The Role of an Auditor in Stock Corporations (AG) and LLCs (GmbH)
The auditor is an independent supervisory body operating in stock corporations (AG) and limited liability companies (GmbH). Their main task is to review the annual financial statements in accordance with statutory requirements.
Core Tasks of the Auditor:
Examination of the bookkeeping for compliance with the law
Review of the annual financial statements
Preparation of the audit report
Reporting of violations of the law
Distinction Between Audit Types
There are two types of audits: the ordinary audit and the limited statutory examination.
Ordinary Audit
The ordinary audit is not mandatory for all companies in Switzerland. However, under the following circumstances, the company is obliged to perform one:
It is a public company
Two of the following thresholds 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
The ordinary audit involves a comprehensive examination of the business ledgers, detailed reporting, and higher requirements regarding the qualification of the auditors apply.
Limited Statutory Examination
The limited statutory examination is the standard for small and medium-sized enterprises in Switzerland. In this type of audit, less extensive auditing procedures are carried out, with the focus mainly on significant business transactions and reporting is done in a simplified form. The depth of the examination is lower than in an ordinary audit, which better suits the needs of smaller enterprises. The auditor primarily conducts inquiries, analytical review procedures, and appropriate detailed tests.
This form of audit offers a balanced ratio between control effort and assurance. The qualification requirements for the auditors are also less strict than for an ordinary audit, which has a positive effect on costs for the companies. Despite the reduced scope, the limited statutory examination still ensures an adequate review of the business ledgers and provides stakeholders with 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 statutory examination 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 statutory examination has to be performed.
Basic Requirements for Opting Out
An 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 statutory obligation for an ordinary audit
Practical Implementation of Opting Out
Upon New Incorporation
In the context of establishing a company, the founders can waive an auditor right from the start. This waiver must be explicitly stated in the public deed of incorporation. In this case, it is required that all founders agree to this waiver. The declaration is then directly included 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 statutory requirements for waiving the audit and that all parties involved agree to it.
It is therefore advisable to clarify the specific cantonal requirements prior to incorporation or to ask an expert to ensure a smooth incorporation process and avoid unnecessary delays.
For an Existing Company
Existing companies must register the opting out with the commercial register office, signed by the authorized representatives. The general meeting of shareholders must approve this by a majority. The cantonal requirements vary. Most cantons require an opting-out declaration signed by all shareholders or the board of directors. A prior review 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 meet the requirements for opting out on a permanent basis. If the thresholds are exceeded, an immediate adjustment is required.
Advantages of Opting Out for SMEs
Opting out offers significant economic benefits for SMEs:
Direct Cost Savings
The elimination of annual audit costs, which usually range between CHF 2'000 and 5'000, represents a substantial 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 required.
Increased Freedom of Action
Decision-making is significantly accelerated due to the elimination of external auditing bodies, while internal processes are simplified at the same time. This allows companies to focus more on their core business and utilize their resources more selectively.
Reduced Administrative Burden
The reduced administrative burden is particularly evident in simplified documentation requirements and a leaner organizational structure. This allows companies to use their existing resources much more efficiently and focus on essential business processes. This leads to an optimized workflow and enables more flexible adaptation to changing market conditions.
Conclusion
Opting out is a sensible option for many SMEs to optimize their operational processes and reduce costs. The possibility of waiving an auditor offers not only financial benefits but also allows for a leaner organizational structure and greater entrepreneurial flexibility. However, companies should weigh the decision to opt out carefully and ensure that they meet the statutory requirements. An effective internal control system remains of great importance for sustainable corporate management, even without an external audit.
These advantages allow SMEs to organize their business activities in a more agile and cost-efficient manner. The saved resources can be directly invested in corporate development. Jurata is happy to support you with all questions and concerns regarding opting out during incorporation or for already registered companies.
