Review by the Financial Supervisory Authority of Norway

Results from a quality inspection are considered by a quality control committee. The inspection may have the following outcomes: • Acceptable - the results of the inspection are regarded as satisfactory and provide no basis for further measures. • Accepted with need for improvement - an action plan is to be prepared describing how the auditor reviewed will improve weaknesses that have been uncovered. • Need for substantial improvement – action plan as above, and new inspection in the following year. • Not approved - report to the BDO board of directors which considers additional measures, but there is a minimum requirement for an action plan and a new inspection in the following year.

The result of an individual inspection is communicated to the auditor reviewed and that person’s superior. The result of the combined inspections is reported to the management of BDO through the Managing Partner and the board of directors. In addition, the results from the inspections at an overall level are presented at information meetings for partners, and findings from the quality inspections are the basis for courses and other training activities in the following year. Non-compliance within quality is one of several elements that are considered in the individual partner’s compensation.

Our international network conducts quality inspections of BDO in Norway at least once every three years. These inspections include reviewing internal policies and procedures and checking a number of audit engagements. The last inspection from BDO Global was in November 2020.

Since BDO is an audit firm that audits public-interest entities, we are inspected at least every three years by the Financial Supervisory Authority of Norway, which is known as a company inspection. The company inspection entails a review of our organisation and procedures in key areas, as well as a random sample-based check of the completion of audits on individual audit engagements. The company inspection must also include an assessment of our internal quality control. The results of the quality inspection must be described in a written report. The Financial Supervisory Authority may also conduct other forms of reviews, either through visits to us or based on documentation we send upon request.

The Financial Supervisory Authority’s company inspection is a part of the regular supervisory work of the largest audit firms. The most recent company inspection at BDO was in September 2019. The inspection involves the review of several audit engagements, as well as a review of Internal policies and procedures. The final report was received in May 2020. It is available on the Financial Supervisory Authority’s website. We have been criticised for some matters concerning our antimoney laundering work, information security, engagement checks and acceptance assessments during acquisitions. Several audit engagements were reviewed, of which 3 were public-interest engagements. We have been criticised for several matters related to one of these engagements. We have implemented measures to rectify these matters, both at the company level and the engagement level.

The Financial Supervisory Authority has conducted an on-site inspection for which a report from March 2020 is available on the Authority’s website. BDO has received criticism for the performance of an audit during one audit engagement, in addition to criticism for failure to withdraw/late withdrawal from another audit engagement. We have implemented measures to rectify these matters.

BDO confirms, pursuant to Article 13.2(g) of the EU Statutory Audit Regulation, that we have internal guidelines for compliance and review of independence on audit engagements and that BDO meets the requirements in laws, standards and internal guidelines. Independence is confirmed by each individual team member in addition to the auditor responsible for the audit confirming the team’s independence in the annual continuation assessment. Quality and Risk Management- conducts reviews for compliance with the independence regulations and BDO’s internal ethical guidelines.

BDO confirms, pursuant to Article 13.2(h) of the EU Statutory Audit Regulation, that we facilitate and verify that auditors responsible for audits have sufficient continuing education within the requirements stemming from the Norwegian Auditors Act.