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    Country by Country Financial Reporting and Auditing Framework

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    Switzerland, Crowe Horwath Switzerland (prepared July 2014)


    Preparation of and Filing of Statutory Financial Statements

    All entities that are not private partnerships or private enterprise are required to prepare annual financial statements. Except for public enterprise, filing of financial statements is not required in Switzerland.


    Listed companies are required to file their financial statements with SIX or any other equivalent supervisory body in other cantons within 4 months after the balance sheet date. Adoption by the shareholders of the financial statements should be performed not later than 6 months after the balance sheet date.


    All public entities are required to prepare full financial statements comprising a balance sheet, an income statement a cash flow and explanatory notes to the financial statements in compliance with acceptable reporting standards. Companies registered on the main market are required to report using only IFRS or US GAAP referential. Companies registered on the domestic market can choose between IFRS, US GAAP or SWISS GAAP. Most companies filing on the domestic market adopt Swiss GAAP because of the reduced disclosures requirements.


    Large and medium sized groups are required to prepare and file consolidated financial statements that also comprise a group management report.


    Financial Reporting Framework

    Listed companies in Switzerland are required to prepare their group financial statements in accordance with International Financial Reporting Standards (IFRS) or US GAAP if they are registered on the main market. In accordance with Swiss GAAP at minimum if they are registered on the domestic market.  A full set of financial statements for listed companies, also includes a group management report.


    All other corporations of legal entities such as cooperatives and foundations, subject to any other requirements which may be otherwise specified, have the obligation to prepare their financial statements at minimum in accordance with accounting principles promulgated by the Swiss Commercial Code.  Also, the Swiss statutory financial statements are the starting point for determining the taxable income of an entity for corporation and trade tax purposes in Switzerland.


    Audit Requirements for Corporations and LLPs Registered in Switzerland

    In general, all legal entities that are not individual companies must have an audit of their statutory financial statements if they exceed 10 employees. Regardless of their size, all listed companies are subject to a full statutory audit.


    In addition to the audit of separate statutory financial statements of parent companies and their affiliates, their group financial statements are also subject to a full audit.


    Audit Exemption

    Subject to the above, small private corporations/LLPs with less than 10 employees may renounce to an audit of their annual accounts - unless the company's articles of association or 10% of shareholders ask for one.  Alternatively, there may be a requirement specified by other third parties for an audit (i.e. in a bank loan/overdraft agreement).


    A Corporation/LLP exceeding 10 employees is subject to a limited statutory audit if 2 requirements out of the following three criteria for two consecutive reporting dates are not met.

    • has an annual turnover of no more than 50 million CHF
    • has total assets of no more than 20 million CHF
    • has no more than 250 employees.

    If 2 criteria are met for 2 consecutive years, the company is subject to a full scope audit. For companies meeting the criteria for a full scope audit, the auditors must, in addition to a standard opinion, report also on the existence of internal controls. Furthermore the auditors must issue a report for the attention of the Board on the audit work performed and findings in the examination of financial statements and internal controls.


    Audit Appointment, Rotation and Joint Audits

    Auditors are elected by the shareholders and appointed by the Board of directors.  Switzerland does not have any rules relating to mandatory rotation of audit firms but there are guidelines within the ethical standards regarding partner rotation.  Whilst not prohibited, joint audits are very rare in Switzerland. For public companies there is a mandatory rotation of the partner in charge of audit every 7 years.


    Auditing Standards

    All certified audit firms in Switzerland are required to carry out their audits and express an opinion on the (group) financial statements in accordance with auditing standards promulgated by the Swiss institute of certified auditors (Chambre Fiduciaire/Treuhand Kammer). The auditing standards issued by the Chambre Fiduciaire are largely consistent with the Clarity ISA issued by the IAASB subject to some additional requirements relevant within Switzerland.


    Ethical Framework

    All certified audit firms in Switzerland are bound by the Code of Ethics promulgated by the Chambre Fiduciaire. This is largely based on the IFAC Code of Ethics (IESBA).


    Audit Regulation

    All certified audit firms in Switzerland are subject to the following external and internal monitoring processes with regard to their audit practice.


    External Monitoring

    The audit practices of all certified audit firms in Switzerland are subject to periodic external peer reviews if they are not registered to audit public entities. The peer reviews have to be completed every six years.


    Certified audit firms in Switzerland that also perform audits for public interest entities are under the direct supervision of the Swiss supervisory body ASR/RAB which performs a full review every three years.


    Internal Monitoring

    All certified audit firms in Switzerland are required to establish an annual firm wide monitoring process known as internal quality inspections. The internal inspections are led by the Quality Assurance Partner within the respective firm. The internal inspections are conducted following procedures defined by Swiss auditing standards issued by the Chambre Fiduciaire and cover all certified auditors of a firm who perform statutory audit engagements. The results of the annual internal inspections are used to develop and further enhance the quality of the audit processes within the member firms.


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