Danish company audit, financial statements, accounting, consulting in Denmark

Denmark is a northern European country, part of Scandinavia, with a highly developed economy, a high standard of living and a favourable environment for starting a business. The financial statements of Danish companies are published annually. Small companies are entitled to an exemption from the annual audit.

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Legal requirements

As a member of the European Union (EU), Denmark complies with the accounting, audit and financial reporting requirements set out in EU decrees and directives incorporated into national laws and decrees. In terms of accounting and audit Denmark has brought its legal framework to complete conformity with the EU requirements.

Requirements regarding accounting and financial reporting are regulated by the Danish Companies Act (Selskabsloven).

All Danish companies must file annual financial statements with the Danish Commerce and Companies Agency (DCCA); this information will be available to the public.

The following types of legal entities must file financial statements:

Private and public limited companies (ApS and A / S),
Limited liability companies (PS),
Branches and partnerships (I / S),
Partnerships (K / S),
Representative offices and European companies (SE and SCE).

In accordance with the requirements of the EU incorporated into the Danish Financial Statements Act 2002, listed companies in Denmark must apply EU-approved International Financial Reporting Standards in their consolidated financial statements and in separate financial statements for listed companies that are not in a group and do not prepare consolidated financial statements. Other companies must comply with the Danish Financial Statements Act. They can choose to apply the International Financial Reporting Standards or the Danish accounting standards (Danish GAAP) developed by the Danish Accounting Standards Committee (DASC) FSR - Danske Revisorer.

Time frame for preparation and submission of financial statements

Financial year corresponds to calendar year: from 1 January to 31 December; the deadline for filing an annual report is 31 May.

Companies must file their annual report with the Danish Business Authority. An annual report must be received by the Danish Business Authority not later than 5 months after the end of the financial year.

For listed companies and national joint stock companies, the deadline is 4 months after the end of the financial year.

Tax year is a calendar year or another 12-month period if the taxpayer has informed the Tax Agency of it.

Liability for late filing

In the case of failure to comply with the time limit for filing of accounts, each member of the board will be imposed with a fine of up to 3 000 DKK. In the case of further delay, it may result in a compulsory dissolution of the company.

Audit of accounts

Companies incorporated in Denmark must annually file audited financial statements with the Registrar of Companies. Small companies, however, in accordance with the Companies Act, have the right to be exempted from audit if during two straight years the company exceeds the limits:

Balance sheet total is 4 000 000 DKK;
Net turnover is 8 000 000 DKK;
Average headcount of employees during the financial year is 12.

This exemption applies until the company approves otherwise at an annual general meeting of shareholders.

Audit exemption is only possible for future financial statements. Hence, previous reporting periods cannot be exempted from compulsory audit.

Audit exemption do not apply to commercial foundations and investment companies with employees even if they meet the criteria.

Audit exemption is lost if the company, affiliated person or sole owner of the company receives a fixed penalty notice or is convicted of violation of companies legislation, accounting legislation or taxes and duties legislation. In such cases the company’s financial statements for the subsequent reporting year is subject to audit.

Consolidated financial statements

A company’s directors are responsible for preparation of consolidated financial statements of the company that gives truthful and objective representation in accordance with the International Financial Reporting Standards and additional requirements of the Danish Financial Statements Act, and audit conducted in accordance with the International Standards on Auditing and additional requirements applicable in Denmark.

Companies of Denmark that have subsidiaries must prepare and file consolidated financial statements and a consolidated management report.

A subsidiary is a company that is more than 50% owned by another company. There are cases when a company that is 50% or less than 50% owned by another company is considered a subsidiary if it is controlled by the company. A company controls a subsidiary if the following conditions are met:

the company can manage the subsidiary’s financial and operational policies;
the company can remove or appoint the majority of members of the board of directors of the subsidiary;
the company has the majority of votes at meetings of the board of directors of the subsidiary.

Frequency Asked Questions

What accounting standards are used in Denmark?

The accounting standards used in Denmark are generally referred to as Danish Generally Accepted Accounting Principles (GAAP), which are largely aligned with International Financial Reporting Standards (IFRS). Danish GAAP is developed and published by the Danish Accounting Standards Board (DASB), which is an independent body that sets accounting and financial reporting standards in Denmark.

What are the audit requirements in Denmark?

In Denmark, companies are required to have their financial statements audited if they meet two out of the following three criteria for two consecutive financial years: 1) balance sheet total of more than 17 000 000 DKK, 2) net revenue of more than 34 000 000 DKK and 3) an average number of employees during the financial year of more than 50. Additionally, public limited companies (PLCs) and some financial institutions are required to have their financial statements audited regardless of their size. The audit must be conducted by an approved auditor or audit firm registered with the Danish Business Authority. The auditor is required to follow the International Standards on Auditing (ISAs) when conducting the audit.

What is the Bookkeeping Act in Denmark?

The Bookkeeping Act in Denmark (Bogføringsloven) is a law that governs how companies must keep their books and records. The law applies to all businesses that are required to submit financial statements, and sets out requirements for the content and structure of accounting records, including invoices, receipts, and bank statements. The purpose of the law is to ensure that companies maintain accurate and complete records of their financial transactions, which can be used to prepare financial statements and tax returns. The law also specifies the retention periods for various types of financial records, and sets out penalties for non-compliance.

What is the accounting period in Denmark?

In Denmark, the accounting period is typically one calendar year, from January 1st to December 31st. However, companies can choose a different financial year-end date with approval from the Danish Business Authority.

When did Denmark adopt IFRS?

Denmark adopted IFRS for consolidated financial statements of listed companies in 2005, with the option for all other companies to use IFRS as well.

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