The development of audit regulation in Sweden and the strengthening of the position of the profession

Paper to be presented at the sixth Accounting History International Conference, 18–20 August 2010, in Wellington, New Zealand

Peter Öhman* and Eva Wallerstedt**

* Assistant Professor (Business Administration) Mid Sweden University Department of Social Sciences 851 70, Sundsvall, Sweden Email: [email protected] Phone: 0046 73 036 79 48 (Corresponding author)

** Professor (Business Administration) Mid Sweden University Department of Social Sciences 851 70, Sundsvall, Sweden Email: [email protected] Phone: 0046 70 233 43 95

1

The development of audit regulation in Sweden and the strengthening of the position of the profession

Abstract The Swedish audit regulation history reveals that laws both codified the development of auditing practice and established a basis for professional auditor associations as rule-making bodies. In Sweden, the regulatory process started in 1895, when the law confirmed a longestablished practice and stipulated that limited companies should assign auditors. The following decades were characterized by the establishment of an auditing field. In 1932, a corporate financial scandal prompted major criticism, while simultaneously initiating changes in audit regulations of benefit for the auditing profession. The profession’s position was further strengthened in the 1970s when the state suggested additional assignments for auditors. Swedish accession to the European Union in 1995 was another critical event, since national regulations had to be adjusted to European statutory requirements, and the Swedish auditing profession was incorporated in an international auditing field.

Keywords: Audit regulation; Auditing profession; Rule-making bodies; Critical events; Sweden; European Union

2

The development of audit regulation in Sweden and the strengthening of the position of the profession

1 Introduction The emergence and early development of the auditing profession have been closely connected with industrialization. As long as enterprises were financed internally from cash flow, their founders rarely had to raise capital by issuing stock. Increasingly, however, companies became dependent on outside capital. Investors, in turn, required assurance that their invested capital was being properly managed. The resulting corporate entities, in which ownership and management were separated, stimulated the emergence of financial auditing, and the auditing profession gradually achieved a significant position in the industrialized world (Sampson, 1962; Power, 1997; Matthews et al., 1998). The first association of accountants, Collegio dei Raxonati, was founded in Italy in 1581. However, nowadays Scotland and England are considered the leading countries in the early development of the auditing profession (Jensen, 2000, pp. 8–9). In Scotland, the Society of Accountants in Edinburgh received a Royal Charter in 1854. In England, the first professional organization, the Incorporated Society of Liverpool Accountants, was formed in 1870. Ten years later the organisation received a Royal Charter under the name the Institute of Chartered Accountants in England and Wales (ICAEW). The relevance of research into the auditing profession is illustrated by a quotation from a classic work by Carr-Saunders and Wilson (1933). In it, the authors examine and evaluate the characteristics of various professions, among them auditing: The position of the company auditor is one of peculiar delicacy, for though he is appointed as the ‘watchdog’ of the shareholders, he must yet work in close and constant cooperation with the board … he should feel himself able to resist pressure that may be brought to bear upon him, in regard either to the form of his certificate or to the manner in which the accounts are presented. (CarrSaunders and Wilson, 1933, p. 221) The delicate and vulnerable position of auditors has been highlighted over the years, especially in discussions in the wake of corporate financial scandals, such as the Hatry (1929) and Royal Mail (1931) cases in England (Jones, 1995). These events indicated that the lack of clear accounting and auditing rules had created unacceptable risk for potential investors. This situation has gradually changed over the years, and today there are many accounting and auditing regulations. However, recent financial scandals, such as the Enron (2001) and 3

WorldCom (2002) cases in the USA, indicate that the problem of inadequate rules for accounting and auditing remains (Rezaee, 2005). This paper focuses on the audit regulation process in Sweden. During the twentieth century, an auditing profession slowly emerged in Sweden and the other Nordic countries. From the start, the Nordic countries had initiated cooperation in professional matters, which led to similar development trajectories (Wallerstedt, 2009). The case of Sweden is also interesting, as Sweden has been a member of the European Union (EU) since 1995 and is affected by the same regulatory requirements as the other 27 member states. The Swedish auditing profession is nowadays part of an international auditing field consisting of regulators, professional associations, accounting firms, and other interested parties. DiMaggio and Powell (1982, p. 148) state that an organizational field includes “those organizations that, in aggregate, constitute a recognized area of institutional life”. Organizations in an actual field display diversity in approach and form in the initial stages of their life cycle, but over time powerful forces emerge and they become more similar to one another. When studying the process of audit regulation in Sweden, the hierarchy of rules suggested by Flower (1999, pp. 5–9) is a helpful tool. This hierarchy in Table 1 covers a wide spectrum of matters ranging from laws to interpretations of individuals, where the former are considered the basis of all regulatory systems and the latter only have persuasive influence.

Table 1: A hierarchy of rules Rule

Rule-making bodies

Laws

Legislature

Delegated legislation Decrees Tax regulations

Government Tax authorities

Judgment

Courts of law

Standards

Standard-setting bodies

Rules of other bodies Professional recommendations Guidelines Listing rules

Professional associations Industrial associations Stock exchange

Interpretations

Individuals: academics, lawyers, etc.

Source: Flower (1999).

4

The rationale underlying the choice of material is that critical events have promoted the process of audit regulation in Sweden and strengthened the position of the auditing profession. A critical event is an incident that in some way has a significant impact on a certain issue (cf. Flanagan, 1954). Critical events can only be recognised retrospectively, and when selecting these events we concentrated on rules and rule-making bodies as suggested by Flower (1999). The empirical data were gathered mainly from archival materials, but also from interviews with prominent Swedish auditors. The remainder of this paper is structured according to three periods in the development of Swedish audit regulation: the set-up period, the domestic development period, and the internationally oriented period. In the concluding section, we discuss the findings. The set-up period began at the turn of the last century when the first signs of an emerging auditing profession appeared in Sweden. During this period, an institutional framework connected to the new profession evolved. The domestic development period started in the early 1930s, when the international financial market collapsed. In the USA, the stock market crashed, and in Europe there were several corporate financial scandals, including the Kreuger crash in Sweden. This period deals with the aftermath/consequences of the Kreuger crash. In the early 1970s, international cooperation began to intensify. Swedish auditors turned to their colleagues in England to get more closely acquainted with new auditing methods. From a Swedish viewpoint, EU membership in 1995 was the most important event during the internationally oriented period.

2 The set-up period 2.1 The first auditor association The set-up of the auditing profession in Sweden started around 1900, promoted by interaction between market conditions, various actors (i.e., organizations), and critical events. Around the turn of the century, 400–500 new limited companies were founded per year. Companies such as AGA, ASEA, LM Ericsson, Separator, and SKF grew greatly in importance overseas (Schön, 2000, pp. 220–223). However, there were no formalized instructions or requirements for how auditing work should be performed or what qualifications were needed to audit a company. Laypeople interpreted the assignments according to their own traditions or cultural beliefs: the knowledge of those bankers, directors, managers, traders, and account clerks performing audits must have been very diverse. At that time, the audit rules seemed to emerge

5

through “spontaneous solidarity of the community”, which together with “market” and “state” is one of the three ideal cases of regulation (Puxty et al., 1987). The first observable sign of a profession (cf. Wilensky, 1964, p. 143–145) emerged when the Swedish Association of Auditors (Svenska Revisorsamfundet; henceforth, SRS) was founded in 1899. Its founder, Edvard Wavrinsky, was a member of the Riksdag and for many years was the foremost proponent of SRS, acting from various positions inside and outside the association. Wavrinsky was inspired by the successful development of the auditing profession in England, and the Institute of Chartered Accountants in London served as his model. SRS’s first protocols refer to this institute, which had achieved a “great reputation” and whose members “were scattered all over the British Empire”. Although the call for members to join SRS went out to “professional auditors and accountants”, SRS members included few full-time auditors, consisting mainly of people who carried out auditing as a sideline to other activities and who lacked professional education in auditing. (SRSa, Protocol 9/10 1900, 3 §; “En återblick på de 25 gångna åren” [A look back on the past 25 years], 1925, pp. 164–165)

2.2 Company law codifies and stimulates auditing practice In 1895, Sweden’s Companies Act for the first time stipulated that limited companies should appoint at least one auditor for a period no longer than two years, and that an audit report should be delivered each year. The auditor was expected to have permanent access to company records and other documents. If the auditors provided misrepresentative information, displayed gross negligence, or intentionally failed to make an observation, they were responsible for the damages incurred by the audited company. However, the Act set forth no stipulations concerning auditor independence or special auditing training. There is evidence of the regular auditing of Swedish companies on a voluntary basis from around 1650 (OSa, Sillén), so the Companies Act of 1895 confirmed longestablished practice. This observation is in line with that of Watts and Zimmerman (1978), who found that company practice had preceded the debates noted in the accounting literature as well as the regulations introduced by legislative authorities. Jönsson (1985, p. 85) followed in the same vein when he observed that the passing of a law often was preceded by good and accepted practice. Notably, mandatory stipulations about appointed auditors appeared five years earlier in Sweden than in England (Jensen, 2000, p. 10). Sweden also became the first country

6

in the world in which the auditor, in addition to the strictly financial investigation, also examined the management’s administration of the company. The legal provisions concerning the management audit were based on a venerable tradition extending back at least to the 1840s (OSa, Sillén). In this case as well, legislated requirements were preceded by practice. The Companies Act of 1910 enlarged on the stipulations concerning auditing and auditors to secure the position of the shareholders relative to the board. Now, anyone employed by the company or by a board member could not be appointed auditor, and the legal rights and obligations of auditors were better expressed than in the Act of 1895. Besides access to all documents, the auditor should be allowed to inventory company cash and other assets. This clarification was needed, because it had occasionally happened that the annual general meeting deprived the auditor of specific duties generally associated with the assignment, for example, examining whether stock reported in the books really existed. A rule was added about minority auditors, but there were still no formal stipulations about auditor qualifications. To overcome the inadequacies of accepted auditing principles and to prepare auditors for the new regulations contained in the Act of 1910, the Federation of Swedish Industries appointed an auditing committee in 1912. Oskar Sillén, a committee member and one of the first authorized auditors in Sweden, prepared guidelines for how the auditing process was to be executed. These guidelines are found in the documents of the Central Board of Auditing formed in 1919, so they had obviously been distributed to practicing auditors. When preparing these guidelines, Sillén was probably inspired by Lawrence Dicksee’s Auditing: A Practical Manual for Auditors, first published in 1892. The need for additional auditing guidelines was highlighted in the 1920s, when authorized auditors pointed out that the auditing process, which according to the 1910 Companies Act was to be conducted in companies, was not working as intended. (Wallerstedt, 2009, p. 72)

2.3 Auditor authorization by a private organisation In 1912, SRS faced competition when the Stockholm Chamber of Commerce decided to authorize auditors. The timing of this decision was connected with the 1909 establishment of the Stockholm School of Economics (SSE), the first graduates of which were examined in 1911. Notably, Sweden’s neighbouring countries began to authorize auditors at about the same time: Denmark in 1909, Norway in 1910, and Finland in 1912. The idea of having chambers of commerce authorize auditors probably came from Germany, where there had

7

been “beeidigten Bücher-Revisoren” in Hamburg, Lübeck, and Berlin since the end of the 1800s, authorized by their chambers of commerce. (“Auktorisationen av revisorer 50 år” [Authorization of auditors 50 years], 1963; Jensen, 2000, p. 30) According to Stacey (1954, p. 21), several European nations embarked on academic accountancy education for auditors long before England. While the precondition for acceptance into ICAEW was five years under articles, the precondition for authorization by the Stockholm Chamber of Commerce was a degree from the SSE and three years of practical experience in a chartered accountant firm. When the first authorized auditors appeared, they differed from the SRS members in that they had a university education and were not allowed to support themselves in any other way than by auditing. Two of the signs of a profession suggested by Wilensky (1964, pp. 142–144), adequate training (including university education) and full-time employment, were thereby initiated. However, the high entrance barriers to becoming an authorized public accountant in Sweden led to the slow growth of the profession, and authorized auditors had a hard time supporting themselves by their work. The companies’ habit of appointing lay auditors seemed to be persistent, possibly because auditors belonging to SRS were often at least as “professional” as were authorized auditors in carrying out audit assignments. There is a difference between being a professional and acting professionally (Torstendahl, 1990).

2.4 The battle between two auditor associations Over the years since 1912, SRS members had consistently tried various tactics either to erase the barriers to becoming authorized auditors or to overcome them themselves. In 1921, the SRS auditors sent a letter to the government expressing their intention to authorize auditors of their own (SRSa, “To the King”). The interaction between the different groups of auditors very clearly exposed opposing interests. Their actions seem to have been in line with the interactionist approach discussed by Willmott (1986, pp. 557–558), in which competing interests in a profession are exposed, one group seeking to convince others of its legitimate claim to professional recognition. When authorized auditors in Norway announced a Nordic auditing conference in Kristiania (nowadays Olso), the time seemed to be right for authorized auditors in Sweden to form their own association. Accordingly, in 1923 the Swedish Institute of Authorised Public Accountants (Föreningen Auktoriserade Revisorer; henceforth, FAR) was formed. The official explanation for the establishment of the Institute was the conference

8

in Kristiania, though the intention of SRS to authorize auditors of their own may have triggered the establishment. After the founding of the new association, the auditing field in Sweden comprised two associations – SRS auditors (72 members) and FAR auditors (20 members) – each pursuing its own interests. SRS consisted of part-time auditors while FAR included only academically trained professionals working fulltime. The climate of cooperation between the two was strained from time to time: FAR claimed a monopoly over the designation “authorized public accountant”, while SRS claimed the right to authorize auditors themselves. Similar turf wars had occurred in the 1890s between UK auditing bodies about using the designation “chartered accountant” and about the “registration and control of persons acting as public accountants”. In 1891, for example, ICAEW introduced a bill (which was denied passage) in the House of Commons seeking legislation to prohibit members of other bodies from using the designation “chartered accountant” (FARa and CBAa, Protocols 1923–1924; Stacey, 1954, pp. 34–36). In 1931, SRS and FAR reached a settlement and a new auditor designation was instituted: that of registered accountant. Authorized and registered accountants differed in that the theoretical and practical requirements for the registered accountants were less stringent, and they were allowed to conduct audits as a sideline to another occupation. As recently as 1930, just below 8 percent of auditors in the largest limited companies in Sweden were authorized auditors. This meant that a great majority of these companies were audited by laypeople. One may conclude that the audits performed differed from person to person and that professional knowledge was probably transferred from one generation to another. It was somewhat more common for authorized auditors to be appointed by listed companies. There were around one hundred companies listed on the stock market at this time (1931), and 32 of them had assigned one or two authorized public accountants. Given this situation, FAR asked the stock exchange to declare in the listing rules that all listed companies should appoint authorized auditors by referring to the neighbouring country of Denmark, which had decided to do so the same year. However, FAR had to wait for a decision on this matter (CBAa, Protocol 1932).

2.5 The creation of an auditing field The set-up period was characterized by the establishment of an auditing institutional framework. Organizations with direct or indirect connection to the young profession were

9

established in the wake of the Companies Act of 1895, which stipulated the obligation of limited companies in Sweden to assign an auditor. The foundation of SRS was partly a consequence of this law, but the concurrent development of the auditing profession in the UK was also of importance. The private initiative to establish SEE in 1909 and the graduation of its first students two years later must be considered key events; they provided the basis for the decision of the Stockholm Chamber of Commerce to authorize their first six auditors in 1912, and the foundation of FAR in 1923. There are close connections between the events presented in Table 2, and in most cases previous events are prerequisites for following ones. For example, the decision to institute a new kind of auditor in 1931 was a consequence of all the preceding events.

Table 2: Critical events in the Swedish auditing field in the set-up period 1895

The Companies Act requires the assignment of auditors

1899

The Swedish Association of Auditors (SRS) is founded

1909

The Stockholm School of Economics (SEE) is opened

1910

The Companies Act extends audit regulation

1912

The Stockholm Chamber of Commerce begins to authorize auditors, and the Federation of Swedish Industries appoints an auditing committee

1923

The Swedish Institute of Authorized Public Accountants (FAR) is founded

1931

A new kind of auditor – the registered accountant – is instituted

Analyzing these events in light of the hierarchy of rules suggested by Flower (1999) in Table 1, it is obvious that the stipulation in the 1895 Act set forth in the 1910 Act, preceded the decision of the Federation of Swedish Industries to appoint an auditing committee to produce auditing guidelines. Apart from the Companies Acts, the guidelines and the listing rules published by private organizations, there was a lack of formalized auditing rules in the set-up period. It should be noted that the activities of individuals, such as the authorized public accountant Oskar Sillén and SRS’s founder Edvard Wavrinsky, were important in these early years. Sillén, for example, produced auditing guidelines, and in this way became an interpreter of the law. These two individuals likely became so influential because of the lack of other rule-making bodies besides the legislature (cf. Flower, 1999, p. 9).

10

3 The domestic development period 3.1 The Kreuger crash This period was ushered in by a corporate financial scandal that had significant international repercussions. According to Flesher and Flesher (1986), the establishment of the Securities and Exchange Commission (SEC) in the USA in 1934 was a consequence not only of the 1929 stock market crash in New York, but also of the Kreuger crash. The Kreuger affair became an international cause célèbre. The frauds had survived undetected for so long because of the lax state of company law which allowed Kreuger to maintain a high level of secrecy around the group’s affairs. In January 1933, G. O. May testified to the United States Banking and Currency Sub-Committee, observing that ‘the Kreuger & Toll frauds could not have been concealed if either the audits of the companies had been co-ordinated under a single control, or the audits, though not so co-ordinated, had been carried out in all cases with a proper honesty, efficiency and independence’. (Jones, 1995, pp. 180–181) It took a long time for the auditor associations to recover from the Kreuger affair, though the activities followed from it also strengthened the position of the profession. In fact, the Kreuger crash can be seen as the most significant event in the development of the Swedish auditing profession. This observation is in accordance with Power (1997, p. 26), who claims that each significant crisis leads to a further round of institutional change that benefits the profession involved. The story began when Ivar Kreuger and Paul Toll formed the joint-stock company Kreuger & Toll, which in a few years grew into one of Sweden’s leading building firms. By the mid 1920s, Kreuger had become a prominent international businessman, generally known as the “Match King”. By the end of 1920, the Kreuger Group had acquired fifteen national match monopolies and owned majority shares in several other match monopolies. Stocks and bonds of Kreuger & Toll were the most widely held securities in America in the 1920s. One explanation for the success on the American market was that annual returns on these stocks and bonds were over 20 percent. Unfortunately, these dividends were paid mostly out of capital, not profits. Kreuger was essentially operating a giant pyramid scheme, which was hidden from the investing public by Kreuger’s insistence that the company’s financial statements not be audited. He preached a philosophy that secrecy was paramount to corporate success (Flesher and Flesher, 1986, p. 447). The group’s structure was very complex, and in fact Ivar Kreuger was the only one who had full insight into the transactions and transfers occurring between the subsidiaries (Thunholm, 1995).

11

Because of the stock market crash in 1929, some banks went into bankruptcy, making it impossible to raise capital through the American market. Loans to various states had become Kreuger’s most important assets but, because of the breakdown of international payment systems, the risk of loss intensified (Schön, 2000, p. 343). Rumours were circulating about the financial problems of the Kreuger Group, and it became impossible for Kreuger to raise more money on the market, something that was essential for company survival (Thunholm, 1995, p. 251). To calm down the lenders, a meeting was arranged in Paris at the beginning of March 1932 with some of Kreuger’s American bank connections and Swedish bankers. At that meeting, Kreuger became aware of what was about to be exposed and on 12 March he committed suicide. This led to the collapse of the Kreuger consortium and to financial disaster for those who had invested much of their money in the group’s companies. (Gäfvert, 1979, pp. 207–241)

3.2 A need for a stronger auditing profession The year before the Kreuger crash, a board meeting at the stock exchange in Stockholm postponed FAR’s proposition that all listed companies ought to appoint an authorized auditor (FARa, Protocol 22/1 1931). However, right after the crash, the stock exchange urged parliament to propose in law that each listed company must have at least one authorized auditor (NAa, Swedish Ministry of Justice Memorandum Report 1932, p. 6). In discussions following the Kreuger crash, there was severe criticism of the institution of auditing in Sweden. Inside the auditing profession, in particular in FAR, it was felt that the profession had to act to defend and protect the prestige of auditors. The most important issue was preventing an authorized public accountant from being involved in anything like the Kreuger affair. It had been proved that Anton Wendler, the auditor of the Kreuger Group, had been on the Kreuger payroll and it was quite obvious that he had failed to uphold FAR stipulations. In fact, he had signed the audit reports without even performing an audit. The significance of Wendler’s contraventions was indicated by the fact that he was jailed by a court of law. (“Revisor Anton Wendler häktad på måndagen” [Auditor Anton Wendler remanded into custody Monday], 1932) The Kreuger crash highlighted the deficiencies of regulations concerning auditor independence and the auditor’s obligation to impose standards in excess of minimum legal requirements. Furthermore, the need for ethics rules had become glaringly obvious. The first rules in this field were formulated by FAR members in 1933 and were secret; these were

12

amended and supplemented several times in the following years. By 1942, the ethics rules contained fifteen principles dealing with professional conduct involving colleagues as well as the auditing profession, auditor independence, price competition, etc. (Wallerstedt, 2009, pp. 159–160). The ethics rules compiled after the Kreuger crash marked an important step in strengthening the auditing profession in Sweden. According to Wilensky (1964, pp. 145– 146), the emergence of a code of ethics indicates that a profession has become securely entrenched.

3.3 Legal protection and new audit tasks After the Kreuger crash, auditors became aware of the importance of recognizing the consolidated financial position of a group. Auditors also took measures to improve their auditing procedures when consolidated balance sheets were introduced. However, very few Swedish companies listed on the stock exchange presented consolidated accounts; the extent just rose from just 4 percent in 1932 to 16 percent in 1941 (Wallerstedt, 1999). A few years later, the situation was different. The Companies Act of 1944 contained stipulations concerning consolidated accounts. The comments attached to the Act included detailed discussion of the growing importance of company groups and the importance of properly auditing them. Consolidated accounts should summarize the balances of the parent company and the subsidiaries, in accordance with accepted accounting and business practices (SOU, 1941:9, p. 446). In this respect Sweden acted before England, where legislation about consolidated accounts appeared in 1948. However, European countries were far behind the USA, which had begun requiring consolidated accounts already in 1910 (Jones, 1995, pp. 235–236). The importance of the requirement to present consolidated accounts cannot be overestimated. What is reported by companies is generally perceived as important by stakeholders (Gambling, 1977); if requirements call for something to be accounted for, this will draw public attention and in turn increase the need for auditing. FAR considered the Companies Act of 1944, which replaced the Act of 1910, as “the most important manifestation ever of their importance in Sweden” (Sillén, 1949, p. 77). The main reason for this satisfaction was probably that the monopoly of the chambers of commerce to authorize auditors was now legally protected; henceforth, no other authority could authorize public accountants. The last of Wilensky’s (1964) characteristic signs of a profession was thereby achieved by the auditing profession in Sweden.

13

Another reason for the satisfaction among the professionals was that use of authorized public accountants finally became compulsory in listed companies. Furthermore, the importance of auditor independence was stressed, and the content of the audit report was more elaborate than before. The auditor was required to sign the balance sheet and the profit and loss statements, verifying that they were in accordance with the company’s books. However, the only qualification required of auditors in limited companies according to the Act of 1944 was that they should have relevant accounting experience and some acquaintance with the financial circumstances of the companies under audit.

3.4 An initial focus on numerical investigations “Några ord om siffergranskning” [A few words about numerical investigation], published by FAR at the time of the Kreuger crash in March 1932, claimed that the auditor’s role was generally understood to entail “detecting and preventing misappropriations”. When performing the annual audit, the auditor had the duty to review the financial statements and examine the balance sheet “in as much detail as possible”. The company’s internal routines and processes should be organized such that irregularities would mainly be discovered by the companies themselves. The control function, which was supposed to preclude misappropriations in daily management, was to be exercised by checking clerks. As a rule, these numerical auditors would be engaged by, and report to, the incumbent auditors. By this arrangement, checking clerks would obtain a much more “independent position towards the company than if they were directly recruited by the company itself”. Their main task was to facilitate the discovery of any misappropriations and to determine when “such business transactions” called for the incumbent auditors’ attention. Regarding the education of checking clerks, they were supposed to be “extremely skilled accountants” as well as “used to auditing”. The incumbent auditors were to prepare detailed work instructions, but even if the checking clerks had these instructions, the work also required that they be able to assess, “reasonably independently”, how the work was to be performed. There are numerous testimonies describing how the subsequently authorized public accountants handled numerical auditing early in their careers. One of them remembers: The job had a lot to do with numerical auditing, verification, and cash inventories. There were virtually no manuals, covering the subject auditing in its entirety. Very few descriptions of the auditing technology were to be found. (Ulf Gometz, interview)

14

Audit work followed in this vein for the first years after the adoption of the new Act in 1944. However, the professional development of auditing methods and procedures began in the late 1950s, when the focus gradually shifted from numerical examination to internal control. The initial step in this transformation occurred when the big accounting firms started to use statistical sampling. The question was not to examine every tenth entry, but to set up audit plans according to a certain level of significance. (Björn Markland, preceding Secretary General of FAR, interview) FAR’s internal activity accelerated in the early 1960s, and several task forces were established. There also seemed to be a need for professional meetings, and members assembled in Stockholm, Gothenburg, and Malmö, where they participated in discussions. The number of members gradually increased, and at the end of the domestic development period FAR consisted of 387 members (Wallerstedt, 2009, p. 263).

3.5 Towards the first auditing recommendation The years that followed the new Companies Act were devoted to interpreting the law. At this time, the regulation process was to largely left to the “market”, and the private auditor associations, in particular FAR, strengthened their positions as rule-making bodies. In 1946, FAR published “Nya aktiebolagens bestämmelser om revisorer” [The provisions of the new Companies Act regarding auditors]. Some of the issues addressed in this work were: who could be appointed auditor; when an approved auditor should be appointed; audits of consolidated accounts; the audit report as a pubic document; and the auditing of limited companies going into liquidation. In 1949, FAR published what came to be regarded as the first recommendation concerning accounting issues, “Några synpunkter på årsredovisningen enligt nya aktiebolagslagen” [Some comments on the financial statements, based on the new Companies Act]. This text was revised and republished in 1955, 1961, and 1965. In 1964, the FAR board decided that accounting and auditing recommendations should be worked out in two parallel committees. The first auditing recommendation, which dealt with the fundamental principles for conducting an audit, was preceded by discussions in the FAR board of whether it was “wise” to publish auditing principles. Several members felt that such a publication could be inappropriate as, in their minds, the proposal contained

15

several controversial points. They argued that, if an auditor failed to apply these principles, this could lead to problems if he or she had applied more conventional methods (FARa, Administration Report 1964–1965). The auditing committee’s draft “Grundläggande principer för utförande av revision i svenska aktiebolag” [Basic principles for conducting audits in Swedish companies], was published in the 1967 member list. The proposal contained the following sections: “Introduction”, “Auditor”, “Auditor review”, “Examination of the company’s internal control”, “Materiality and relative risk”, Documentation”, “Demarcation of responsibilities between the auditor and management”, “Additional missions”, “Agencies”, “Organization of work and the working paper”, and “Filing”. In the introductory section, the committee stressed, in accordance with what had been determined by the board, that the proposal should not be regarded as definitive: the principles made no claim to be “established auditing standards”. The committee noted that the focus of auditors’ work had changed since the advent of the 1944 Companies Act. Accounting firms had become more complicated and advanced, and auditors had an increasing number of tools at their disposal. Companies were also aware that they had to be organised so as to facilitate effective internal control. Against this background, the committee considered it necessary to through the elaboration of rules and recommendations for members’ work, seek to achieve uniform standards, which can be gradually applied in the future, and in accordance with business needs. In 1971, finally, the first recommendation, “Om revision av räkenskaperna i svenska aktiebolag: granskningens inriktning och omfattning” [About auditing the accounts of Swedish limited companies: focus and scope of the review process], was published. It was a revised version of the 1967 draft. “Sweden thereby became the third country in the world to issue auditing recommendations, preceded only by the USA and England” (Bertil Edlund, former president of IFAC, interview).

3.6 A financial scandal promotes the development of the profession The first critical event in this period (see Table 3) was the most important one. On one hand, the Kreuger crash prompted major criticism of the institution of auditing. The auditor’s obligations were tested in the court of law, and the Kreuger Group auditor was jailed. This highlighted the judgment level in the hierarchy of rules presented in Table 1.

16

Table 3: Critical events in the Swedish auditing field in the domestic development period 1932

The Kreuger crash

1933

Ethics rules are formulated for FAR members

1944

The Companies Act grants chambers of commerce the monopoly to authorize public accountants and registered accountants and to make decisions concerning consolidated accounts

1964

An auditing committee is established by FAR

1971

The first auditing recommendation is published by FAR

On the other hand, the audit failure caused further audit regulation to the benefit of the auditing profession. As a result of the Kreuger crash the stock exchange urged that all listed companies should be obliged to appoint at least one authorized auditor, and this was finally included in law in the Companies Act of 1944. The Act also stipulated that the title “authorized public accountant” was legally reserved for auditors who received their titles from chambers of commerce. The compilation of ethics rules by FAR members at the beginning of this period is another critical event that positively affected the profession. The additional rule-making was of particular concern to FAR in this period. The years that followed the new Act were devoted to interpreting the law. An auditing committee was established in 1964 and the first recommendation was published in 1971. From then on, FAR was considered a prominent rule-making body in the Swedish auditing field.

4 The internationally oriented period 4.1 Modern auditing practice In 1970, some FAR members were assigned to create a “model company” to be used as a case when discussing upcoming auditing recommendations. This case, Modular Machinery, later became known as Sweden’s first step towards modern auditing practices with a clear focus on internal control. Considerable work supported this case, which was inspired by foreign models. In the early 1970s, FAR members had visited colleagues in ICAEW in London to obtain inspiration for the future development of auditing practice in Sweden. The Swedish auditors were interested in the organization of ICAEW, education and recruitment matters, professional merger activities, work on accounting and audit recommendations, and the impact of these recommendations on practice (FARa, Protocol 23/2 1970). After the collaboration with their foreign colleagues, the old model of item-byitem checking was abandoned in Sweden. Instead, auditing work focused on areas of responsibility and delineation of authority, established rules and procedures, and the existence

17

of a systematically arranged accounting system. These were essentially the same principles that Skinner and Andersen (1966) had recommended in Analytical Auditing (FAR 75 år – en rapsodisk skildring av utvecklingen 1923-98 [The Swedish Institute of Authorised Public Accountants 75 years – a rhapsodic story of the development 1923-98], 1998, s. 16).

4.2 The private authorization system comes to an end In the early 1970s, the system of private authorization through chambers of commerce was questioned by various stakeholders, among them members of the Riksdag. This issue found a solution in 1973, when the National Board of Trade became the authority responsible for authorizing and approving auditors (the term “approved auditors” replaced “registered accountants” in 1975). Sixty years of private authorization had come to an end. The National Board of Trade from then on issued authorizations and approvals, published instructions for auditors, and dealt with complaints from the public concerning professional acts of omission on the part of authorized public accountants or approved accountants. The theoretical academic qualifications were, as before, normally a degree in business administration with an approved curriculum. After five years’ documented service under an authorized public accountant, candidates could apply for authorization to the National Board of Trade and afterwards apply for membership in FAR. The Board had a supervisory role but played no part in setting standards. The National Board of Trade was assisted by an advisory board in important or complex issues. The advisory board comprised representatives of the auditor associations, i.e., FAR and SRS, and representatives of various organizations and governmental agencies. (Wallerstedt, 2009, p. 220)

4.3 New statutory audit assignments Allen and McDermott (1993, p. 4) claim that, in England, auditing is likely the profession that has been most dependent on legislation to consolidate its position. Regarding the stipulations about auditors in the Companies Acts, this is arguably valid also in Sweden. The workload of professional auditors increased when a new Companies Act was passed in 1975. Substantially more data had to be scrutinized in virtually every audit. The most important feature of the new Act was that specific stipulations of the Companies Act of 1944 regarding the auditing process were replaced by the requirement that company annual reports were to be examined according to Generally Accepted Auditing Standards (GAAS). These standards were to be interpreted according to the recommendations 18

of the auditing profession and to statements issued by the National Board of Trade. Once again, legislated requirements were preceded by practice and professional efforts. When the National Board of Trade became responsible for authorizing and approving auditors in 1973, a shift from “market oriented regulation” to “state oriented regulation” (cf. Puxty et al., 1987) occurred. The state soon moved to act on its new power position. In the Riksdag, the question of how to handle economic crimes came to the fore. A report from the Crime Prevention Council, for example, suggested that auditors should be used in fighting economic crimes. This was the first time auditors had experienced a government assault on their traditional role. (Björn Markland, preceding Secretary General of FAR, interview) This debate in Sweden can be compared with the situation from the mid 1850s to at least until the early 1900s in England, when the primary objective of auditing was fraud detection (Power 1997, p. 21; Matthews et al., 1998, pp. 94–99). In 1978, the Crime Prevention Council issued a memorandum suggesting that the position of auditors ought to be strengthened, since it was observed that economic crime was most common in small limited companies. As it was expected that the supply of authorized and approved auditors would be sufficient by 1983, it was possible to prescribe in the Companies Act that at least one auditor in a limited company should be authorized or approved (Revisors verksamhet [The Work of Auditors], 1978; SFS, 1982:739). To meet the enhanced demand to which accounting firms had to respond, the number of authorized public accountants increased by 120 percent, from 854 in 1982 to 1877 in 1992 (Wallerstedt, 2009, p. 263). Starting in 1985, auditors were required to monitor whether companies had fulfilled their obligations according to stipulations concerning taxes and other charges. If the company had not done so, the auditors had to deliver a qualified opinion. The auditors were also obliged, on request, to provide information about the company to the person in charge of preliminary investigations of economic crimes (Widhagen and Damberg, 1985). Additional responsibility was placed on auditors with another supplement to the Companies Act specifying that auditors had to report suspicions of particular economic crimes committed by a board member or the CEO (SFS, 1998:760). The Companies Act of 1975 was replaced in 2005 by a new Act, which contained few substantial changes. Instead, separate laws for auditors and auditing were introduced as a consequence of Sweden’s membership in the EU (see below). 19

4.4 Sweden enters the European market Today’s Europe has its roots in the aftermath of the Second World War and the quest to build a new and peaceful Europe (EU contract, 1994). The Coal and Steel Community was formed by France, West Germany, Italy, Belgium, the Netherlands, and Luxembourg in 1951, a year considered a milestone in the history of the EU. The next milestone came in 1957, when these countries decided to deepen and broaden cooperation in all spheres of economic life. The Treaty of Rome entered into force in 1958; the “four freedoms” it enshrined – free movement of goods, services, capital, and people across borders – would lead to economic and social development throughout Western Europe. When Sweden signed the European Economic Area (EEA) agreement in 1992, it also committed to adapting its rules to EC company law. Sweden became, along with Finland and Austria, a member of the EU in 1995. The previous national regulations of the member states now had to be adjusted to European statutory requirements. EU directives are the instruments used to achieve harmonization concerning various issues. Each member state must incorporate these directives into its laws and regulations. The EU’s 8th Company Law Directive regulates the auditing field, focusing especially on auditor qualifications and ethics rules (SOU, 1993:69). Swedish membership in the EU must be regarded as a critical event for the auditing profession. The harmonization of Swedish accounting and auditing regulations with EU directives provided the impetus for new laws (cf. Flower, 1999, pp. 14–18). An Annual Accounts Act was introduced, incorporating the terms of the 4th EU Directive, and separate laws for auditors and auditing were introduced in 1995 and 1999, respectively. The Swedish Auditors Act of 1995 stipulated that auditing matters should be handled by an independent authority, which would assume the duties of the National Board of Trade. From this point on, the Supervisory Board of Public Accountants issued authorizations and approvals, published instructions for auditors, and dealt with complaints from the public. Union Européenne des Experts Comptables Economiques et Financiers (UEC), the European accountancy organization of which FAR was a member, along with several other countries’ auditors’ associations had appointed a committee to draw up codes of conduct. The FAR ethics committee had reviewed these rules and the FAR board found that they were also suitable for Swedish conditions. These rules were translated into Swedish and adopted in Swedish law and in the FAR constitution. The UEC rules were mostly consistent

20

with the main rules applying to members of the American Institute of Certified Public Accountants (AICPA) since 1973. The proposal concerning ethics rules was approved by FAR’s 1977 annual general meeting, and, in a slightly amended version in 1996. In the 1990s, the EU prepared a recommendation calling on member states to ensure that those carrying out statutory audits were “independent”: an auditor should not be allowed to undertake any activities inconsistent with the statutory audit. The Fédération des Experts Comptable Européens’ (FEE) ethics committee, which was working on a “conceptual approach to independence”, tried to convince the European Commission to implement the ideas contained in this EU recommendation concerning auditor independence. The Commission accepted these ideas, but their implementation was postponed because of the Enron affair, making Sweden the first country in Europe to include an “auditor independence tool” (“The Analysis Model”) in the Swedish Auditors Act of 2001. “The law provided the auditors with a ‘tool’ for attaining and reinforcing their independence, but its implementation was left to the profession” (Björn Markland, preceding Secretary General of FAR, interview). This arrangement was similar to other attempts to create a balance between regulation and “self-regulation” in the auditing field in Sweden (Öhman et al., 2006). Although Sweden is an EU member, its auditing regulations possess some special domestic features. The most prominent of these is that Swedish auditors still have to examine the management’s administration of the company. In fact, Sweden and Finland are the only countries in the world where there are legal provisions concerning management auditing. It must also be noted that the present Swedish auditor association Far (see below) is a member of the International Federation of Accountants (IFAC) and is thus committed to implementing IFAC’s ethics recommendations as far as Swedish law allows. Over the last years, Swedish authorized public accountants have occupied prominent positions in various auditor associations. Bertil Edlund was Deputy President of IFAC (1987–1990) and President (1990–1992). Göran Tidström has been Deputy President of IFAC since 2008; he was a former President of FEE (2000–2002). Björn Markland has several international assignments, among them technical advisor to the IFAC Board. From their positions, these Swedish auditors have had the opportunity to interact with colleagues from other countries.

21

4.5 The state and the EU interferes in the Swedish auditing field The structure of the auditing field changed in 1973 when the National Board of Trade became the authority responsible for authorizing and approving auditors (see Table 4). When the state interfered in the auditing field, the position of the auditing profession was further strengthened. In 1975, Sweden’s Companies Act for the first time stipulated that auditing work should be carried out in accordance with Generally Accepted Auditing Standards. In 1983, a supplement of the Companies Act stipulated that at least one auditor in every limited company had to be authorized or approved. A particularly critical event was when Sweden joined the EU in 1995. Sweden’s national regulations now had to be adjusted to European statutory requirements and to EU directives. The Swedish Auditors Act of 1995 brought Swedish auditing rules into line with EU legislation. This law stipulated that auditing matters should be handled by an independent governmental agency – the Supervisory Board of Public Accountants – now responsible for the former duties of the National Board of Trade. The decision to create a separate authority responsible for auditing matters highlighted the importance of the auditing profession. Although there had been proposals for cooperation between SRS and FAR auditors since the 1920s, it was not until the 1970s that these discussions became more substantial and the two bodies actually began to cooperate. Finally, in 2006 the associations merged. The new association (Far) is now the only national professional organisation for authorized public accountants, approved public accountants, and other highly qualified accounting specialists. Far includes approximately 6000 members. (Far.se)

Table 4: Critical events in the Swedish auditing field in the internationally oriented period 1973

The National Board of Trade becomes a governmental agency in the auditing field

1975

The Companies Act stipulates the application of Generally Accepted Auditing Standards

1983

A supplement to the Companies Act stipulates that limited companies must appoint authorized or approved auditors (thereby preparing for additional auditor assignments)

1995

Sweden signs the European Economic Area (EEA) agreement, the Swedish Auditors Act is enacted, and the Supervisory Board of Public Accountants is appointed through legislation

2001

New legislation concerning the auditing profession is enacted as a tool to bolster auditor independence (The Analysis Model”) in the Swedish Auditors Act

2006

The two professional auditor associations, FAR and SRS, merge

The formulation in the Companies Act of 1975 emphasized standards in the hierarchy of rules in Table 1, while bolstering FAR as a standard-setting body. The adoption of “self-regulation”

22

was emphasized not only when it was left to the profession to interpret the law and express in standards what would be considered generally accepted auditing work, but also when Sweden included a specific model to bolster auditor independence in the 2001 Swedish Auditors Act. This “tool” for resolving the eternally difficult question of auditor independence was handed over to the professionals to interpret and act upon accordingly. When the National Board of Trade became a governmental agency in the auditing field, delegated legislation was for the first time highlighted in audit regulation in Sweden. Later on the tax authorities become a new rule-making body to consider at the delegated legislation level, and after that another governmental agency, the Economic Crimes Bureau, entered the field.

5 Discussion and conclusions Over the last century, an auditing field gradually emerged in Sweden. At the beginning of the 1900s, SRS auditors and FAR auditors entered the scene. They occasionally cooperated, but usually their actions benefited solely their own interests. FAR members struggled to protect their status as authorized public accountants. This illustrates a strategy to achieve control, in line with the critical perspective according to which “the emergence of professional bodies is seen as a means of achieving collective social mobility by securing control over a niche within the market for skilled labour” (Willmott, 1986, p. 558). Wilensky (1964, pp. 142–146) suggests that the core of a profession consists of signs of professionalism that symbolize its domain. In the 1940s, all these signs – adequate training, full-time employment, professional associations, legislated protection for the professionals, and ethics codes – were achieved by the Swedish auditing profession. The Kreuger crash obviously promoted the profession in several ways, even though it was embarrassing that the appointed FAR-auditor of the Kreuger Group was jailed by a court of law. New and extended rules in the auditing field emerged in the wake of the financial scandal (cf. Power, 1997), and important actors expressed a need for a stronger profession. When FAR developed accounting and auditing recommendations some decades later, the association established itself as the prominent rule-making body in the Swedish corporate market. In the 1970s, the state took action to use the competence of the auditing profession in fighting economic crime, in what was considered a “government assault” on the auditors’ traditional role. The prescription in the 1983 supplement to the Companies Act that

23

at least one auditor in each limited company should be authorized or approved was also motivated by the fact that most economic crimes were believed to occur in small companies. This decision promoted the position of the profession, and the number of authorized public accountants grew by 120 percent within a period of ten years. The most critical event in recent years was undoubtedly the 1995 governmental decision to enter the EU, and Swedish regulations had to be adjusted to the European statutory requirements. The EU became the most important rule-making body, and a new level was included in the hierarchy of rules. Table 5 illustrates how the hierarchy of auditing rules in Sweden was gradually modified in response to the critical events described in this paper.

Table 5: The Swedish hierarchy of auditing rules Rule a

Rule-making body a

Directive The 8th directive (the audit directive)

European Union

First appearance in period b III

Laws Legislature The Companies Act 2005 (1975, 1944, 1910, 1895) The Swedish Auditors Act 2001 (1995)

I

Delegated legislation Auditor and auditing regulation

III

Tax regulation Economic crime regulation

The Supervisory Board of Public Accountants (The National Board of Trade) Tax authorities Economic Crimes Bureau

Judgement The Kreuger crash

Courts of law

II

Standards Generally Accepted Auditing Standards

Far (FAR)

III

Rules of other bodies Professional recommendations Guidelines Listing rules

Far (FAR, SRS) The Federation of Swedish Industries Stock exchange

Interpretations

Individuals: Auditors, members of parliament

a

b

I

I

Rules and rule-making bodies that were replaced are indicated within parentheses. The Roman numerals indicate the period in which a certain rule first appeared.

It can be concluded that the number of rule-making bodies involved in the audit regulation process has increased over time (see Table 5). In addition to the importance of legislation, influential individuals, as well as various organizations have had an impact on the development. In chronological order, the organizations involved are: the Federation of 24

Swedish Industries, which was involved when the first guidelines were produced; the stock exchange, which was involved in discussions with auditing professionals about future listing rules; the courts of law, which were involved in sorting out the frauds committed by people involved in the Kreuger Group; and FAR, which produced auditing recommendations and formulated Generally Accepted Auditing Standards. In the 1970s, audit legislation was delegated for the first time. Besides the National Trade of Board (and the subsequent the Supervisory Board of Public Accountants), other governmental agencies – the tax authorities and the Economic Crimes Bureau – became rule-making bodies within the auditing field. When Sweden entered the EU, the 8th directive (the audit directive) was introduced at the top level in the Swedish hierarchy of auditing rules. It can also be concluded that laws both codified the development of auditing practice and promoted future regulation in Sweden. On the one hand, the Companies Acts were partly preceded by auditing practice, and professional efforts in the decades following 1900 paved the way for new laws. On the other hand, every time legislative authorities investigated the auditing field and enacted new laws, rules connected to these laws followed. Allen and McDermott (1993) claim that the auditing profession in England has been strongly dependent on legislation to consolidate its position, and this conclusion also holds for the auditing profession in Sweden. The laws became a foundation for both additional rules and the professional associations as rule-making bodies in all three investigated periods. It must be stressed that audit regulations in EU member states are harmonized by international auditing organizations, and that the auditing field is recognised on an international level (cf. DiMaggio and Powell, 1982). Although the Swedish governmental decision to enter the EU was the decisive step towards this harmonization, the international exchange of ideas has been considerable. In the set-up period, Swedish auditors were inspired by the development of the auditing profession in England, and they cooperated with their Nordic colleagues. The development in Sweden was similar to what happened in the Nordic countries and in the UK. The international orientation clearly increased in the 1970s, when Sweden followed the UK and adopted modern auditing practice with a clear focus on internal control. As a member of the International Federation of Accountants (IFAC), FAR implemented international ethics recommendations, and Swedish authorized public accountants with prominent positions in various international auditor associations interacted with colleagues from other countries. However, the differences between authorized public accountants like Göran Tidström and their former colleague Oskar Sillén’s abilities to influence the Swedish rule-making process are significant. The present situation is 25

characterized by rule-making bodies at various levels, including an additional EU level (see Table 5), while the early years were characterized by a lack of rule-making bodies at several levels in the Swedish hierarchy of auditing rules. Our historical review of audit regulation in Sweden also demonstrates that the rules first emerged through the “spontaneous solidarity” of the community. At the end of the 1800s, laypeople carried out audits as a sideline to other activities, and regulation was limited to the Companies Act of 1895. Successively, private interests became more active in the regulation process. The professional auditor associations, in particular FAR, promoted a market orientation. A shift from “market” to “state” occurred when the National Board of Trade became responsible for authorizing and approving auditors. Subsequent EU membership further increased the state orientation. However, although regulation had become more extensive, it was still partly left to the auditing profession to monitor the auditors. This was an attempt to establish a balance between “state-oriented regulation” and “marketoriented self-regulation” in the auditing field in Sweden (cf. Öhman et al., 2006). Since critical events can only be recognised retrospectively, it is possible that a historical review of audit regulation in Sweden would render somewhat different results in the future. Sweden’s membership in EU will likely continue to affect the auditing field. For example, the upcoming decision to join the other member states and abolish the statutory audit for the smallest private limited companies may severely affect the auditing profession in Sweden. In the UK, the statutory audit was abolished for the smallest limited companies in 1994, and more than half of UK companies have made use of the exemption from the audit requirement (Collis et al., 2004). To deal with this new situation, auditing professionals have restructured their supply of services to cope with a shrinking auditing market. From originally being two associations exclusively for auditors, the merged association Far is now an organization including other highly qualified accounting specialists.

26

References Allen, G. D. and McDermott, K. (1993), Accounting for Success: A history of Price Waterhouse in America 1980–1990, Boston: Harvard Business School Press. “Auktorisationen av revisorer 50 år”, (1963), List of Members, Föreningen Auktoriserade Revisorer (FAR). Carr-Saunders, A. M. and Wilson, P. A. (1933), The Professions, Oxford: Oxford University Press. Collis, J., Jarvis, R and Skerratt, L. (2004). “The demand for the Audit in Small Companies in the UK”, Accounting and Business Research, Vol. 34, No. 2, pp. 87–100. Dicksee, L. R. (1892), Auditing: A Practical Manual for Auditors (17. ed. 1951), London: Gee & Co. DiMaggio, P. J. and Powell, W. W. (1982), “The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields”, American Sociological Review, Vol. 48, April, pp. 147–160. “En återblick på de 25 gångna åren”, (1925), Revisorn, No. 11, pp. 163–174. EU-contract, (1994), Stockholm. FAR 75 år – en rapsodisk skildring av utvecklingen 1923-98, (1998), Stockholm: FAR Förlag. Far.se (2010), Branschorganisationen för revisorer och rådgivare, http://www.far.se/portal/page?_pageid=114,340195&_dad=portal&_schema=PORTAL (2010-06-14). Flanagan, J. (1954), “The Critical Incident Technique”, Psychological Bullentin, Vol. 51, No. 4, July, pp. 327–358. Flesher, D. L. and Flesher, T. K. (1986), “Ivar Kreuger’s Contribution to U. S. Financial Reporting”, The Accounting Review, Vol. 61, No. 3, pp. 421–434. Flower, J. (1999), “Introduction”, in McLeay, S. (ed.), Accounting Regulation in Europe, London: MacMillan Press, pp. 1-23 Gambling, T. (1977), “Magic, Accounting and Morale”, Accounting, Organizations and Society, Vol. 2, No. 1, pp. 141–151. “Grundläggande principer för utförande av revision i svenska aktiebolag”, (1967), List of Members, Föreningen Auktoriserade Revisorer (FAR). Gäfvert, B. (1979), Kreuger, Riksbanken och regeringen, Stockholm: Liber Förlag.

27

Jensen, O. (2000), Revisionens formål og genstand i reguleringshistorisk og reguleringsteoretisk perspektiv, Bind II: Perioden 1900-1920, Köpenhamn: Handelshøjskolan i København, Det Økonomiske Fakultet, Ph. D. serie 2.2000. Jones, E. (1995), True and Fair. A History of Price Waterhouse, London: Hamish Hamilton. Jönsson, S. (1985), Eliten och normerna: drivkrafter i utvecklingen av redovisningspraxis, Lund: Doxa. Matthews, D., Anderson, M. and Edwards, J. R. (1998), The Priesthood of Industry. The Rise of the Professional Accountant in British Management, Oxford: Oxford University Press. “Nya aktiebolagens bestämmelser om revisorer”, (1946), List of Members, Föreningen Auktoriserade Revisorer (FAR). “Några ord om siffergranskning”, (1932), List of Members, Föreningen Auktoriserade Revisorer (FAR). ”Några synpunkter på årsredovisningen enligt nya aktiebolagslagen”, 1949, List of Members, Föreningen Auktoriserade Revisorer (FAR). “Om revision av räkenskaperna i svenska aktiebolag – granskningens inriktning och omfattning”, (1971), List of Members, Föreningen Auktoriserade Revisorer (FAR). Power, M. (1997), The Audit Society. Rituals of Verification, Oxford: Oxford University Press. Puxty, A. G., Willnett, H. C., Cooper, D. J. and Lowe, A. C. (1987), “Modes of Regulation in Advanced Capitalism: Locating Accountancy in Four Countries”, Accounting, Organization and Society, Vol. 12, No. 3, pp. 273–291. “Revisor Anton Wendler häktad på måndagen”, (1932), Svenska Dagbladet 3/5. ”Revisors verksamhet”, (1978), Brottsförebyggande rådet, PM 1978:2, Stockholm Rezaee, Z. (2005), “Causes, Consequences, and Deterence of Financial Statement Fraud”, Critical Perspectives on Accounting, Vol. 16, No. 3, pp. 277–298. Sampson, A. (1962), Anatomy of Britain, London: Hoddar and Stoughton. Schön, L. (2000), En modern svensk ekonomisk historia: tillväxt och omvandling under två sekel, Stockholm: SNS Förlag. SFS 1982:739, Lag om ändring i aktiebolagslagen, Stockholm. SFS 1998:760, Lag om ändring i aktiebolagslagen, Stockholm. Sillén, O., 1949, “Auktorisationer förr, nu och framledes”, Affärsekonomi, No. 6.

28

Skinner, R. Mc. G. and Andersen, R. J. (1966), Analytical Auditing: An Outline of the Flow Chart Approach to Audits, Toronto: Sir Isaac Pitman. SOU 1941:9, Lagberedningens förslag till Lag om aktiebolag m. m., Motiv, Stockholm. SOU 1993:69, Revisorerna och EG, Stockholm. Stacey, N. A. (1954), English Accountancy: A Study in Social and Economic History 1800–1954, London: Gee & Co. Thunholm, L–E. (1995), Ivar Kreuger, Stockholm: Fischer & Co. Torstendahl, R. (1990), “Essential Properties, Strategic aims and Historical Development: Three Approaches to Theories of Professionalism”, in Burrage, M. and Torstendahl R. (eds.), Professions in theory and history, London: Sage Publications, pp. 44-63. Wallerstedt, E. (1999), “Ivar Kreuger”, The third Accounting History International Conference, Osaka, Japan. Wallerstedt, E. ( 2009), Revisorsbranschen i Sverige under hundra år [The Swedish Auditing Industry over 100 years], Stockholm: SNS Förlag. Watts, R. J. and Zimmerman J. L. (1978), “Towards a Positive Theory of the Determination of Accounting Standards”, The Accounting Review, Vol. 53, No. 1, January, pp. 112–133. Widhagen, G. and Damberg, M., 1985, “Så blev resultatet av förslagen om effektivare företagsrevision”, Balans, Vol. 11, No. 1, pp. 10–13. Wilensky, H. (1964), “The Professionalization of Everyone?”, The American Journal of Sociology, Vol. LXX, No 2, pp. 137–158. Willmott, H. (1986), “Organising the Profession: A Theoretical and Historical Examination of the Development of the Major Accountancy Bodies in the U. K.”, Accounting, Organizations and Society, Vol. 11, No. 6, pp. 555–580. Öhman, P., Häckner, E., Jansson, A-M. and Tschudi, F. (2006), “Swedish Auditors’ View of Auditing: Doing Things Right versus Doing the Right Things”, European Accounting Review, Vol. 15, No. 1, pp. 89–114. Archives CBAa, Central Board of Auditing CBA, Stockholm. FARa, Swedish Institute of Authorized Public Accountants FAR, Stockholm. OSa, Oskar Silléns archive, Uppsala.

29

NAa, Swedish National archive, Stockholm. SRSa, Swedish Association of Auditors SRS, Stockholm. Interviews Bertil Edlund, former president of IFAC (2003). Ulf Gometz, Authorized public accountant (2004). Björn Markland, preceding Secretary General of FAR (2009).

30