Reasons for Voluntary Audit in Sweden

Abstract

Background: The Swedish Parliament passed a law change in late 2010, suspending the former requirement for all Swedish incorporated companies to have an auditor. The new limit values allow the smallest incorporated companies to dismiss the auditor of the company (or not appoint one in the case of a newly started company). The opinions of abolishing mandatory audit vary, and little research has been done post to the law change. However, a new situation has arisen, meaning the optional choice of voluntary audit, for some companies. Aims and research questions: The aim of the thesis is to examine the reasons behind voluntary audit in Sweden, as well as what value companies, having chosen audit, see in their auditor. The following research questions have been used in order to fulfill the aim of the thesis: “Why do small private owner-led incorporated companies in Sweden voluntarily choose audit?” and “What value does the voluntarily chosen auditor add to the companies?” Methodology: The research questions were formulated after reviewing relevant literature and scientific articles regarding the topic of voluntary audit, as well as the recent law change in Sweden. The method for data collection was semi-structured in-depth interviewing of five companies. Analysis and conclusion: In the analysis segment the empirical results are put in relation to the studied theoretical framework and literature review. The theories used to explain the results are the Theory of Institutionalism, the Principal-Agency Theory and the Stakeholder Theory. Moreover, a number of international studies on voluntary audit can be said to correspond to the results in some aspects, but the empirical results show a wider perspective concerning the reasons and value of voluntary audit. One conclusion that can be drawn is that there is not a single reason behind choosing voluntary audit. Furthermore, the personal qualities and the relationship between the client and the auditor play an important role in the decision. The respondents find great value in their auditor and this depends on, for instance, the auditor’s availability and that they offer a wide range of counseling services.