The three types of audits at a glance

Swiss law of obligations differentiates three types of audits. Depending on the economic significance and size of a company, the legislator sets varying high standards for the audit office.

Since it is difficult to almost impossible for shareholders to determine whether the financial figures printed in the annual report reflect the reality of the business, the legislator has created an independent monitoring body, the audit office, to check this. The types of audits are regulated in Art. 727 and 727a of the Swiss Code of Obligations (OR).

The ordinary audit

Companies are required to undergo an ordinary audit if they are of particular size or public interest. The ordinary audit covers public companies that have securities listed on an exchange or have outstanding bond obligations. In corporate structures, companies are also required to undergo an ordinary audit if they account for at least 20 percent of the assets or turnover of the parent company. Companies that exceed two of the following sizes in two consecutive fiscal years are also subject to the obligation for an ordinary audit: (i) balance sheet total of 20 million francs, (ii) sales revenue of 40 million francs, or (iii) 250 full-time positions on average per year. An ordinary audit must also be performed if at least 10 percent of shareholders demand it.

The limited audit

If the conditions for an ordinary audit are not met, a limited audit (review) must be conducted. In principle, every joint stock company not already subject to the ordinary audit must undergo a limited audit.

The waiver of the audit

To avoid burdening small and medium-sized companies with excessive and costly auditing obligations, the law also allows for a waiver of the limited audit (Opting-out). The waiver of the limited audit requires the approval of the shareholders and is only possible if the company involved does not have more than 10 full-time positions on average per year.

Findea helps you keep an eye on the financial situation of your company at all times.