We advise and assist the Audit Committee to comply with the requirements of procedures, in accordance with Article 16 of the Regulation (EU), in regard of the appointment of statutory auditor(s), in accordance with section 31 (3, p.6) of the Danish Act on Approved Auditors and Audit Firms (the Directive, Article 39, paragraph 6 (f))

The Audit Committee is responsible for the appointment of auditors for election in accordance with Article 16 of the Regulation (EU). The audited entity shall be able to demonstrate, upon request, to the competent authority (the Danish Business Authority), that the procedure was conducted in a fair manner.

Article 16 thus sets out the detailed requirements to the appointment procedure. The Regulation (EU) regulates the situation in which an extension with the current auditor is proposed, and the situation in which either a new auditor is elected or an extension with the current auditor for a period of more than 10 years should take place.

If there is neither extension with the current auditor nor an extension with the current auditor for a period beyond 10 years, the recommendation of the Audit Committee shall be prepared after the completion of an audit tender process. Article 16, paragraph 1 (3), of the Regulation (EU), sets out the requirements to the appointment procedures.

The Audit Committee shall then prepare a reasoned recommendation for the election of the auditor, which shall contain at least two choices for the audit engagement, and the Audit Committee shall express a duly justified preference for one of them.

In addition to complying with rules and procedural requirements, the choice of auditor is, by nature, a very important task for the Audit Committee. Choosing the right auditor with sufficient knowledge of the trade, the right audit team in both Denmark and the company's key markets abroad, as well as the right level of experience and competence, is fundamental to good cooperation between auditors and business.

Inspicio may advise and assist the Audit Committee to comply with the requirements of Article 16 and provide an overview and structure of the audit tendering process, which could be as follows:

1. Procedures prior to the audit tender process
   
   In this phase, Inspicio assists the company and the Audit Committee with the practical aspects of the tendering process and to determine critical success factors for this. Also, the tender documents will be prepared. These tender documents shall allow the tendering auditors to understand the business of the entity to be audited as well as the type of statutory audit to be carried out. The tender documents shall contain transparent and non-discriminatory appointment criteria to be used by the audited entity in its assessment of the offers submitted by statutory auditors or audit firms.
2. The actual tendering process
   
   This stage will clarify practical matters such as necessary access to the Audit Committee and other key employees in the company, as well as access to necessary data in order to draft an accurate offer.

   Inspicio can assist the company and Audit Committee to obtain and analyze offers submitted by the audit firms invited to the audit tendering process. The audited entity shall assess the offers submitted by the statutory auditors or the audit firms in accordance with the predefined appointment criteria in the tendering documents. The audited entity shall prepare a report on the conclusions of the appointment procedure which shall be validated by the Audit Committee. The audited entity and the Audit Committee shall take into consideration any findings or conclusions of any inspection report on the applicant statutory auditor or audit firm published by the competent authority (the Danish Business Authority).

   The phase ends with a presentation round in which the respective audit firms will have the opportunity to present their offers to the Audit Committee and other relevant key employees, such as the company's CFO.

3. The decision-making process and completion
   
   At this stage, the Audit Committee will decide on the selection of at least two options among the audit firms, specifying a preference. At this stage, Inspicio can assist in analyzing the options available. In this analysis, Inspicio uses, among other things, "Audit Quality Indicators" (AQI). Finally, feedback will be given to the involved audit firms.
   

Inspicio can advise and assist in all or part of the above processes. These can be modified and implemented according to an agreed process that will suit your business.