As a general rule, companies must designate a licensed auditor to check their annual financial statements.
Swiss joint-stock companies (société anonyme), limited liability companies (société à responsabilité limitée), cooperatives, partnerships limited by shares (société en commandite par actions), associations and foundations are all required by law to perform audits. The type of audit to be performed depends on the organization's size and economic importance. These factors determine whether a company is subject to an ordinary or limited audit. Companies are advised to choose an auditor independent from their own trustees and advisors. Smaller companies can forgo the audit under certain conditions, particularly with the owners' unanimous consent.
Tax and AVS audits
For a tax or AVS audit, it is a good idea to get an independent second opinion. The audit is a guarantee against systematic errors that could have a negative impact on the company over time. Plus, strict separation of powers is a recognized principle of good corporate governance.
New rules for audits
A company's annual financial statements are subject to an ordinary audit if, for two consecutive fiscal years, two of the threshold values are exceeded. In force since early 2012, the new law on audits sets the threshold values at:
- CHF 20 million for the balance-sheet total (instead of CHF 10 million)
- CHF 40 million for revenue (instead of CHF 20 million)
- 250 full-time employees (instead of 50)
Other criteria for an ordinary audit
A company must also undergo an ordinary audit if it has an obligation to consolidate or if a group of shareholders holding at least 10% of the company's shares requests that such an audit be performed (opting-up). An audit of the annual financial statements may be provided for in the company's articles of incorporation or voted on at a general meeting.
An ordinary audit requires a full report to be sent to the board of directors and a summary report to be sent to the members of the general meeting.
Limited audits or no audit
Most Swiss SMEs do not meet the above criteria and are therefore not required to undergo an ordinary audit. Their annual financial statements are subject to a limited audit.
The limited audit requires a summary report to be sent to the members of the general meeting. The procedure includes an interview with management, verification of details and an analytical audit.
A company may forgo the audit partially (opting-down) or fully (opting-out) if the owners give unanimous consent and if the company in question has no more than 10 full-time employees. Creditors may also request that a company be audited (opting-in).