Waiver of audit: Opting-Out - Risks for creditors?

Since the introduction of the audit law (OR) in 2008, small and medium-sized enterprises have had the option to dispense with an audit firm, also known as Opting-Out. The question arises whether this poses risks for the company and its creditors.

Listed companies and economically significant companies are subject to the obligation of ordinary audit (Art. 727 OR). Companies that do not meet the requirements for an ordinary audit are subject to a limited audit (Art. 727a Paragraph 1 OR). These are those with less than CHF 40 million in sales or with a balance sheet total of max. CHF 20 million, and with no more than 250 full-time positions. If there are fewer than 10 employees in an employment relationship, it is even possible to completely dispense with an audit firm, provided all shareholders agree (Art. 727a Abs.2 Or). This is then referred to as Opting-Out.

For banks as lenders, an Opting-Out does not primarily indicate poor debtor's creditworthiness. Rather, banks are interested in whether the accounting is prepared by a reputable trustee. However, it is clear that companies that have dispensed with an audit firm must be more closely scrutinized regarding their creditworthiness. Companies with low creditworthiness must finance themselves at higher interest rates and are less liquid. Primarily, costs are saved by Opting-Out. Due to the high density of Opting-Outs by companies in Switzerland, it can be assumed that the cost factor argument outweighs that of security. Therefore, the risk for lenders and suppliers hardly increases.