The introduction of an audit
watchdog and much stricter registration laws are proving a burden
on audit firms in Switzerland, according to partners speaking to
The Accountant.

In January, the Federal Audit Oversight Authority (FAOA)
was established to provide oversight of the audit profession in
line with similar regimes in the US and Europe. The FAOA provides
audit reviews of firms and requires firms to meet strict criteria
in order to become registered. At present, firms are being
provisionally registered before their first review.

This layer of oversight comes at a time when the market is
adapting to recent anti-money laundering legislation and a growing
number of companies are required to abide by US Sarbanes-Oxley
regulation and IFRS.

Added burden

The Accountant interviewed firms of varying sizes and
received a mixed reaction to the new laws. All partners agreed the
oversight is an extra burden as it requires firms to prepare extra
documentation to meet the requirements of the regulations.

KPMG, a firm which generated CHF422 million ($385.2 million) in
its most recent financial year, said the regulations are both
directly and indirectly affecting the firm.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

“We are now getting controlled, we get on-site visits and it’s
like they audit us as an official authority,” Stefan Mathys, head
of press communications, said.

“We don’t fear any consequences of this. It’s just a burden to
have all the documentation ready and all the facts and figures
ready to show them what we’re doing and our quality in

“There are two [types of laws that affect KPMG]. Those that
affect us directly as KPMG, giving us more work which we can’t
charge to our clients,” he explained. “The other thing is more
regulations for all the companies, which means our clients, and
this could also mean more work for us. They will probably need more
audit work and advisory. For us it’s a costly process although on
the other hand we can also sell more services.”

BDO Visura is the largest Swiss mid-tier firm by some margin
with fee income of CHF139.5 million in the year ended December
2007. It provides services to listed and privately held
medium-sized enterprises with up to CHF1 billion in turnover.

The firm’s deputy chief executive and board member Werner
Schiesser said the regulation would not have a massive impact on
BDO internally.

“I think we will need to do some homework, improve systems a
little bit, improve documentation but nothing too dramatic that our
income statement is hit significantly,” Schiesser said.

Potential benefits

Where BDO is set to benefit is by picking up work from smaller
firms that are being forced to exit the market.

“Those who are not able to register drop out of this type of
audit work and so from smaller firms we pick up work. Fewer firms
to do all the audit work might be another issue,” Schiesser

BDO Visura’s audit practice grew about 15 percent and a third of
this growth could be due to work secured from smaller firms,
Schiesser added.

Nexia Switzerland, an association of independent firms with
combined fee income of CHF25 million, said the new regulation,
intended by the government to reduce bureaucratic red tape, is
making life harder for smaller firms and clients.

“Our profession now has a new overseeing body that is
complicating things. We have our anti-money laundering laws,
apparently the strongest in Europe, which is creating a lot of work
that is unnecessary and extremely formalistic,” regional chair
Roland Schaer remarked.

“Now you have to be credited to this body and you have to fulfil
certain criteria – qualification-wise, size-wise and your top
people have to fulfil some financial and moral criteria. This thing
is an ongoing process too and has been done in a hurry. It isn’t
really 100 percent clear and it is all a big mess… for the time
being, it is creating a lot of internal work, which is

Schaer said the growing use of IFRS requires Nexia professionals
to attend seminars in order to upgrade skills.

“It’s costing money and some time is spent, which can’t be
[directly] billed out to the clients. However, it’s something that
makes things more expensive for the client,” Schaer said.

Arvind Hickman and Melanie White