Audit Committees The Implementation of Audit Committees, in Swedish Companies, and their Influence on the Independence of the Swedish Auditor

Abstract

Background and problem: The recent auditing scandals have provoked new legislation in the United States, the European Union and Sweden. The legislation is intended to restore the public confidence in auditing and financial reporting. Two important events are the U.S. Sarbanes-Oxley Act of 2002 and the proposed a modernized EU Eighth Company Law Directive. Both are important affecting Swedish business. In Sweden a proposed Swedish Code follows the legislation tendencies in the world. As a result of the Sarbanes-Oxley Act, the role of the Audit Committee is strengthened. A similar result is expected in both EU and Swedish legislation.

Purpose: The purpose of this thesis is to investigate the effects of the Audit Committee legislations on the independence of the Swedish auditor.

Delimitations: Since auditing is a global and complex issue, this thesis will not scrutinize all auditing aspects. The aim is to investigate the impact on the independence of the auditor in Sweden with the introduction of Audit Committees and to clarify the regulations relevant to the subject.

Methodology: This thesis is based on a hermeneutic approach and is a qualitative study based on a questionnaire.

Results and conclusion: The introduction of an Audit Committee will mainly have positive consequences on the independence of the Swedish auditor. The main issue today is the independence in appearance. The Audit Committee will increase the Swedish auditor’s independence in appearance and thereby help restore the public confidence in auditing. However, the only one who can guarantee the independence in fact is the auditor himself/herself.

Suggestions for further research: This thesis investigates a scenario that is not fully tested. It would be interesting to research the same subject, but after a suitable period of time has passed, in order to see if the conclusions of this thesis are accurate.