The Swiss Audit
LPG Geneva, Swiss Fiduciaire, offers clients auditing services, either on its own or in partnership with other renowned Geneva firms.
Most Swiss companies (with the exception of partnerships) including foundations must undergo a yearly audit of their financial statements.
Swiss SA, SARL and incorporated partnerships must allow their financial statements to be reviewed by an approved Swiss auditor.
Ordinary audit
The scope of a Swiss audit depends on the size of the company. The following companies must undergo an ordinary audit by an accredited Swiss auditor:
- Companies listed on the stock market OR
- companies which are indebted for more than 2 million Swiss francs (about 2,150,000 USD) OR
- companies which surpass two of the three following criteria:
- Total balance sheet: 20,000,000 CHF
- Turnover: 40,000,000 CHF
- Number of full time employees: 250
An accredited auditor is usually charged with ensuring the shareholders (or associates) that the annual report gives an accurate account of the financial standing of the company. It lets them know if they should approve or reject the annual report of the prior financial year. The accredited accountant must also verify that there are internal controls in place and the proposition by managers on employment benefits.
Limited audit
Certain companies can undergo a limited audit of their accounts performed by an accredited auditor. These are companies which during the previous two financial years remained below the threshold of at least two of the three following criteria:
- Total balance sheet: 20,000,000 CHF
- Turnover: 40,000,000 CHF
- Number of full time employees: 250
Since the audit is limited, the accredited auditor is not required to get confirmation on balances from third parties or to assist in taking inventory. At the end of audit, the conclusion is limited to "on the basis of the limited audit of accounts, there was nothing observed to suggest that the annual report and the proposed allocation of profits is not in compliance with the Swiss law or the articles of association."
Example
Example of the difference between a mandatory ordinary and a limited audit of accounts:
| Year | 2008 | 2009 | 2010 | 2011 |
| Total balance sheet | 11,000,000 | 12,000,000 | 12,000,000 | 11,000,000 |
| Turnover | 18,000,000 | 21,000,000 | 22,000,000 | 19,000,000 |
| Number of Employees | 47 | 48 | 51 | 52 |
In 2010, this company has to undergo a limited audit of its accounts by an accredited auditor because the thresholds were surpassed in 2009 but not in 2008 (the ordinary audit is required only when the thresholds are surpassed in the two preceding financial years).
In 2011, however, the company must undergo an ordinary audit of its accounts by an accredited auditor because the thresholds were surpassed in 2009 and 2010 (during the two prior financial years).
Companies which regularly employ fewer than 10 full time employees can choose to forego the audit of their accounts if the shareholders (associates) agree to do so (article 727a CO of the Swiss Code of Obligations).
Please note that in Switzerland, accredited auditors usually work in an auditing firm. An accounting firm can also be an accredited auditing company when at least half of the members of the board are accredited auditors and at least 20% of the audit team are accredited auditors.
Reference texts:Articles 727 and Swiss Code of Obligations. Thresholds from January 1, 2012