General and Limited Audits
Switzerland’s new auditing law came into force at the beginning of 2008. There are two key elements of the legislation worthy of note:
- Legal form no longer a criterion:
An organisation’s legal form will no longer determine whether an external audit is required. Under the new law, the following legal entities will be subject to more or less identical regulations: public limited companies (AG), limited liability companies (GmbH), cooperative societies, partnerships limited by shares, associations and foundations. In principle, all of these organisations will in future be required to perform an external audit. - Company size the determining factor:
Under the new law, publicly held companies and companies of economic relevance* will be required to conduct a “standard audit”, while smaller companies will only be subject to a “limited audit”. In specific circumstances, very small companies may forego an audit altogether.
The general audit will be broader in scope than the previous financial statement audit. In particular, the new law stipulates that a company’s internal controlling system (ICS) must be audited. As a result, many companies will be firmly focused on establishing an ICS in the current year. An-other new requirement is that the Board of Directors be provided with a comprehensive report, with predefined contents, by the auditors.
For both general and limited audits, information on the company’s risk assessment process must be included in the notes to the annual financial statements. In other words, companies must now – irrespective of their size – report on their risk management procedures.
The new legal provisions are expected to be applicable for the first time in the 2008 financial year. For further information, please refer to our brochure, “Revision of Financial Statement Auditing”.
* An organisation is considered economically relevant if it exceeds at least two of the following values in two consecutive years: turnover of CHF 20 million, total assets of CHF 10 million or 50 full-time employees.
Martin Nay