Auditing requirements have been a highly debated subject in both Denmark and other EU countries. The debates have resulted in the introduction of a number of audit exemptions in the individual EU countries and recently Denmark has approved a second audit exemption as of 1 January 2011. However, many companies continue to have their financial statements audited even though they are exempt from the audit requirement. We have examined the reason for this continued audit through a questionnaire survey and the result indicates that the individual companies have many different reasons for continuing with an audit. Some of the reasons mentioned in the questionnaire are: the companies are unaware of the consequences of discontinuing with the audit, the companies themselves want to continue with the audit, the cost saved by discontinuing the audit is unimportant or the mortgage credit institutions demand audited financial statements. The companies who discontinue the audit do so to save money and because they believe the audit does not add value when the company’s size and activity level is taken into account. A general trend revealed in the questionnaire is that a large number of the respondents are unaware of the difference between an audit and a review and for this reason they are unsure which type of auditor’s report to choose. Several surveys have indicated that the credit institutions attach great importance to the fact that the financial statements have been audited. However, this has turned out not to be the case in our questionnaire where we interviewed four mortgage credit institutions. The interviews reveal that the mortgage credit institutions would be just as satisfied with a review and for this reason the need for audited financial statements steadily diminishes. On the basis of our analyses we can conclude that there seems to be less demand for audited financial statements among the smaller class B enterprises, as the audit exemption in this case concerns enterprises that have no extensive internal controls and only limited separation of duties. In addition, the daily management and the executive management are often one and the same for which reason the requirement for an audit no longer applies, see the principal-agent theory. Furthermore, it became apparent that the stakeholders – including the credit institutions – were satisfied with a review of the financial statements and thus there is no reason for the enterprises to spend their resources on an audit.
|Uddannelser||Cand.merc.aud Regnskab og Revision, (Kandidatuddannelse) Afsluttende afhandling|