Requirement for a Statutory Audit – Who Is Affected?
Do you also wonder whether your company is required to undergo a statutory audit? You’re not alone. For many small and medium-sized businesses, the question of when an audit is necessary is anything but clear. In this article, we’ll explain—in simple, easy-to-understand terms—what the audit requirement entails, who is specifically affected by it, and what it all means for your company.
What does “statutory audit” actually mean?
Before we get started, let’s briefly clarify what an audit actually means. An audit—also known as a financial audit—is an independent examination of the annual financial statements by an external auditor. The goal is to confirm that the accounting records are accurate and comply with legal requirements.
A standard audit is the more comprehensive form of audit—as opposed to a so-called limited audit. It is significantly more detailed and time-consuming, and is required only for certain companies.
Who is required to have a regular audit conducted?
Now we're getting down to specifics. The requirement for a statutory audit is regulated by law in Switzerland—more specifically, in the Swiss Code of Obligations (CO). It primarily applies to companies that exceed a certain size.
The following companies are affected:
- Corporations (AGs), limited liability companies (GmbHs), or cooperatives of a certain size
- Companies listed on the stock exchange
- Companies that exceed two of the following thresholds in two consecutive fiscal years:
- Total assets: at least 20 million Swiss francs
- Revenue: at least 40 million Swiss francs
- Workforce: more than 250 full-time positions on an annual average
- Companies required to prepare consolidated financial statements
- AGs or GmbHs in which shareholders holding a combined total of at least 10% of the capital request a regular audit
A real-world example
Imagine this: You run a thriving IT company in Zurich. You’ve grown rapidly in recent years. Last year, you generated 45 million francs in revenue, your total assets were just under 21 million, and you now employ 270 people.
Congratulations—your success is impressive! However, you now meet all three thresholds. As a result, your company is subject to the legal requirement for a statutory audit.
Why is a regular audit important?
You might be wondering, “What’s in it for me?” Sure, an audit costs money and time. But it also has its benefits.
- Trust: Business partners, investors, and banks view audited financial statements as more reliable.
- Transparency: You get an unbiased outside perspective—which helps identify weaknesses within the company early on.
- Legal Certainty: An audit ensures that you comply with all legal obligations.
In many cases, a proper audit strengthens a company—even if it seems like a chore at first glance.
Are there any exceptions to the audit requirement?
Yes, they do exist. Smaller companies that do not meet the thresholds mentioned above can breathe a sigh of relief: They are generally only required to conduct a limited audit. Some can even forego an audit entirely—a process known as “opting out.”
But keep in mind: This is only possible if all shareholders agree and the company employs no more than ten full-time employees. For example: You have a small creative studio with seven people—in this case, you can legally skip the audit.
Conclusion: When size matters, it's put to the test
The requirement for a statutory audit applies to companies that have reached a certain size and level of complexity. Whether this applies to you depends on your revenue, total assets, and number of employees.
If you're unsure whether your company is subject to a statutory audit, it's worth clarifying this early on with your tax advisor, bookkeeper, or auditor. After all, acting early saves time, stress, and money down the road.
Any questions?
Do you feel like your company might be on the verge of becoming subject to mandatory audits? Or would you like to know whether switching from a limited audit to a full audit would be beneficial for you?
Then seek advice early on—preferably from someone who is very familiar with company financials and Swiss law.
Because one thing is certain: If you're prepared, your duty won't catch you off guard.
Related: Learn how a fractional CFO supports Swiss SMEs—from cash flow planning to meetings with banks.