Fraud and Money Laundering in Denmark

Abstract

The purpose of this thesis is to examine the roles and responsibilities of Danish auditors in detecting and preventing the risk associated with fraud and money laundering within firms. In recent years there has been a noticeable increase in cases regarding fraud and money laundering. These increases have significantly impacted the public’s trust in the Danish external auditors. This thesis analyzes whether the current obligations of the external auditors are sufficient to cover money laundering and fraud and how current legislation and collaboration with the internal auditors assist in identifying and covering the risk associated with this.

This study applies a mixed-method approach that combines qualitative interviews with experienced auditors and a quantitative survey to support the perspective on the expectations and perceptions of the external auditors’ roles related to fraud and money laundering. The analysis identifies and explores both strengths and weaknesses in the auditors existing processes with the purpose of suggesting improvements to enhance the effectiveness of the audit procedures in identifying, preventing and reporting activities in relation to fraud and money laundering.

Findings in the analysis indicate that the external auditors are generally considered to be sufficient in their duties related to the procedures presented in ISA 240 which includes identifying and monitoring the risk of fraud. The study shows that there are certain external weaknesses which can affect the auditor's overall sufficiency where further improvements are possible. Additionally, it is clear that the collaboration with SØIK is not efficient. Based on the thesis it appears that the audit procedures regarding money laundering are not considered sufficient. This is due to lack of clear guidelines and law regulations to the requirements of the external auditor’s actions.

In response to the identified weaknesses, the thesis will present and discuss a series of proposed solutions or alternative actions in terms of how to improve cooperation with public authorities and Danish companies. Furthermore, this research will focus on an assessment of whether these are appropriate for the auditor to implement regarding fraud and money laundering.