We advise and assist the Audit Committee in its compliance with the obligations to review and monitor the independence of the statutory auditors or the audit firms in accordance with section 31 (3, p.5) in the Danish Act on Approved Auditors and Audit Firms (the Directive, Article 39, paragraph 6 (e)).

The Audit Committee shall review and monitor the independence of the statutory auditors or the audit firms in accordance with section 24-24c of the Danish Act on Approved Auditors and Audit Firms, as well as Article 6 of the Regulation (EU), and in particular the appropriateness of the provision of non-audit services to the audited entity in accordance with Article 5 of that Regulation.

A statutory auditor or an audit firm shall, annually, confirm in writing to the Audit Committee that the statutory auditor, the audit firm and partners, senior managers and managers, conducting the statutory audit are independent from the audited entity. This declaration of independence shall be included in the additional report submitted to the Audit Committee, in accordance with Article 11 paragraph 2 (a) of the Regulation (EU).

The Audit Committee shall approve non-audit services from auditors, including auditors belonging to the same audit network, after having made an appropriate assessment of independence threats and the safeguards initiated by the auditor. This approval requirement does not apply to such tax and valuation services as are permitted by section 24a of the Danish Act on Approved Auditors and Audit Firms, but it is the responsibility of the Audit Committee to monitor and assess compliance with the guidelines for the performance of such services. In this regard, the Audit Committee should pay particular attention to the fact that it is not a service that is included as a prohibited service specified in the Regulation (EU).

The Audit Committee should also be aware of the new rules of the Regulation's (EU) Article 4 on audit fees, including limitations in the auditor's delivery of non-audit services and the proportion of this fee as compared with the auditor's total fees.

The rules on auditor independence are quite complex and require careful assessments. Furthermore, applicable legislation is set out in the Danish Act on Approved Auditors and Audit Firms and the Regulation (EU). The rules on auditor's independence laid down in the Danish Act on Approved Auditors and Audit Firms are thus supplemented by additional requirements in the Regulation (EU).

Inspicio has in-depth knowledge of the provisions on auditor's independence and, therefore, has the capability to advise the Audit Committee on compliance with the rules. This also includes concrete independence assessments.

The purpose of the regulation and rules is to ensure auditors' independence in relation to their audit clients. Article 5 of the Regulation (EU) thus contains a list of prohibited non-audit services that the auditor may not deliver to a PIE audit client. However, the Danish Act on Approved Auditors and Audit Firms section 24a implements an option in respect of the Regulation (EU) to allow the provision of certain tax and valuation services.

Inspicio has in-depth knowledge of the Danish Business Authority's guidance on the auditor's provision of authorized tax and valuation services to PIE audit clients (NAS guidance) and also, from authority work experience, Inspicio has extensive knowledge of and experience with complicated independence issues.

The Danish Business Authority's guidance on permitted tax and valuation services was published on December 11 2017 and can be downloaded here:

https://erhvervsstyrelsen.dk/sites/default/files/media/vejledning_om_tilladte_skatte-_og_vurderingsydelser_til_revisionskunder_af_interesse_for_offentligheden.pdf (in Danish only).