Civil and common law influences on the Danish auditor's responsibilities in relation to fraud

Abstract

We use a legal perspective to examine how the role of auditors in Denmark has been defined and the auditor's responsibilities in relation to fraud have been determined. The study draws on laws, legal cases and documents produced by professional organisations. We show that developments during the twentieth century were conditioned by the central legislative role of the Danish state combined with a hands-off approach to enforcing new law provisions. While the organising role of the state was consistent with the Roman civil law tradition, the implications of legislative absences, and later provisions in the form of ‘general principles legislature’, ensured that the role of the auditor was defined as a result of market forces and the judicial processes of the courts. We observe that in the Danish legal system important interpretative powers are granted to the courts in line with case law traditions in common law systems. An examination of fraud cases handled by the courts and disciplinary tribunals suggests that an important role was played by the professional organisation in Denmark.