Special terms and conditions for audits

20.1 Purpose

20.1.1 Auditing

The purpose of our work as an auditor is to increase users' confidence that the Client's annual accounts have been has been prepared in accordance with applicable statutory and regulatory requirements, including the applicable framework for financial reporting.

20.1.2 Review engagements

The purpose of review Engagements is to increase intended users' confidence that the entity's (annual) accounts have been prepared in accordance with applicable framework for financial reporting.

20.1.3 Other assurance engagements

The purpose of assurance Engagements that are not audits or reviews of historical financial information, is to provide either reasonable or limited certainty, depending on what is relevant, that the information about the subject matter does not contain material misstatements.

20.1.4 Agreed upon procedures

The purpose of agreed upon procedures is to assist the client with an agreed objective, specified in the Engagement Agreement. Our report may not be used for any other purpose and is for information only. For agreed upon procedures, we perform the procedures explicitly agreed upon and report our findings based on these procedures.

Since BDO neither decides the scope of procedures nor determines any threshold for what is to be included in the report or not, agreed upon procedures do not constitute an audit, review or any other form of assurance. Therefore, we will not issue a report containing an opinion on anything other than what is specifically agreed in the Engagement Agreement.

 

20.2 Audit engagements

20.2.1 Our responsibilities as the client’s auditor

When we are appointed auditors, we are required to audit the Client's annual accounts, which consist of a balance sheet, profit and loss accounts, a description of accounting policies applied and other notes. Where it is appropriate, a statement of changes in equity and/or cash flow is also a part of the annual accounts. If the Client is the parent company in a group issuing consolidated accounts, the annual accounts consist of company accounts and consolidated accounts, each with the content described above.

We will issue an audit report, where we state an opinion on whether: the annual accounts or other accounts, provide a true and fair view, or are stated, in accordance with the accounting framework applied and whether the accounts meet applicable legal requirements.

If an annual report is also issued together with the annual accounts, we will state an opinion on whether the annual report is consistent with the annual accounts and whether the annual report contains the information to be provided according to applicable legal requirements.

 

20.2.2 Frameworks for the engagements

20.2.2.1 Audit of financial statements

We will perform our audits in accordance with generally accepted auditing practice, including the International Standards on Auditing (ISAs) issued by the International Auditing and Assurance Standards Board (IAASB). We will also perform related services according to applicable standards that apply to such services, see the specification of this below.

 

20.2.2.2 Assurance on reporting to tax authorities

Under the Norwegian Tax Administration Act, an auditor must sign (assure) the tax declaration and the form for wages and pension expenditures for entities subjected to statutory audit that are also liable to tax and/or have wage and pension expenditures that are required to be reported. There may be other attachments that must be assured, such as the form for group contributions.

The purpose of such certification is for the tax authorities to have reasonable assurance that the basis for information about tax and VAT matters in the tax declaration is in accordance with the tax laws.

If the auditor is not able to provide assurance of the tax declaration or the schedule of wages and pension expenditures, this will be reported to the tax authorities through their receipt of a copy of the explanation in accordance with applicable statutory and regulatory requirements.

We will perform our work on assurance of the income declaration and the schedule of wages and pension expenditures for entities subjected to statutory audit in accordance with the Norwegian assurance standard, SA 3801.

 

20.2.2.3 Responsibilities of the client’s board of directors and management

Our audit will be performed on the basis that the Client’s board of directors and management are responsible for

a) the preparation of annual accounts that provide a true and fair view in accordance with the accounting framework;

b) the bookkeeping being in accordance with the Norwegian Bookkeeping Act;

c) compliance with the legislation for the company's tax and VAT reporting;

d) the company managing the risk of irregularities and errors in a prudent manner by having well-functioning internal control and good accounting and reporting procedures;

e) facilitating the audit by granting us the access required to undertake examinations and provides us with the information we deem necessary for the performance of the Engagement, including unlimited access to individuals in the company;

f)  ensuring timely submission of all relevant documentation and reconciliations of accounting entries; and

g) issuing any written statements we request in connection with the audit.

 

20.2.2.4 Reporting

After accounts and any annual reports have been submitted by the Client, we will conclude the auditing work for the year and submit our auditor's report according to Section 9-7 of the Norwegian Auditors Act, which shows the result of the statutory audit to the Client’s general meeting.

 

20.2.2.5 Communication with the company

Pursuant to Section 9-5 of the Norwegian Auditors Act, an auditor is required to report all matters brought to light by the audit of which the board of directors should be apprised in order to be able to discharge its responsibility and tasks, including significant deficiencies in the enterprise’s internal control, breaches of the bookkeeping regulations and other legal requirements and identified irregularities in numbered written communications to the board of directors. Such correspondence is to be retained in an orderly and satisfactory manner.

The auditor is required to identify the matter and the consequences it will have for the audit if the matter is not acted upon. The auditor is required to verify that the matters communicated have been considered by the board of directors. The written communication must state that it has been provided according to Section 9-5 of the Norwegian Auditors Act.

In enterprises without a board of directors the communication is to be made to another appropriate management body.

Where it is required by law, an annual meeting must be held between the company's board of directors and the auditor, without management being present.

The purpose of the meeting is for the board of directors and the auditor to discuss accounting matters in which the auditor sees significant weaknesses and deficiencies in the assessments the management has made, as well as other matters that the auditor believes the board should be informed about.

 

20.2.2.6 Termination and resignation

The audit Engagement runs until it is terminated either by the Client or by us.

In given situations, we have a duty and/or right to withdraw from the audit Engagement, see Section 9-6 of the Norwegian Auditors Act.

A notice of termination must be written.

 

20.3 Assurance engagements other than auditing

20.3.1 Opinions and statements under norwegian company legislation

Both for clients where we are selected auditors and for other principals, we may agree to issue opinions, confirmations or statements where it is appropriate under Norwegian company legislation. Such special assurances will not be included as part of our general audit Engagement.

We will perform our work on such special assurances in accordance with the assurance standard, SA 3802.

 

20.3.2 Other assurance engagements

We may also agree by specific agreement to provide other opinions or confirmations where this is appropriate.

Such opinions or confirmations are completed in accordance with standards for review Engagements (ISRE 2400-2410), standards for assurance Engagements that are not audits of historical financial information (ISAE 3000) and the ISAs.

 

20.4 Agreed upon procedures

We may agree by specific agreement to provide a report after agreed upon procedures.

For such services, we issue a report on our factual findings, pursuant to what was agreed in the Engagement Agreement and the standards, without reporting any opinions as for an assurance Engagement.

Our Engagement will be performed in accordance with ISRS 4400 ‟Agreed‑Upon Procedures”.

An assignment on agreed upon procedures in accordance with ISRS 4400, entails that we do the procedures agreed with the client and that we communicate the findings in a report on agreed upon procedures. The findings are the results of the agreed upon procedures that have been performed. The client (and other parties if relevant) confirms that the actions are appropriate for the purpose of the assignment. We do not comment on the appropriateness of the actions.

The assignment for agreed upon procedures will be carried out based on the assumption that the client is responsible for the details on which the agreed upon procedures will be performed.

 

20.5 Inherent limitations

For limitation of financial liability, see Section 15 of the Terms and Conditions.

Auditing and other assurance Engagements, as described in Sections 20.1.2 and 20.1.3 of the Terms and Conditions, involve carrying out measures to obtain evidence on matters for which we are to express an opinion. The measures chosen depend on the auditor's judgement.

A judgement is also involved when assessing the risk that information reported by the client contains material misstatements, whether due to fraud or errors.

Because of the inherent limitations of auditing and assurances, as well as the inherent limitations of internal control, there is always a risk that not all material misstatements in the financial or non-financial information will be detected, even if the audit or assurance has been planned and carried out in accordance with the professional standards.

 

20.6 Auditing and internal control

An auditor's objective when auditing is to express an opinion on the financial reporting.

The audit includes an assessment of the internal control related to the preparation of the accounts, in order to design audit measures that are appropriate under the circumstances, but not with the objective of expressing an opinion on the effectiveness of the internal control.

Deficiencies reported to the management are limited to the deficiencies that the auditor has identified during the audit and which the auditor believes are sufficiently important that they should be reported.