The planned reform of Sweden’s audit requirements is causing a
debate within the profession. Firm leaders have offered a mixed
response to the planned legislation as part of a survey on the
Swedish profession in TA sister publication
International Accounting Bulletin (see IAB
424).

At present, all limited companies in Sweden are required to have
statutory audits but a government committee is working on changes
that will place a threshold on the size of companies that require
an audit. Most EU member countries have chosen to exempt small
companies from the statutory audit requirement and similar moves in
Sweden could have a significant impact as there are about 320,000
limited companies and the overwhelming majority of them are
SMEs.

Grant Thornton Sweden managing partner Peter Bodin said the reforms
could have a positive effect on the firm and the entire audit
profession. “Yes, of course [the audit reforms] will affect us and
everybody else,” he said. “I think it will affect us in a mostly
positive way but it’s going to be a big challenge for our
profession and all the companies in Sweden to handle that change.
There will be many questions from a lot of people like, how should
they work with their auditors and advisor services in the future?
Other countries have made the same change and they have coped well.
In the UK market it was good for the business that the threshold
went up.”

Although the threshold has not yet been set by the government, some
firms remain dubious about the impact of the changes. Baker Tilly
Sverige managing partner Thomas Olofsson said: “At present we are
trying to attract new clients to Baker Tilly in Sweden, but this is
hard when you don’t really know what the threshold is going to be.
On one hand the government is telling auditors that they must do
this and this, and then on the other hand they are telling auditors
that their services are no longer needed.”

Sweden’s SME market is much larger in proportion to most other
developed Western economies. Testament to this fact is the
country’s largest firm, Öhrlings PricewaterhouseCoopers (PwC),
which regards the SME sector as very important. “In Sweden, we have
a lot of smaller clients,” PwC chief executive Mikael Eriksson
explained. “PwC has 140 offices in Sweden and that is an expression
of how important smaller clients are. Out of 50,000 clients in
Sweden, 49,000 are smaller clients with 50 employees and
under.”

Eriksson predicts reforms will result in the demand for audit
becoming market driven rather than being driven by rules. “If
smaller companies are not obliged to have an audit then smaller
companies will not have an audit,” he said. “We will not be gaining
customers, we will surely lose them. However, I don’t think this
will be a huge change because the system would still like to see
financial information that they can trust and therefore, they will
still be likely to have an audit.”