Have there been any significant regulatory developments in the Nordic region over the last 12 months?

There have not been region-specific legal changes over the last 12 months. The industry in the Nordic countries has been subject to the general legal developments that impact the industry globally. The industry-related legislation in the Nordic countries closely resembles each other across the region's national borders.

Throughout 2022 and 2023 “new” areas that have received the most attention:

• ISQM1 and ISQM2
• Anti-Money Laundering and anti-terror financing
• ESG

How would you describe the health of the accounting industry in the Nordic region in terms of customer demand, fee pressure, and staff recruitment and retention?

The Nordic countries have generally been subjected to significant challenges in terms of recruitment, which, in the period following the Covid-19 pandemic, has been the most prevalent challenge. The recruitment challenge has resulted in clear pressure on client assignments, both in terms of delivering core services such as auditing, accounting and taxes, but also an increasing pressure in solving tasks arising from Covid-19, mainly national various support packages awarded for businesses.

Similarly, the market has seen an increase in M&A transactions, which, however, has slowed down throughout 2023. Consequently, there has not been the same price pressure as before, as supply has not been able to meet demand. Instead, the pressure has shifted to personnel salaries and recruitment. By the end of 2023, the recruitment challenge appears to be decreasing.

In the post-Covid-19 period, a market recession was expected, but the Nordic markets have not yet seen a significant impact from this. It still remains an expected risk for the coming years.

Are there any service areas where demand has grown over the last 12 months?

In terms of legislation: yes. Compliance and demand to the auditor’s work continue to increase.

Demands from clients have not provided significant changes over the last 12 months.

Has there been any significant consolidation or merger activity in the accounting profession?

With reference to the earlier mention of pressure from client assignments, many firms in the industry have experienced organic growth, but there has also been an increase in mergers and acquisitions in the sector.

With a general strategy for growth among many audit and accounting firms, acquisitions and mergers have been part of that strategy. Especially for firms that, in terms of size, are outside the Big4 but are part of the national top 10, growth strategies have been realized by acquiring smaller auditing firms.

Similarly, there has been a trend where Big4 firms increasingly focus on auditing larger entities and, as a result, have divested activities related to small and medium-sized enterprises. Thus, there has been a trend where firms that are the "biggest of the rest" have grown through acquisitions both from above and below. Martinsen has itself grown using this strategy, as we have also experienced organic growth.

What are your expectations for the next 12 months - are there any potentially significant developments in the pipeline?

The expected focus area for the foreseeable future will be ESG and sustainability reporting. With mandatory ESG reporting regulations for the largest companies from 2024, which will extend to include smaller companies in the coming years, the industry is facing a future with new requirements for auditors. This area has significant public attention, and from the auditing industry's perspective, it remains an area with more questions than answers. As a good colleague has expressed, ESG is a journey where we lay the tracks while traveling. This encapsulates well how the industry views the ESG reporting requirements.

There will be specific requirements for authorized auditors, to also be ESG certified, in order to sign ESG and sustainability reporting in the annual reports in the future. This could potentially be leading to a restructuring of client distribution in the industry, as not all authorized auditors may obtain the required ESG certification.