Logotype The Swedish NAO

The audit obligation for small companies should be reintroduced

The audit obligation for small limited companies was abolished in 2010. The Swedish National Audit Office’s audit shows that the reform has had few positive effects but has entailed an increased risk of tax evasion and made fighting economic crime more difficult – and therefore the audit obligation should be reintroduced.

Woman who handles receipts.

Photo: Ulrika Kestere

Audit background

The Swedish NAO has audited the consequences of the reform that abolished the audit obligation for small limited companies, which came into force on 1 November 2010. The reform covered almost three quarters of limited companies, which were subsequently allowed to choose whether they wanted an auditor or not.

Statutory audit requirements for companies has been discussed on various occasions since they were introduced in 1895. The discussions have weighed the costs and regulatory administration for companies against audit as a measure against economic crime and tax evasion. In the period 2006–2010 the Government focused on simplification of the rules for companies and a number of reforms were implemented. As part of that work the Government proposed abolition of the audit obligation for small companies, which was decided by the Riksdag in 2010.

The reform aimed to reduce the administrative burden on companies and the costs of audit. Another reason for abolishing the audit obligation was the Government’s intention for the reform, along with other regulatory reforms, to strengthen companies’ competitiveness and help more companies to grow and employ more people. The fears about the reform were reduced tax revenue, increased economic crime and poorer accounting quality.

The purpose of this audit was to examine whether the intentions of the reform were achieved for the limited companies concerned, what consequences the reform has had and how undesirable consequences were handled. 

The audit was based on the following questions:

  1. Have the intentions of the reform been achieved?
  2. Has the reform had undesirable consequences?
  3. Have the agencies concerned dealt with the undesirable consequences of the reform?

Press contact: Olle Castelius, phone: +46 8-5171 40 04.

Presskontakt: , telefon: 08-5171 42 06.

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Updated: 13 February 2018

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