Who is affected by this?
The following are affected by the new audit law:
- Corporations (AG)
- Partnerships limited by shares
- Limited liability companies (GmbH)
There are no changes for sole proprietors, general partnerships, and limited partnerships. The regulations regarding external auditors are contained under corporate law. For the other legal structures, reference should be made to corporate law, in combination with regulations specific to each legal structure.^
The previous law governed audit according to the specific legal structure. In the future, audit shall to a large extent no longer be governed according to legal structure, but rather depending on the size and economic significance of the company. Audit law shall thereby employ the principle of "same business, same risks, same rules".
The Code of Obligations divides companies into four categories:
- public companies (Art. 727 para. 1 Section. 1 CO);
- companies of economic significance (Art. 727 para. 1 Section. 2 and 3 CO);
- small and medium-sized enterprises (Art. 727a para. 1 CO);
- micro-enterprises (Art. 727a para. 2 CO).
The revised law introduces ordinary audits and limited statutory examinations. It is obligatory for public companies and companies of economic significance to submit their annual financial statements to an ordinary audit (Art. 727 para. 1 CO). A limited statutory examination is sufficient for small and medium-sized enterprises (Art. 727a para. 1 CO). Micro-enterprises can forego an audit alto-gether with the approval of all shareholders (Art. 727a para. 2 CO).
There are important differences between an ordinary audit and limited statutory examinations ((Spezifikation Link ergänzen: Grafik? Tabelle? PDF?))[Link - ev. direkt darstellen? Kann schwer beurteilen, da hier nicht abgebildet.]
Options with regard to limited statutory examinations
Companies that are not obligated to perform an ordinary audit have options:
- In companies that are required to perform a limited statutory examination, a minority representing ten percent of the company capital can demand an ordinary audit be performed by an accredited auditor (opting-up). In a corporation (AG), this requires 10 percent of the equity capital (Art. 727 para. 2 CO), in a limited liability company (GmbH), ten percent of the share capital (Art. 818 para. 1 CO), and in a cooperative, 10 percent of the cooperative members or 10 percent of the stock certificate capital (Art. 906 para. 2 Section 1 and 2 CO).
- In micro-enterprises with a maximum of ten full-time positions, limited statutory examinations can be foregone entirely (opting-out) with the approval of all shareholders. The approval of shareholders may be requested in writing. A time period of at least 20 days must be granted for replies. It must be noted that failure to reply is considered approval (Art. 727a para. 3 CO). Art. 727a para. 4 CO specifies that a decision to forego an audit also applies for subsequent years.
- Companies that may entirely forgo limited statutory examinations may also modify the limited statutory examination (opting-down) and may decline to observe individual legal regulations of the limited statutory examination. For example, a single person who does not satisfy the requirements for an accredited auditor may be designated as the audit body. It is also possible to place fewer demands on the unbiased requirement. A decision in favor of opting-out is always required before opting-down. An auditor acting in the context of opting-down is not considered an auditor under the terms of the law and is therefore not entered in the commercial register.
Divergent regulations specific to legal structures:
Limited liability companies (GmbH)
According to Art. 818 para. 1 CO, the corporate law regulations are applicable for audit bodies. However, limited liability company law diverges from corpo-rate law in that it features two additional cases in which a shareholder may demand opting-up:
- in the event a shareholder is affected by an obligation to make addi-tional contributions (Art. 818 para. 2 CO); and
- in the event this is demanded by a departed shareholder when com-pensation has not been fully paid (Art. 825a para. 4 CO).
Under cooperative law, audit bodies are also referred to the corporate law regulations (Art. 906 para. 1 CO). However, in contrast to corporate law, any cooperative member affected by personal liability or an obligation to make additional contributions can demand an ordinary audit (Art. 906 para. 2 CO).
According to the general reference of Art. 906 para. 1 CO, the activities of the audit body are also subject to the regulations defined under corporate law. A regulation specific to the legal structure is provided under Art. 907 CO, whereby in the event of cooperative members with personal liability or an obligation to make additional contributions the audit body must determine whether the cooperative directory is being correctly maintained. If the cooperative does not have an audit body, then the administration of the cooperative directory must be audited by an accredited auditor. This divergent regulation was created with the reasoning that the solvency of cooperative members burdened with personal liability or double liability is relevant for the assessment of the cooperative's economic status by third parties.
The audit obligation of associations is governed under Art. 69b CC. Associa-tions are basically free to decide if they wish to perform an audit and how the audit is to be done (Art. 69b para. 4 CC). There are two exceptions to this principle:
- Associations must subject their accounts to an ordinary audit by an ac-credited audit specialist if they exceed the limits defined by Art. 69b para. 1 CC.
- Associations must subject their accounts to a limited statutory examination by an accredited auditor if this is requested by an association member who is subject to personal liability or a double liability (Art. 69b para. 2 CC).
If an association must subject its accounts to an ordinary or limited statutory examination, then aspects related to the commissioning, duties and unbiased of the auditor are correspondingly subject to the corporate law regula-tions (Art. 69b para. 3 CC).
The audit obligations of foundations are conclusively governed under Art. 83b para. 1 and 2 CC. Accordingly, the options provisions under corporate law do not apply. Foundations are fundamentally obligated to designate an audit body in accordance with Art. 83b para. 1 CC. The supervisory authorities may exempt a foundation from its audit obligation if certain requirements are satisfied. These requirements are stipulated in the provision governing the audit bodies of foundations. However, the foundation supervisory authorities may revoke the exemption of the audit obligation at any time if the requirements for exemption are no longer satisfied or if this should become necessary for the reliable assessment of the foundation's assets and earnings. The foundation supervisory authorities may also request that an audit body be designated if this becomes necessary for the reliable assessment of the foundation's assets and earnings.
For other questions related to audit, foundation law refers to corporate law (Art. 83b para. 3 CC). It is therefore the type of audit in particular (ordinary audi-tor limited statutory examination) that is governed according to the limits under corporate law.
Swiss Institute of Certified Public AccountancyFederal Justice Department
Further information on the new audit law can be found under the following:
Federal Act on Collective Investments Schemes
Federal Justice Department
The reference work "Neuerungen im Gesellschafts- und Revisionsrecht 2007/2008" [Changes to corporate law and audit law 2007/2008] (Schulthess Verlag, ISBN/ISSN: 978-3-7255-5329-7) provides a quick introduction to the subject, explains important legal texts, and compares the various types of company. Order directly via Schulthess Verlag.