Under current legislation, it is the size of the company which determines whether an audit is required or not. In accordance with the provisions of art. 727, para. 2 no. 2 of the Swiss Code of Obligations (OR), which will apply from January 2012, non-profit organizations are required to carry out an audit if they exceed two of the limiting criteria listed below in two consecutive years:
balance sheet total: CHF 20 million (previously CHF 10 million)
annual sales: CHF 40 million (previously CHF 20 million)
full-time employees: 250 (previously 50)
A full audit also establishes the obligation to introduce an internal control system (ICS), the existence of which must be examined and confirmed by the auditor. Companies which do not meet the relevant criteria are subject to a limited audit, and companies with fewer than 10 full-time employees can even opt out of the limited audit provided all stockholders agree.
As a basic principle, all non-profit organizations (regardless of their legal form) will be affected by the new provisions, with two exceptions:
- Small foundations may be fully exempted from an audit by the responsible supervisory authority.
- The limiting criteria for associations will remain unchanged (10/20/50). A full audit must be performed if these limiting criteria are exceeded. Although there is essentially no audit obligation for other associations, they too must carry out a full audit.
KPMG’s network for non-profit organizations has many years of experience in auditing Swiss GAAP ARR mandates and provides support for the changeover from their previous accounting regime to this standard.