    A statutory audit shall not apply if the operating revenues of the overall enterprise are less than NOK five million (kEUR 560). If the annual financial statements show operating revenues exceeding this limit, statutory auditing shall take effect for the following financial year. If the operating revenues fall below the limit in two consecutive financial years, statutory auditing shall lapse effective from the start of the third financial year. The exception in the audit obligation shall not apply to:

    Private limited companies and public limited companies,

    Enterprises with more than five partners that are obliged to keep accounts as described in the Accounting Act section 1-2 subsection one, no. 4,

    Limited partnerships where the general partner is a body corporate in which none of the co-owners are personally liable for the obligations, undivided or for portions that together comprise the body corporate’s total obligations, provided the limited partnership has a balance sheet total that is more than NOK 20 million or an average number of employees that is more than ten man-years. The provisions stipulated in subsection two, sentences two and three, apply correspondingly to the threshold values for the balance sheet total and man-years,

    General partnerships where all the partners are bodies corporate in which none of the co-owners are personally liable for the obligations, undivided or for portions that together comprise the body corporate’s total obligations, provided the general partnership has a balance sheet total of more than NOK 20 million or an average number of employees that is more than ten man-years. The provisions stipulated in subsection two, sentences two and three, apply correspondingly to the threshold values for the balance sheet total and man-years,

    Foundations.

    Audit Appointment, Rotation and Joint Audits

     

    Auditors are elected by the shareholders and appointed by the board of directors. Only public interest entities (listed companies etc.) are subject to mandatory rotation of their auditor. The following enterprises are subject to mandatory rotation:

    •   Enterprises that have issued negotiable securities that are traded in a regulated market in the EEA, 
    • A bank or other credit institution, 
    • An insurance company.
    Finanstilsynet (The Financial Supervisory Authority of Norway) may make exceptions to this requirement if the auditor is subject to requirements stipulated by another country’s legislation. 

     

    Joint audits are very rare in Norway, but not prohibited.

     

    Auditing Standards

     

    According to the Norwegian Audit and Auditor Act the auditor shall perform his duties in accordance with good auditing practice, and the Ministry may issue regulations stipulating requirements as to the performance of the audit if this is necessary for carrying out international obligations. The Norwegian standards are a translation of IAASBs international standards and thus fully consistent with the Clarity ISAs issued by the IAASB.

    Ethical Framework

     

    Crowe Horwath Norway, and the Norwegian auditing profession in general are bounded by the IFAC Code of Ethics (IESBA) which is incorporated through the ISA.

    Audit Regulation

     

    Crowe Horwath Norway is subject to the following external and internal monitoring processes with regard to their audit practice.

    External Monitoring

    The audit practices of all Norwegian auditor firms with authorization are subject to periodic external peer reviews (by the public supervision under The Financial Supervisory Authority of Norway). The peer reviews have to be completed every six years, in addition to the continuous controls. The auditor firms also have to report annually to The Financial Supervisory Authority of Norway.

    Internal Monitoring

    Crowe Horwath Norway (Vidi Revisjon AS) has established an annual firm wide monitoring process known as internal inspections, where at least one engagement of each partner shall be reviewed. In addition all larger engagements, and significant capital changes/mergers/demerges are second-hand-reviewed by another partner. The internal inspections are conducted following procedures defined by the Norwegian Institute of Public Accountants and the formal annual monitoring review process allows us to gain assurance that our firm`s quality systems are operating effectively, and this is a part of the firm`s reporting to the Financial Supervisory Authority of Norway.

    Transparency Report

    Audit firms that perform audits for public interest entities are required to prepare an annual transparency report that is available on their websites and cover information about the respective audit firm’s governance and ownership structure, its quality control and monitoring system, its independence policies and measures, its continuing professional education processes and its remuneration principles for senior personnel.


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