Intent Declared Summary

Finland is a member of the European Union and as such complies with the European Union Directive No. 2006/43/EC which requires all statutory audits of annual and consolidated accounts to be carried out in accordance with international auditing standards as adopted by the European Commission (EC). Although it is not specified which standards constitute international auditing standards, it is widely anticipated that International Standards on Auditing as issued by the International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants (IFAC) will be adopted. Per a 2009 EC publication, Finland has fully transposed the above-mentioned Directive into its national legislation. At present, the Finnish Institute of Authorized Public Accountants (KHT) issues generally accepted auditing standards which, according to the 2006 KHT self-assessment, are based on ISAs, but with modifications that reflect the local legal environment. These modifications, as explained in a 2009 publication by IFAC, are stated to be in the line with the IFAC’s Modifying Policy.

General Overview

On May 17, 2006, Directive 2006/43/EC of the European Parliament and Council came into force requiring all statutory audits of annual and consolidated accounts be carried out on the basis of ISAs as adopted by the EC. The Directive aims at high-level -- though not full -- harmonization of statutory audit requirements. EU member states were expected to adopt and publish the provisions necessary to comply with the Directive before June 29, 2008. According to the Directive, member states should be allowed to impose additional national audit procedures or requirements only if those requirements have not been covered by the adopted ISAs. If, however, the adopted ISAs contain audit procedures which would lead to a specific legal conflict with national law, member states are allowed to carve out the conflicting part of the ISA. Member states may impose these additional requirements relating to the statuary audits of annual and consolidated accounts for periods expiring on June 29, 2010.

The legal framework for auditing and auditors in Finland is contained in the Auditing Act, Auditing Ordinance, and the Ministerial Decrees. According to a 2009 Central Chamber of Commerce (CCC) publication, a new Auditing Act came into force in July 2007 which complies with the above mentioned EC Directive No. 2006/43/EC, the Commission's Recommendation on Quality Assurance for the Statutory Audit in the European Union: Minimum Requirements (2001/256/EC), and the Commission Recommendation on Statutory Auditors' Independence in the EU: a Set of Fundamental Principles (2002/590/EC). Detailed provisions on the enforcement of the Auditing Act are laid out in the Auditing Ordinance, which came into effect simultaneously with the Auditing Act. The Auditing Act contains provisions for the statutory audit, the qualification requirements for auditors, authorization, and supervision of auditors. Per the Act, all registered companies, foundations and other legal entities must appoint an auditor to audit their annual accounts, including consolidated accounts. Also, under the Auditing and Companies Acts, companies (subject to small company exemptions) must comply with the Finnish Institute of Authorized Public Accountants' (KHT) audit rules. The report further pointed out that companies satisfying no more than one of the following requirements are exempt from audit: "(1) the balance sheet total in the annual accounts for the preceding financial period was in excess of EUR 100 000; (2) turnover or comparable net sales in the annual accounts for the preceding financial period was in excess of EUR 200 000; and (3) the average number of employees during the preceding financial period exceeded 3" (p. 6). In addition, regardless of these criteria, a company must appoint an auditor if “its primary field of operation is to buy or possess stocks and, by doing so, to gain control over another companies (a holding company)." Furthermore, "even the smallest companies have a right to choose an auditor even if they do not have to” (p.5).

The CCC 2009 paper explains that there are two categories of authorized auditors in Finland: the KHT auditors, authorized by the CCC, and the HTM auditors, the regional auditors of the Registered Association of Certified Auditors (HTM-tilintarkastajat ry, or HTM) authorized by the regional chamber of commerce. Regulatory oversight of the accountancy profession is performed by the Auditing Board of the CCC, which ensures compliance with the Auditing Act and other professional requirements by the KHT auditors, and the regional chambers of commerce which regulate the HTM auditors. Further, the CCC 2009 paper notes that the Ministry of Employment and Economy has the responsibility for defining legislation and regulations in the area of accounting and auditing, although it does not directly oversee the auditors and audit firms. In addition, the Ministry appoints the members of oversight bodies, defines their budgets, and licenses chambers of commerce.

The KHT is a private, professional body responsible for setting national auditing standards and ethics requirements based on the International Federation of Accountants (IFAC) recommendations and standards. The 2006 KHT self-assessment noted that the KHT has adopted ISAs as Finnish auditing standards, but with modifications to reflect the local legal environment. The 2009 IFAC report on the implementation of ISAs throughout the world confirmed these findings, adding that the changes introduced to ISAs “are stated to be in line with the spirit of IAASB Modifications Policy” (p. 1). The effective dates of the Finnish recommendations differed from the effective dates of the international standards. The HTM does not issue auditing standards, and auditors registered with HTM follow the KHT-issued standards. The KHT and the HTM are listed as members on the IFAC website.

The Principles

IIISA 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Tilintarkastuksen tavoitteet ja yleiset periaatteet" became effective on July 1, 2006. However, differences exist as modifications have been made in accordance with Finnish law. The KHT noted that the subsequently revised ISA 200 will be translated during 2006-2007. As of December 2009, there is no further information publicly available as to Finland’s compliance with this principle.

IIISA 210 Agreeing the Terms of Audit Engagements (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Tilintarkastus- toimeksiannon ehdot" became effective July 1, 2000. However, differences exist as modifications have been made in accordance with Finnish law. Further, the International Auditing and Assurance Standards Board (IAASB) subsequently revised ISA 210 to incorporate conforming amendments resulting from the adoption of the Audit Risk standards. These amendments were expected to be introduced into Finnish requirements effective July 1, 2006. The KHT noted that the subsequently revised ISA 210 will be translated during 2006-2007. As of December 2009, there is no further information publicly available as to Finland’s compliance with this principle.

IIISA 220 Quality Control for an Audit of Financial Statements (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Tilintarkastustyön laadunvalvonta" became effective July 1, 2000. However, differences existed, as modifications had been made in accordance with Finnish law. Further, ISA 220R was subsequently revised, and the KHT self-assessment noted that the revised ISA 220 will be translated in 2006-07. As of December 2009, there is no further information publicly available as to Finland’s compliance with this principle.

IIISA 230 Audit Documentation (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Dokumentointi" became effective July 1, 2000. However, the IAASB subsequently revised ISA 230 to incorporate conforming amendments resulting from the adoption of the Audit Risk standards. These amendments were expected to be introduced in to Finnish requirements effective July 1, 2006. As of December 2009, there is no further information publicly available as to Finland’s compliance with this principle.
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IIISA 240 The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Tilintarkastajan velvollisuus ottaa väärinkäytös huomioon tilintarkastuksessa" was expected to be approved in May 2006. As of December 2009, there is no further information publicly available as to Finland’s compliance with this principle.

IIISA 250 Consideration of Laws and Regulations in an Audit of Financial Statements (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Säännösten ja määräysten huomioon ottaminen tilintarkastuksessa" became effective July 1, 2000. However, differences existed, as modifications had been made in accordance with Finnish law. The IAASB subsequently revised ISA 250 to incorporate conforming amendments resulting from the adoption of the Audit Risk standards. These amendments were expected to be introduced in Finnish requirements effective July 1, 2006. As of December 2009, there is no further information publicly available as to Finland’s compliance with this principle.

IIISA 260 Communications of Audit Matters with Those Charged With Governance (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Tilintarkastusta koskevien kysymysten kommunikaatio hallintoelinten jäsenten kanssa ja hallinnon tarkastus" became effective July 1, 2004. However, differences existed, as modifications had been made in accordance with Finnish law. Further, the IAASB subsequently revised ISA 260 to incorporate conforming amendments resulting from the adoption of the Audit Risk standards. These amendments were expected to be introduced in Finnish requirements effective July 1, 2006. As of December 2009, there is no further information publicly available as to Finland’s compliance with this principle.

IIISA 300 Planning an Audit of Financial Statements (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Suunnittelu" became effective July 1, 2000. However, differences existed. ISA 300 was subsequently revised. The self-assessment noted that the revised ISA 300 had been translated and was expected to be approved in 2006. As of December 2009, there is no further information publicly available as to Finland’s compliance with this principle.

IIISA 315 Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Yhteisön ja sen toimintaympäristön käsittäminen sekä olennaisen virheen tai puutteen riskien arviointi" became effective July 1, 2006. The KHT report stated that there were no differences between the Finnish standard and its international equivalent. However, as of December 2009, there is no further information publicly available as to whether the latest version of ISA 15 has been adopted in Finland.

IIISA 320 Materiality in Planning and Performing an Audit (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Olennaisuus" became effective July 1, 2000. However, differences existed, as modifications had been made in accordance with Finnish law. Further, the IAASB subsequently revised ISA 320 to incorporate conforming amendments resulting from the adoption of the Audit Risk standards. These amendments were expected to be introduced in Finnish requirements effective July 1, 2006. As of December 2009, there is no further information publicly available as to Finland’s compliance with this principle.

IIISA 330 The Auditor’s Procedures in Response to Assessed Risks (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Arvioituihin riskeihin vastaavat tarkastustoimenpiteet" became effective July 1, 2006. The KHT report stated that there were no differences between the Finnish standard and its international equivalent. However, as of December 2009, there is no further information publicly available as to whether the latest version of ISA 15 has been adopted in Finland.

IIISA 402 Audit Considerations Relating to an Entity Using a Service Organization (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Palveluyritystä käyttävien tarkastuskohteiden tilintarkastuksessa huomioonotettavaa" became effective July 1, 2000. However, the IAASB subsequently revised ISA 402 to incorporate conforming amendments resulting from the adoption of the Audit Risk standards. These amendments were expected to be introduced in Finnish requirements effective July 1, 2006. As of December 2009, there is no further information publicly available as to Finland’s compliance with this principle.

IIISA 500 Audit Evidence (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Tilintarkastusevidenssi" became effective July 1, 2006. The KHT report stated that there were no differences between the Finnish standard and its international equivalent. However, as of December 2009, there is no further information publicly available as to whether the latest version of ISA 15 has been adopted in Finland.

IIISA 501 Audit Evidence—Specific Considerations for Selected Items (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Tilintarkastusevidenssi - tietyt tarkastuserät" became effective July 1, 2000. However, the IAASB subsequently revised ISA 501 to incorporate conforming amendments resulting from the adoption of the Audit Risk standards. These amendments were expected to be introduced in Finnish requirements effective July 1, 2006. As of December 2009, there is no further information publicly available as to Finland’s compliance with this principle.

IIISA 505 External Confirmations (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Vahvistukset ulkopuolisilta" became effective July 1, 2003. However, the IAASB subsequently revised ISA 505 to incorporate conforming amendments resulting from the adoption of the Audit Risk standards. These amendments were expected to be introduced in Finnish requirements effective July 1, 2006. As of December 2009, there is no further information publicly available as to Finland’s compliance with this principle.

IIISA 510 Initial Audit Engagements—Opening Balances (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Uudet toimeksiannot- avaava tase" became effective July 1, 2000. However, differences existed, as modifications had been made in accordance with Finnish law. Further, the IAASB subsequently revised ISA 510 to incorporate conforming amendments resulting from the adoption of the Audit Risk standards. These amendments were expected to be introduced in Finnish requirements effective July 1, 2006. As of December 2009, there is no further information publicly available as to Finland’s compliance with this principle.

IIISA 520 Analytical Procedures (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Analyyttinen tarkastus" became effective July 1, 2000. However, differences existed, as modifications had been made in accordance with Finnish law. Further, the IAASB subsequently revised ISA 520 to incorporate conforming amendments resulting from the adoption of the Audit Risk standards. These amendments were expected to be introduced in Finnish requirements effective July 1, 2006. As of December 2009, there is no further information publicly available as to Finland’s compliance with this principle.

IIISA 530 Audit Sampling (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Otanta ja muita selektiivisiä testausmenetelmiä" became effective July 1, 2000. However, differences existed, as modifications had been made in accordance with Finnish law. Further, the IAASB subsequently revised ISA 530 to incorporate conforming amendments resulting from the adoption of the Audit Risk standards. These amendments were expected to be introduced in Finnish requirements effective July 1, 2006. As of December 2009, there is no further information publicly available as to Finland’s compliance with this principle.

IIISA 540 Audit of Accounting Estimates (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Arvionvaraisten erien tarkastaminen" became effective July 1, 2000. However, the IAASB subsequently revised ISA 540 to incorporate conforming amendments resulting from the adoption of the Audit Risk standards. These amendments were expected to be introduced in Finnish requirements effective July 1, 2006. As of December 2009, there is no further information publicly available as to Finland’s compliance with this principle.

IIISA 545 Auditing Fair Value Measurements and Disclosures (effective 2004, superseded by ISA 540 in December 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Käyvän arvon määrityksen ja sitä koskevien tilinpäätöstietojen tilintarkastus" became effective July 1, 2005. However, differences existed, as modifications had been made in accordance with Finnish law. Further, the IAASB subsequently revised ISA 545 to incorporate conforming amendments resulting from the adoption of the Audit Risk standards. These amendments were expected to be introduced in Finnish requirements effective July 1, 2006. As of December 2009, there is no further information publicly available as to Finland’s compliance with this principle.

IIISA 550 Related Parties (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Lähipiiri" became effective July 1, 2000. However, differences existed, as modifications had been made in accordance with Finnish law. Further, the IAASB subsequently revised ISA 550 to incorporate conforming amendments resulting from the adoption of the Audit Risk standards. These amendments were expected to be introduced in Finnish requirements effective July 1, 2006. As of December 2009, there is no further information publicly available as to Finland’s compliance with this principle.

IIISA 560 Subsequent Events (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Tilinpäätöspäivän jälkeiset tapahtumat" became effective July 1, 2000. However, differences existed, as modifications had been made in accordance with Finnish law. Further, the IAASB subsequently revised ISA 560 to incorporate conforming amendments resulting from the adoption of the Audit Risk standards. These amendments were expected to be introduced in Finnish requirements effective July 1, 2006. The KHT report noted that the subsequently revised ISA 560 was expected to be translated during 2006-2007. As of December 2009, there is no further information publicly available as to Finland’s compliance with this principle.

IIISA 570 Going Concern (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Epävarmuus toiminnan jatkuvuudesta" became effective July 1, 2004. However, differences existed, as modifications had been made in accordance with Finnish law. Further, the IAASB subsequently revised ISA 570 to incorporate conforming amendments resulting from the adoption of the Audit Risk standards. These amendments were expected to be introduced in Finnish requirements effective July 1, 2006. As of December 2009, there is no further information publicly available as to Finland’s compliance with this principle.

IIISA 580 Written Representations (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Johdon antamat tiedot" became effective July 1, 2000. However, per the self-assessment, differences existed. The IAASB subsequently revised ISA 580 to incorporate conforming amendments resulting from the adoption of the Audit Risk standards. These amendments were expected to be introduced in Finnish requirements effective July 1, 2006. As of December 2009, there is no further information publicly available as to Finland’s compliance with this principle.

IIISA 600 Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors) (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Toisen tilintarkastajan työn hyödyntäminen" became effective July 1, 2000. However, differences existed as "auditing recommendation 600 does not contain the Public Sector Perspective included in ISA 600. Paragraph 18 has been omitted to comply with national practices" (p. 13). As of December 2009, there is no further information publicly available as to Finland’s compliance with this principle.

IIISA 610 Using the Work of Internal Auditors (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Sisäisen tarkastuksen työn hyödyntäminen" became effective July 1, 2000. However, differences existed. The IAASB subsequently revised ISA 610 to incorporate conforming amendments resulting from the adoption of the Audit Risk standards. These amendments were expected to be introduced in Finnish requirements effective July 1, 2006. As of December 2009, there is no further information publicly available as to Finland’s compliance with this principle.

IIISA 620 Using the Work of an Auditor’s Expert (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Asiantuntijan työn käyttäminen" became effective July 1, 2000. However, the IAASB subsequently revised ISA 620 to incorporate conforming amendments resulting from the adoption of the Audit Risk standards. These amendments were expected to be introduced in Finnish requirements effective July 1, 2006. As of December 2009, there is no further information publicly available as to Finland’s compliance with this principle.

IIISA 700 Forming an Opinion and Reporting on Financial Statements (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Tilintarkastuskertomus ja muu tilintarkastajan raportointi" became effective July 1, 2004. However, per the self-assessment, "Auditing Recommendation 700 does not contain the Public Sector Perspective included in ISA 700. The audit reports included in the Recommendation have been amended in accordance with Finnish law" (p. 14). As of December 2009, there is no further information publicly available as to Finland’s compliance with this principle.

IIISA 705 Modifications to the Opinion in the Independent Auditor’s Report (effective 2009)

There is insufficient publicly available information addressing this principle.

IIISA 710 Comparative Information—Corresponding Figures and Comparative Financial Statements (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Vertailevat tiedot" became effective July 1, 2000. However, differences existed, as modifications had been made in accordance with Finnish law. Further, the IAASB subsequently revised ISA 710 to incorporate conforming amendments resulting from the adoption of the Audit Risk standards. These amendments were expected to be introduced in Finnish requirements effective July 1, 2006. As of December 2009, there is no further information publicly available as to Finland’s compliance with this principle.

IIISA 720 The Auditor’s Responsibilities Relating to Other Information in Documents Containing Audited Financial Statements (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Muu informaatio tilintarkastetun tilinpäätöksen sisältävässä asiakirjassa" became effective July 1, 2000. However, differences existed. The IAASB subsequently revised ISA 720 to incorporate conforming amendments resulting from the adoption of the Audit Risk standards. These amendments were expected to be introduced in Finnish requirements effective July 1, 2006. As of December 2009, there is no further information publicly available as to Finland’s compliance with this principle.

IIISA 800 Special Considerations—Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks (effective 2009)

According to the 2006 KHT self-assessment, the corresponding Finnish standard "Raportointi erityistä tarkoitusta varten tehdystä tarkastustoimeksiannosta" became effective July 1, 2003. The KHT noted that the revised ISA 800 will be translated during 2006-2007. As of December 2009, there is no further information publicly available as to Finland’s compliance with this principle.