Switzerland

The financial reporting framework in Switzerland is established under the Swiss Code of Obligations (Swiss CO), as amended in 2017. Companies—other than public interest entities (PIEs), defined as listed companies and financial institutions—may prepare financial statements in accordance with IFRS Standards, IFRS for Small- and Medium-sized Entities (SMEs), US GAAP, and Swiss GAAP FER. PIEs are required to prepare their group financial statements in accordance with IFRS or US GAAP if they are registered on a major stock exchange and in accordance with Swiss GAAP FER if they are registered on the domestic market. The Swiss GAAP FER Foundation, an independent private standard-setter, establishes Swiss GAAP FER.

In addition to complying with the requirements of the Swiss CO, PIEs are subject to additional financial reporting requirements issued by the Swiss Financial Market Supervisory Authority.

A mandatory audit is required for all PIEs and companies that exceed two of the three following thresholds: (a) CHF 20 million of total assets; (b) CHF 40 million of total revenue; and/or (c) 250 employees. Companies below the specified thresholds are subject to statutory limited examination (a moderate assurance engagement), for which a stand-alone Swiss review standard has been established.

Under the Federal Act on the Licensing and Oversight of Auditors of 2005, the Federal Audit Oversight Authority (FAOA) is responsible for setting auditing standards for PIEs. Under an FAOA’s Ordinance on the Oversight of Audit Firms of 2008, financial statements of PIEs prepared in accordance with the Swiss CO and Swiss GAAP FER must be audited following auditing standards issued by the Swiss Expert Association for Audit, Tax and Fiduciary (EXPERTsuisse). EXPERTsuisse has developed national auditing standards that converge with ISA, with modifications (add-ons) for Swiss-specific issues.

As reported by EXPERTsuisse, FAOA has issued specific rules for listed companies — these companies are required to prepare financial statements in accordance with IFRS and must have audits done following ISA, as issued by the IAASB. Companies preparing their financial statements in accordance with US GAAP must prepare their audits following the U.S. Public Company Oversight Board (PCAOB) requirements. Lastly, listed companies preparing financial statements based on Swiss GAAP FER must follow Swiss national auditing standards.

Only auditors are regulated at the state level under the Federal Act on the Licensing and Oversight of Auditors (AOA) of 2005. The Act establishes and outlines the roles of the audit oversight authority—the Federal Audit Oversight Authority (FAOA). Through the Act, initial and continuing professional development (IPD and CPD) requirements are also outlined for auditors in Switzerland.

Universities and the Swiss Expert Association for Audit, Tax and Fiduciary (EXPERTsuisse) have a role in implementing IPD requirements for auditors. To be eligible to practice as a Licensed Audit Expert for statutory audits, individuals must: have a university degree, have work experience of at least three years, and pass a final assessment. A Licensed Auditor undertaking statutory limited exemptions (moderate assurance engagements) is subject to at least 1 year’s practical experience. Subsequently, candidates must be registered with the FAOA to practice.

The FAOA, as the oversight authority for the audit profession, has the following responsibilities:(i) the approval and registration of auditors and audit firms; (ii) the adoption of audit standards for public interest entities (PIEs); (iii) establishing a quality assurance system; and (iv) establishing an investigative and disciplinary system.

In addition to auditors, there are several other qualifications—i.e. certified accountants, tax experts, fiduciary experts, certified experts in accounting and controlling, among others—for professional accountants in Switzerland. Still, none are regulated at the state level. Other professionals may voluntarily join a professional accountancy organization (PAO) and be self-regulated through the membership requirements of the PAO. The EXPERTsuisse, a PAO with voluntary membership, carries out the following activities: (i) maintaining a registry of all members; (ii) administering an IPD program for candidates that want to join its membership; (iii) administering the examination for auditors; (iv) establishing and enforcing CPD requirements for all members; (v) issuing audit standards for auditors providing services to non-PIEs; (vi) setting ethical requirements for its members; and (vii) implementing an investigation and discipline system for its members.

The Federal Act on the Licensing and Oversight of Auditors (AOA) of 2005 recognizes the Federal Audit Oversight Authority (FAOA) as an independent, non-governmental entity responsible for the oversight of the audit profession. The FAOA is a member of the International Forum of Independent Audit Regulators. The FAOA functions are outlined in the Regulation section.

The Swiss Expert Association for Audit, Tax and Fiduciary (EXPERTsuisse)

EXPERTsuisse is a voluntary membership PAO recognized by law and was founded in 1925. EXPERTsuisse carries out the following activities: (i) maintaining a registry of all members; (ii) administering an IPD program for candidates that want to join its membership; (iii) administering the examination for auditors; (iv) establishing and enforcing CPD requirements for all members; (v) issuing audit standards for auditors providing services to non-PIEs; (vi) setting ethical requirements for its members; and (vii) implementing an investigation and discipline system for its members. EXPERTsuisse’s membership includes auditors, accountants, tax consultants, technicians, bookkeepers, and students.

In addition to being an IFAC Member, EXPERTsuisse is also a member of Accountancy Europe.

• EXPERTsuisse is working on implementing the Corporate Sustainability Reporting Directive (CSRD) into Swiss law. EXPERTsuisse launched a project regarding sustainability in 2023 to prepare members for advisory, reporting and assurance services in this regard. Furthermore, EXPERTsuisse has started an initiative to certify the competencies of members and other interested persons in the form of certificate courses in audit, data analytics, and tax advisory. One of these courses is related to the assurance of sustainability reports.
• EXPERTsuisse also commenced an initiative regarding attracting young professionals and promoting gender diversity in the audit and accounting sector.

In Switzerland, a mandatory quality assurance (QA) review system is required for all statutory audits of financial statements. The Federal Audit Oversight Authority (FAOA) is responsible for carrying out QA reviews per the Federal Act on the Licensing and Oversight of Auditors (AOA) of 2005.

In Switzerland, the five largest audit firms operating in the jurisdiction and which have a significant market share in the audit of public interest entities are inspected annually. Other PIE audit firms are inspected every three years (or five years for firms providing auditing services to financial intermediaries who are directly subordinated to the Swiss Financial Market Supervisory Authority). All other firms are subject to a license renewal process every 5 years or earlier in case of any reported information. Sole practitioners registered at FAOA are subject to peer reviews. The Swiss Expert Association for Audit, Tax and Fiduciary (EXPERTsuisse) reports that the FAOA’s QA review system aligns with the best practices of the SMO 1, however, as of 2023, IAASB Quality Management Standards have not been adopted.

In addition, the Swiss Code of Obligations (Swiss CO), as amended in 2023, requires audit firms to have a quality control system in place. EXPERTsuisse has issued a national quality control standard (ISQC-CH 1) which is converged with IAASB Quality Control Standards and which the FAOA has endorsed.

Current Status: Partially Adopted

The Federal Act on the Licensing and Oversight of Auditors (AOA) of December 2005 sets initial and continuing professional development (IPD and CPD) requirements for auditors in Switzerland. Further, the Federal Act on Vocational and Professional Education and Training and the Ordinance on Vocational and Professional Education and Training provide the legal basis for the initial professional development (IPD).

To be eligible to practice as a Licensed Audit Expert for statutory audits, individuals must: have a university degree, have work experience of at least three years, and pass a final assessment. A Licensed Auditor undertaking statutory limited exemptions (moderate assurance engagements) is subject to at least 1 year’s practical experience. Subsequently, candidates must be registered with the FAOA to practice.

EXPERTsuisse offers an IPD program for candidates who voluntarily join its membership as a pathway to becoming a licensed auditor or audit expert. EXPERTsuisse reports having an ongoing process to review and ensure alignment with the requirements of the IES.

In accordance with AOA, all auditors are required to complete 120 hours of CPD over a two-year rolling period. All EXPERTsuisse members must fulfill the same CPD requirements.

Current Status: Adopted

Under the Federal Act on the Licensing and Oversight of Auditors of 2005, the Federal Audit Oversight Authority (FAOA) is responsible for setting auditing standards for public interest entities (PIEs). Under an FAOA’s Ordinance on the Oversight of Audit Firms of 2008, financial statements of PIEs prepared in accordance with the Swiss CO and Swiss GAAP FER must be audited using auditing standards issued by the Swiss Expert Association for Audit, Tax and Fiduciary (EXPERTsuisse).

As reported by EXPERTsuisse, FAOA has issued specific rules for listed companies — these companies are required to prepare financial statements in accordance with IFRS and must have audits done following ISA, as issued by the IAASB. Companies preparing their financial statements in accordance with US GAAP must prepare their audits following the U.S. Public Company Oversight Board (PCAOB) requirements. Lastly, listed companies preparing financial statements based on Swiss GAAP FER must follow Swiss national auditing standards.

EXPERTsuisse has developed national auditing standards that converge with ISA, with modifications (add-ons) for Swiss-specific issues. EXPERTsuisse reports that it has an ongoing system in place to incorporate new and revised standards. In 2022, a revised version of the Swiss standards on Auditing was published that converged with the 2018 ISAs (including the revised ISA 250 and 540).

EXPERTsuisse will progress with the adoption of ISA 220 (Revised), ISA 315 (Revised) and ISA 600 (Revised) (applicable in the 2021 and 2022 ISA) in 2024 so that the gap between ISA and Swiss national auditing standards will be further reduced.

Current Status: Partially Adopted

Ethical requirements for auditors in Switzerland are established in the Swiss Code of Obligations (Swiss CO), as amended in 2023, and the Federal Act on the Licensing and Oversight of Auditors of 2005. The legislation refers only to independence requirements for auditors, which, as reported by the Swiss Expert Association for Audit, Tax and Fiduciary (EXPERTsuisse), are aligned with the IESBA requirements.

Auditors and other professionals who voluntarily join a professional accountancy organization (PAO) are self-regulated through the membership requirements of the PAO. EXPERTsuisse has developed its own Code of ethics based on the 2020 IESBA Code of Ethics. The Swiss Code of Ethics (Principles of Independence) has been revised to reflect revisions from the IESBA Code of Ethics in 2018 and 2020.

Current Status: Partially Adopted

The Swiss Federal Finance Administration (FFA), under the authority of the Federal Department of Finance, is responsible for adopting public sector accounting standards for the federal government, while the governments of the states or cantons are responsible for adopting public standards in their jurisdictions. Accrual-basis IPSAS (modified for local context) have been adopted through the Financial Budget Ordinance.

Current Status: Adopted

The Federal Audit Oversight Authority (FAOA) has the responsibility for establishing an investigative and disciplinary (I&D) system for auditors, in accordance with the Federal Act on the Licensing and Oversight of Auditors (AOA) of 2005. Accordingly, the FAOA has established such a system. In addition, the Swiss Expert Association for Audit, Tax and Fiduciary (EXPERTsuisse), has established its own I&D system for its members who join voluntarily.

EXPERTsuisse assessed the FAOA’s and its own I&D systems and indicated both meet the benchmark of SMO 6.

Current Status: Adopted

In Switzerland, accounting standards are established by the Swiss Code of Obligations (Swiss CO), as amended in 2023. Companies—other than public interest entities (PIEs), which are defined as listed companies and financial institutions—may prepare financial statements in accordance with IFRS Standards, IFRS for Small- and Medium-sized Entities (SMEs), US GAAP, and Swiss GAAP FER. PIEs are required to prepare their group financial statements in accordance with IFRS or US GAAP if they are registered on a major stock exchange and in accordance with Swiss GAAP FER if they are registered on the domestic market. The Swiss GAAP FER Foundation, an independent private standard-setter, establishes Swiss GAAP FER.

In addition to complying with the requirements of the Swiss CO, PIEs are subject to additional financial reporting requirements issued by the Swiss Financial Market Supervisory Authority.

Standards and amendments are automatically adopted as and when issued by the IASB. The IFRS Foundation makes available French, German, and Italian translations, all of which can be used in Switzerland.

Current Status: Partially Adopted

Relevant Organizations

• Swiss Expert Association for Audit, Tax and Fiduciary (EXPERTsuisse)
• Federal Audit Oversight Authority (FAOA) of Switzerland
• Swiss GAAP FER Foundation
• Swiss Financial Market Supervisory Authority

Relevant Legislation

• Swiss Code of Obligations
• HYPERLINK "https://www.fedlex.admin.ch/eli/oc/2007/533/de"Federal Act on the Licensing and Oversight of Auditors, December 2005
• Ordinance of the Federal Audit Oversight Authority on the Oversight of Audit Firms, 2022

Relevant Publications

Accountancy Europe, Structure and Organisation of the Accountancy Profession. Key feature: Switzerland, 2020.

Member State Implementation of Directive 2014/95/EU, 2017.

Organization of the Public Oversight of the Audit Profession in Europe, a Survey, March 2018.

Definition of Public Interest Entities in Europe, March 2019.

Defining a public interest entity: How to streamline the scope of EU audit rules across countries, 2022.

EXPERTsuisse, SMO Action Plan, November 2023.

Federal Audit Oversight Authority, Annual Report 2022, April 2023.IFRS Foundation, IFRS Application Around the World, Jurisdictional Profile: Switzerland, Aug 2019.

IFIAR, IFIAR Member Profile: Switzerland, 2023.