Enhanced auditor’s report: towards trust and transparency

The new auditor’s report required by Swiss legislation is designed to be more informative and insightful, and give the stakeholders of reporting entities greater assurance. We at PwC welcome the new reporting requirements as an opportunity to unlock the ‘black box ’of what we actually do as auditors and increase trust in our role.

We also realise, though, that the new reports and their potential impact on governance have to be discussed and understood – not only by the auditors who produce them, but by reporting entities and their stakeholders, from shareholders to regulators. For this reason we’ve produced a short flyer explaining the major changes and their implications, including a commented overview of the structure of the new report.

You can read the flyer via the link below. Feel free to contact us if you’d like to discuss the new auditor’s report and its implications in more detail.

Download flyer


Swiss GAAP FER checklist for consolidated and stand-alone financial statements

Swiss GAAP FER is a recognised financial reporting standard in Switzerland according to art. 962 Swiss Code of Obligation. This checklist allows users to review the completeness of the disclosures in the financial statements prepared according to Swiss GAAP FER. It covers all requirements of the currently applicable Swiss GAAP FER standards (status 10 December 2014).

The checklist follows the modular structure of Swiss GAAP FER. It is structured in relation to the items in the financial statements and differentiates between the core FER and the other standards of the FER as well as the special requirements for consolidated financial statements and for listed companies.

You can download the file here.

PwC at the forefront of new auditor reporting

PwC recently issued the first auditor’s report in Switzerland under the new reporting requirements. The IAASB (International Auditing and Assurance Standard Board) issued these requirements in response to a demand for more informative auditor reporting in the wake of the financial crisis.

The new auditor’s report constitutes a revolution in auditing – it’s a game-changer for shareholders, investors, clients and the audit profession and goes beyond just a redesigned boilerplate report. The reports will help organisations and their auditors to build trust in the capital markets and to enhance the reputation of all involved.

Greater insight and transparency

The most significant innovation involves the ‘key audit matters’. This new section of the report sheds light on matters that, in the auditor’s judgment, were of most significance in the audit of the financial statements of the current period. It also describes how the auditor addressed these matters. This bespoke description of key areas of focus in the audit gives the auditor an opportunity to provide meaningful comments and explanations.

Going concern also receives more visibility in the new auditor’s report. Both the management’s and the auditor’s responsibilities regarding going concern are included.

We believe these changes will help translate the new reporting requirements into added transparency and trust – to the lasting benefit of our clients and their stakeholders.

In Switzerland, this new reporting requirement will come into full effect for audit reports for financial statements of listed companies for period ending on or after 21 December 2016, but early application is permitted. This new reporting style is already in place in the UK and the Netherlands.

For further information read our Disclose article.

Please contact Matthias Jeger or your usual PwC contact if you have any questions or wish to discuss these or other aspects of the new auditor’s report.


Presentation of treasury shares attributable to contribution reserves under the new accounting law

  • The new accounting law is effective since 1 January 2013. However, due to transition rules, most companies apply it for the first time as of business year 2015 which is usually being closed these days/weeks.
  • One of the main changes relates to the presentation of treasury shares (i.e. own participation rights). The new accounting rules require that treasury shares are presented separately as a negative item in shareholders’ equity (art. 959a para. 2 Swiss Code of Obligations, SCO). This provision also applies to treasury shares for which capital contribution reserves represented the freely disposable equity as a prerequisite for their acquisition in accordance with art. 659 para. 1 SCO.
  • As you may recall, the capital contribution principle was introduced to the Swiss tax system by Corporate Tax Reform II and became effective 1 January 2011.
  • On 9 September 2015 the Swiss Federal Tax Authorities have published Circular Letter No. 29a covering aspects of the capital contribution principle in the context of the new accounting rules. According to section 4.2.3 of this Circular Letter, treasury shares attributable to capital contribution reserves have to be presented as negative item within the statutory capital reserve in order to qualify for a favorable tax treatment (i.e. no income tax and withholding tax consequences upon the cancelation of the participation rights or in case of an expiry of the deadlines referred to in art. 4a of the Swiss Withholding Tax Act).
  • These different views on how to present treasury shares attributable to capital contribution reserves – accounting view: separate negative item as the last line item within shareholders’ equity versus tax view: negative item within the statutory capital reserve – would have led to a contradictory result. In order to resolve the issue, EXPERTsuisse liaised with the Swiss Federal Tax Authorities and an acceptable presentation of treasury shares attributable to capital contribution reserves has been agreed. The agreed solution is published in German and French in the members-area of the EXPERTsuisse website (cf. <Fachexpertise/Fachliche Verlautbarungen/Q&A/Q&A New Accounting Law (01-2016)>, pages 24 – 26). Further, the Swiss Federal Tax Authorities have published on 18 January 2016 a summarized version in German, French and Italian as new attachment 2 to Circular Letter 29a (cf. https://www.estv.admin.ch/estv/de/home/direkte-bundessteuer/dokumentation/kreisschreiben.html).
  • In a nutshell, the amount of treasury shares attributable to capital contribution reserves is contained in “Statutory capital reserve/Reserves from capital contributions” and as negative item presented under “Own participation rights against reserves from capital contributions”.
  • For your convenience, please find below a comparison between the presentation of treasury shares attributable to capital contribution reserves under the former and the new accounting law (the latter according to the solution as agreed with the Swiss Federal Tax Authorities). The example is based on the following assumptions:
  •     At the date of acquisition of the treasury shares, the company had sufficient capital contribution reserves which had been allocated to this transaction.
  •     The entire amount of capital contribution reserves is allocated to treasury shares (there is no residual amount of capital contributions reserves).

Chart[please click to enlarge]

  • Should a company for example dispose over a total amount of capital contribution reserves of 120, of which 80 were according to the former accounting law reflected under “Reserves from capital contributions” in the section “Legal reserves” and 40 were reflected under “Reserves from capital contributions” in the section “Reserves for treasury shares”, these capital contribution reserves of 120 would under the new accounting law have to be presented as follows:
  • Line item: “Reserves from capital contributions” in section “Statutory capital reserve” would have to show 120. Line item: “Against reserves from capital contributions” in the amount of – 40 in section “Own participation rights” would remain unchanged.
  • It should be noted that from a Swiss tax authorities perspective, it is important that all “Reserves from capital contributions”, i.e. the full 120, are presented in one single line item in the section “Statutory capital reserve” (i.e. the Swiss Federal Tax Authorities do not allow sub-accounts).


  • Please liaise with your main PwC contact persons in relation to the preparation of your accounts and in particular to the presentation of your treasury shares attributable to capital contribution reserves or directly contact the persons below.


Stefan Schmid
Tax & Legal Services
Office: +41 58 792 44 82
Main: +41 58 792 44 00 stefan.schmid@ch.pwc.com PricewaterhouseCoopers AG Birchstrasse 160 | Postfach |
8050 Zürich
Dr. Remo Küttel
Tax & Legal Services
Office: +41 58 792 68 69
Main: +41 58 792 68 00 remo.kuettel@ch.pwc.com PricewaterhouseCoopers AG Grafenauweg 8 | Postfach |
6304 Zug
Dr. Sarah Dahinden
Senior Manager
Tax & Legal Services
Office: +41 58 792 44 25
Main: +41 58 792 44 00 sarah.dahinden@ch.pwc.com PricewaterhouseCoopers AG Birchstrasse 160 | Postfach |
8050 Zürich

Flash News: Potential delays for some parts of MiFID II/MiFIR

ESMA announced on 10 November 2015 that it pleaded with the Commission to delay certain parts of MiFID II/MiFIR. The entire MIFID II/MiFIR framework was supposed to be applicable as of  January 2017. However, all the final Level 2 texts are still not ready. The Commission hasn’t yet endorsed the Final technical advice and the Final drafts of Regulatory and Implementing Technical Standards RTS/ITS), submitted by ESMA in 2014 and 2015  espectively. ESMA has yet to prepare many others RTS/ITS in 2016.

Delays to some parts of MiFID II/MiFIR?

Steve Maijoor, the ESMA Chair delivered a statement to the Economic and Monetary Affair Committee (ECON) at the European Parliament on 10 November 2015. He provided the Eurodeputies with an update on the ESMA work on MiFID II/MiFIR II and the consequences on the implementation timeline.

The ESMA Chair insisted on the fact that the delay to build the necessary – MiFID II/MiFIR compliant- IT systems is hardly compatible, and in some aspects even incompatible, with the initial regulatory timeline. Moreover, there are still some uncertainties related to what will be in some of the final texts:

“The timing for stakeholders and regulators alike to implement the rules and build the necessary IT systems is extremely tight. Even more, there are a few areas where the calendar is already unfeasible. This relates to the fact that it will take some time, and well into 2016, before the text of  the RTS will be stable and final. […] We have therefore raised these timing issues with the European Commission, and the fact that some IT systems will not be ready in January 2017, and the uncertainty this will create as they are needed for the execution of certain elements of MIFID II. Related to that, we have raised with the Commission whether this uncertainty would need a legislative response with delaying certain parts of MIFID II, mainly related to transparency, transaction and position reporting.” (Steve Maijoor, Speech to ECON, 10 November 2015)

ESMA has thus suggested to the European Commission to postpone the implementation timeline for some aspects of the MiFID II/MiFIR:

1.      Transparency
2.      Transaction reporting
3.      Position reporting

With respect to transaction reporting, ESMA highlights that both ESMA/Supervisors and the investment firms/trading venues need to build complex IT systems “(almost) from scratch” to allow the former to determine aggregate positions in commodity  derivatives at group level, and the latter to reshape their transaction and reference data  reporting systems.

When it comes to transparency and position reporting, ESMA explains that the assessment of the pre-transparency waivers and of the proposals for setting position limits will be “extremely resource-intensive” if the initial deadline is kept, “given the sheer volume of financial instruments covered”.

The EU institutions will have to decide whether to postpone these aspects of the MiFID II/MIFIR framework.  

Based on the latest ECON discussions, held on 11 November 2015, the European Commission appears to agree with ESMA “that a delay is needed” and that “the simplest and most legally sound approach would be a one-year delay”. The European Parliament, however, appears to strongly oppose the delay. Its rapporteur, Markus Feber, mentions that “postponement of implementation of the cornerstone legislation of financial markets in the EU is not in line with G20 commitments”.

How PwC can help

PwC can support you in assessing the impacts of MiFID II/MiFIR and identifying the gaps. Our qualified professionals can also directly support or re-enforce your teams in the implementation of these requirements.

PwC will keep you informed of any updates regarding the MiFID II/MiFIR timeline.
If you have any further questions do not hesitate to contact us.

The audit committee

A practical guide for audit committee members on the requirements and responsibilities of the audit committee.

In this publication, we summarise the current legal, regulatory and de facto provisions as well as the daily routine of the audit committee. In the process, we shine a light on a variety of aspects concerning the audit committee in all of the economic sectors relevant to Switzerland, from industrial undertakings to financial institutions.

Read more…
The audit committee