Insight
Danish Audit Committee Guide
On 23 June 2022, the Danish Business Authority issued news that it had revised the Audit Committee Guide including appendices in April 2022.
The Guide has primarily been revised with election of audit committee’s chairman, Report on quality review of the audit firm, rulings on Auditors will be published, guide on appointing an auditor and cool-off period before an audit partner may take up an employment with an audit client.
Audit Committees
The Danish Audit Committee guide has been revised.
On 23 June 2022, the Danish Business Authority issued news that it had revised vejledning om revisionsudvalg samt tilhørende bilag in April 2022. The Guide has primarily been revised with amendments to the Auditor Act and updated Recommendations for Corporate Governance.
The update does not include changes in the duties of audit committees.
In our opinion, the five principal revisions in the Guide are:
- The audit committee's chairman shall be elected by the committee members, by the board of directors, by the supervisory board or annually at the undertaking's general meeting. In the event of a tied vote, lots shall be drawn. The enterprise can choose the option that suits it best. No provisions can be set out in the articles of association on other means of electing a chairman. The Committee on Corporate Governance recommends that the chairman of the board is not selected as chairman of the audit committee (recommendation 3.4.3).
- All audit firms that have been subject to the mandatory quality assurance review shall inform the audit committee in writing within 4 weeks of receiving the Authority’s report on the review of a) the report’s main conclusions from the quality assurance review and any recommendations for following up on points for improvement, and b) the result of the review of the audit of the audit client’s accounts, if subject of the review.
- Rulings made by the Disciplinary Board on Auditors concerning auditors and audit firms will be published on the website of the Disciplinary Board on Auditors. Rulings in which auditors are found guilty will be published with details of their identity, unless they are given a warning, publishing of their identity will be a serious threat to financial market stability or a criminal investigation in progress, or publication will cause disproportionate harm. The identity of the auditor will be publicly accessible for at least 2 years. Rulings concerning audit firms will contain details of the firm's name but will be anonymised in all other respects. The identity of an audit firm will be publicly accessible for at least 2 years.
- The Committee of European Auditing Oversight Bodies (CEAOB) published a guide on 16 March 2021 on appointing an auditor in public-interest entities, which contains guidance on a number of frequently asked questions concerning the appointment of an auditor. The guide can be seen on the Danish Business Authority's website (www.erst.dk).
- It has been specified that the determination of the two-year cool-off period before a key audit partner may take up employment with his or her audit client is to be interpreted to mean that the relevant former auditor cannot accept an employment contract for a managerial position with the audit client until two years after he or she has resigned as auditor even if he or she does not yet commence their work in the relevant position before two years after retirement.
The proposed EU Corporate Sustainability Reporting Directive, the final wording of which is expected in July 2022, will presumably involve a change in the duties of audit committees. So, it is to be expected that the Danish Business Authority will revise the Guide once the Directive is to be implemented into Danish law.
