The Removal of the Audit Protocol for Small and Medium Sized Companies: How will Future Communication with the Board be?

Heidi Birch Petersen

Student thesis: Master thesis


This thesis is concerned with the communication between the auditor and the board. After the removal of the statutory authority on audit protocols for all Danish companies, expect public interest entities, the question remains on how the future communication will look for all small and medium sized companies.
Based on the curiosity concerning this question, the following problem statement is made in order to answer this:
Which demands are there for the communication between the board in small and medium sized companies and the auditor, and how could communications have these demands taken into consideration?
To answer the problem statement the method and analysis on the thesis is divided into three parts. The first part seeks to explain the change in laws in audit communications, and the statutory authority it has now. Here legal method has been used to deduct the following. Due to the above- mentioned removal, the statutory authority for communication in audits lies in the audit law §16, which states that auditors must comply with good audit practice, and thereby follow certain standards.
The second part analyses five chosen ways to communicate, in order to find out how these methods comply with both the audit standards concerning audit communications, communications theory, legal proof theory and corporate governance recommendations for small and medium sized companies. The analysis compares all of this based on the characteristics type, content, extent and frequency. In this part the results are that the best way to communicate depends on which perspective you look from, but apart from auditing standards’ demand for certain topics in writing, the most useful form would be sound recording of the board meetings, with an attending auditor. The situation you are communicating from is however paramount due to the different demands.
The third part of the analysis seeks to find the opinion on audit communications from board members, and the role an auditor plays in the work and responsibility of the board. For this analysis there has been used primary qualitative data in the shape of personal partly structured interviews. The results showed different opinions on the communications method, but revealed a common desire for trust for the auditor, and a demand for more value creating information in future audits. The philosophy of science in this thesis is constructivist, due to the problem statement, method of research, and the nature of the results.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
Publication date2017
Number of pages127
SupervisorsJørgen Valther Hansen