The Role of an Auditor in Stock Corporations and LLCs
The auditor is an independent control body that operates in stock corporations (AG) and limited liability companies (GmbH). Their main task is to review the annual financial statements in accordance with legal requirements.
Core Tasks of the Auditor:
Examination of bookkeeping for legality
Control of the annual financial statements
Preparation of the audit report
Reporting of violations of the law
Differentiation of Audit Types
There are two types of audits: the ordinary audit and the limited audit.
Ordinary Audit
The ordinary audit is not mandatory for all companies in Switzerland. However, under the following circumstances, the company is obliged to do so:
It is a public company
Two of the following sizes were exceeded in two consecutive financial years: (1) Balance sheet total: CHF 20 million (2) Sales revenue: CHF 40 million or (3) 250 full-time positions on an annual average
Companies that have an obligation to prepare consolidated financial statements
In the case of an ordinary audit, a comprehensive audit of the business books, detailed reporting and higher requirements for the qualifications of the auditors apply.
Limited Audit
The limited audit is the standard for small and medium-sized enterprises in Switzerland. In this type of audit, less extensive audit procedures are carried out, with the focus mainly on significant business transactions and reporting in a reduced form. The depth of the audit is lower than for an ordinary audit, which better meets the needs of smaller companies. The auditor mainly carries out inquiries, analytical audit procedures and appropriate detailed tests.
This form of audit offers a balance between control effort and security. The requirements for the qualification of the auditors are also less strict than for an ordinary audit, which has a positive effect on the costs for the companies. Despite the reduced scope, the limited audit nevertheless ensures an adequate review of the business books and offers stakeholders basic assurance regarding the accuracy of the annual financial statements.
Opting Out for SMEs: Requirements and Procedures
Opting out refers to the voluntary waiver by a stock corporation (AG) or LLC (GmbH) of the limited audit in accordance with Article 727a of the Code of Obligations. This option allows SMEs to exempt themselves from the statutory audit obligation, meaning that no limited audit needs to be carried out.
Basic Requirements for Opting Out
Opting out is possible if the following criteria are met:
Fewer than 10 full-time positions on an annual average
Consent of all shareholders
No legal obligation for an ordinary audit
Practical Implementation of Opting Out
In case of a new incorporation
As part of a company incorporation, the founders can waive an auditor right from the start. This waiver must be explicitly stated in the public deed of incorporation. In this regard, it is required that all founders agree to this waiver. The declaration is then included directly in the incorporation documents and submitted to the commercial register.
Depending on the canton, there are different formal requirements. Some cantons require a separate opting-out declaration in addition to the deed of incorporation. This declaration confirms once again in writing that the company meets the legal requirements for waiving the audit and that all parties involved agree.
It is therefore advisable to clarify the specific cantonal requirements before incorporation or to ask an expert in order to make the incorporation process run smoothly and avoid unnecessary delays.
In case of an existing company
Existing companies must register the opting out with the commercial register office, signed by the authorized representatives. The general meeting must decide this by a majority. Cantonal requirements differ. Most cantons require an opting-out declaration signed by all shareholders or the board of directors. A prior check of the specific cantonal requirements is recommended to avoid delays.
Legal Consequences
After successful opting out:
No external audit of the annual financial statements
Possibility of reintroducing an audit at any time
The company must permanently meet the requirements for opting out. If the threshold values are exceeded, an immediate adjustment is required.
Advantages of Opting Out for SMEs
Opting out offers significant economic advantages for SMEs:
Direct Cost Savings
The elimination of the annual audit costs, which usually range between CHF 2'000 and 5'000, represents a significant financial advantage. In addition, companies benefit from a significant reduction in administrative effort, as time-consuming preparation of documents for external auditors is no longer necessary.
Increased Freedom of Action
Decision-making is significantly accelerated by the elimination of external audit bodies, while internal processes are simplified at the same time. This allows companies to focus more on their core business and use their resources more selectively.
Reduced Administrative Effort
The reduced administrative effort is particularly evident in the simplified documentation obligations and a leaner organizational structure. Companies can thus use their existing resources much more efficiently and concentrate on essential business processes. This leads to an optimized way of working and enables more flexible adaptation to changing market conditions.
Conclusion
Opting out represents a sensible option for many SMEs to optimize their operational processes and reduce costs. The possibility of dispensing with an auditor not only offers financial advantages, but also enables a leaner organizational structure and greater entrepreneurial flexibility. However, companies should carefully weigh the decision to opt out and ensure that they meet the legal requirements. An effective internal control system remains of great importance for sustainable corporate management even without an external audit.
These advantages enable SMEs to make their business activities more agile and cost-effective. The resources saved can be invested directly in corporate development. Jurata will gladly support you with all questions and concerns regarding opting-out during foundation or for already registered companies.
