The thesis processes the auditor’s role and whether it can constrain possible earnings management in smaller Swedish private corporates. The removed auditing obligation that was abolished in Sweden 2010 with the reason to reduce the administrative burden faced by smaller corporates, contributed to an important discussion regarding the auditor’s actual importance. In addition, the corporate tax in Sweden was significantly reduced from 26.3 percent to 22 percent, which gave Swedish corporates incentives to reduce their earnings before the tax reduction, and therefore pay less taxes. This phenomenon is used in the thesis as an excellent opportunity to measure earnings management since there were significantly strong incentives for corporates to manipulate their earnings at that time. The thesis aims to increase understanding among these corporates accounting, and whether the auditor can strengthen the accounting- and audit quality, and therefore constrain earnings management. Through the use of a quantitative method where statistical tests have been performed on underlying data gathered from the corporates annual reports, the thesis research question has been answered. The formulation of the research questions is “Does the degree of earnings management differ between audited and unaudited corporates?”, which has been investigated by measuring the degree of earnings management through unexpected accruals, but also through SG&A cost stickiness. Furthermore, the thesis aims to provide the research area with arguments regarding the appropriateness of the audit exemption. The result obtained in the thesis indicates that audited corporates have less negative unexpected accruals, and hence a minor degree of earnings management in comparison with unaudited corporates. However, no significance is shown in the result, at a five percent significance level, which means that it’s not possible to say with certainty that there’s a difference between these two groups in terms of negative unexpected accruals. Instead, there is evidence that there’s a significant difference between audited and unaudited corporates in terms of cost stickiness, where unaudited corporates showed more cost stickiness and thus also a higher degree of earnings management. With an additional test the thesis also demonstrates that there are corporates that don’t follow the Swedish laws regarding audit exemption. This is when it’s discovered that there are corporates that aren’t covered by the audit exemption, and thus don’t meet the required limits, but still don’t provide an auditor. These corporates also prove to have a higher degree of earnings management since the thesis received a significant result in terms of negative unexpected accruals. To sum up, the thesis highlights that the auditor’s role is of great importance in several aspects, and for this reason there are motives for legislators to review the audit exemption in Sweden.