Audit oversight act. Prof. Dr. Thomas Nösberger. Winter 2017

Transcription

1 Audit oversight act Prof. Dr. Thomas Nösberger Winter 2017

2 Learning Objectives 1. The good old days 2. The influence of the Sarbanes-Oxley Act in The consequences in Switzerland 4. Federal Audit Oversight Authority 5. Internal control system over financial reporting 6. One size fits all abolished Page 1

3 The good old days 1 Few requirements Audit was required for certain forms of incorporation (basically only for stock corporations) The auditor is legally part of the organization Minimal requirements regarding education and experience ( The auditor shall be able to do an audit ) Some consequences Everyone can sign an audit opinion Choice of the form of incorporation influenced by the audit requirement Difference in quality? There are different opinions on this point Page 2

4 The influence of the Sarbanes-Oxley Act in Public Company Accounting Oversight Board Internal controls over financial reporting Applicable outside of the US! Creation of the Federal Audit Oversight Authority in CH Internal control system over financial reporting in CH Page 3

5 The consequences in Switzerland Fast changes in the law 3 The existing draft law regarding audit and accounting was divided into two sub-projects (2003): Audit Accounting Audit part exposed for public comment in 2004 Final voting in the parliament by the end of 2005 Federal Audit Oversight Authority created in 2006 Audit oversight act effective January 1, 2008 Page 4

6 Federal Audit Oversight Authority 4 Decentralized administrative unit, self-financed (fees per activity, fees levied on stateregulated audit firms in accordance to their fee volume with public companies) Core tasks: 1. Licensing 2. Oversight 3. International relations No standard setting, but standard adopting! Center of excellence for audit in Switzerland Page 5

7 Federal Audit Oversight Authority Licensing 4 Licensing Licensing audit experts and auditors Maintaining electronic register of the licensed audit experts (8 552) and auditors (3 587) ( ) Only 32 state-regulated audit firms Very stable over time Page 6

8 Federal Audit Oversight Authority Licensing 4 Page 7

9 Federal Audit Oversight Authority Licensing 4 Page 8

10 Federal Audit Oversight Authority Licensing 4 Page 9

11 Federal Audit Oversight Authority Oversight Oversight 4 Firm reviews: Quality assurance systems Tone at the top Ethical principles and independence Acceptance and continuance of clients Human ressources Proper performance of assignments Internal monitoring File reviews: Working papers of individual audits No publicly available inspection reports Regulatory audit of Federal Financial Market Supervisory Authority with the FAOA Third party whistle blowing possible (!) Page 10

12 Federal Audit Oversight Authority Oversight 4 Page 11

13 Federal Audit Oversight Authority Oversight 4 Page 12

14 Federal Audit Oversight Authority International Relations 4 Principle of mutual recognition Harmonization of accounting and auditing standards Same yardstick Worldwide: EU, USA, Canada, China, Japan, South Africa etc. International Forum of Independent Audit Regulators (IFIAR) European Audit Inspection Group (EAIG) European Union recognition of equivalence obtained US Statement of protocol signed inspections in Switzerland Page 13

15 Federal Audit Oversight Authority International Relations 4 Page 14

16 Internal control system over finanical reporting 5 Art. 728a The auditors shall examine whether: the annual financial statements and, if any, the consolidated financial statements comply with the provisions of law, the articles of incorporation and the chosen accounting principles; the motion by the board of directors to the general meeting of share-holders regarding the appropriation of the balance sheet profit complies with the provisions of law and the articles of incorporation; an internal control system exists and is documented. Page 15

17 One size fits all abolished 6 Audit required based on: Size Form of incorporation disregarded besides personal liability considerations of the owners. Resulted in: 4 groups of companies 2 different forms of audit 3 different levels of independance 2 different quality level of auditors Page 16

18 One size fits all abolished 6 In 2008 Balance sheet (Mio. CHF) Revenues (Mio. CHF) Employees Ordinary audit January 1, 2012 Balance sheet (Mio. CHF) Revenues (Mio. CHF) Employees Ordinary audit Two criteria out of the three in two subsequent years. If less than 10 employees potential micro company. Let s think about the consequences Page 17

19 One size fits all abolished 6 Typ Goal Intensity Registration Independence Public Companies (equity/dept securities traded) Protection of investors Ordinary audit Auditor under oversight of FAOA High standards, rotation required Significant companies (or consolidated financial statements) Public interest Ordinary audit Licensed audit expert High standards, rotation required SME Protection of Limited statutory Licensed auditor Reduced level minorities examination (book keeping allowed!) Micro companies Protection of third parties not needed Opting out Opting up Opting down Opting in No requirements No requirements Page 18

20 One size fits all abolished Criteria Ordinary audit Limited statutory examination 6 Experience Highest requirements Less stringent requirements Licensed audit expert Licensed auditor Independence Highest requirements Less stringent: book keeping Rotation of lead auditor services allowed No rotation required Scope of examination Comprehensive reduced Depth Comprehensive Limited on certain specified procedures Reporting Comprehensive report to the Standardized report to the board of directors shareholders Standardized report to the shareholders Additional disclosure Infringements against laws, Notification of the judge in case duties statuts of overindebtness Notification of the judge in case of overindebtness Page 19

21 Thank you for your attention uestions Page 20