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May 2019.

Your accountant may never tell you this: you don’t need an audit of your financial statement if your company has a turnover up to 8 million kroner and assets no larger than 4 million kroner, or if you have a maximum of 12 employees.

According to the Danish Financial Statement Act, article 135, a company may opt out of an audit if, two of the following criteria are not exceeded on the balance sheet date for two financial years in a row:

• assets of DKK 4 million
• net turnover of DKK 8 million
• average number of full-time employees of 12 during the year

Before 2006, all private and public limited companies were required to submit audited financial statements. However, after the law of audit exemption for small companies emerged, the number of companies that opted out of auditing financial statements increased annually.

For business owners, this could help to cut costs in accounting services by up to 50% if the company does their own bookkeeping. For the accounting service industry, it created a crisis. Occasionally, you will hear the Danish Auditors Association lobbying to remove this audit exemption. Their rationale is that companies risk committing accounting errors and fraud, and the state cannot detect fraud without auditors. In Denmark, there are two types of auditors: State-authorised public accountant (Statsautoriseret revisor) and Registered public accountant (Registreret revisor), with the former being a more prestigious title than the latter.

Despite the audit exemption, some companies still need financial audits. Some may have this requirement stated in the letter of association that the financial statement must be audited. This is a common practice among trust funds and companies that need to be financially transparent, e.g., partly publicly financed or a charity organisation. The bank may ask for a financial audit if it has issued a big loan to the company.

The third reason a company needs an audit, despite its size, will likely never be revealed to you. The Danish Financial Statement Act requires a company charged with financial and tax fraud to submit audited financial statements in the three following years. A company must also submit financial audits in the two following years if the authority detects significant accounting errors in its financial statement.

The deadline for submitting the annual financial statement for 2018 (January-December calendar) is the 30^th of May, 2019.