Integrated Thinking and Acting – An opinion paper by the University of St. Gallen and PwC Switzerland

Integrated management control in the context of modern performance management systems

Financial performance is of vital importance to the senior management of a company. Non-financial performance, however, often lurks in the shadows and is relegated to specialised departments such as the accounting department, or treated as a separate part of sustainability. The results of our survey show that such an approach is counterproductive. Senior managers interested in long-term value creation and success must take into consideration the concerns of their company’s various stakeholders, and identify financial as well as non-financial value drivers. Long-term value creation and success not only depend on the identification of key value drivers, but also, in particular, on the establishment of a performance management system that allows for controlling these drivers. The results of our survey show that there is an expectation gap in this context.

The message is clear: the more intensively senior management is involved in the modification of a performance management system, the greater its acceptance and usefulness for decision-making. Higher decision quality, in turn, is positively linked to performance. Senior management members should therefore ask themselves how they can take into account (and manage) all the key aspects, of both a financial and non-financial nature. Integrated thinking and acting create added value, counteract a silo mentality and render a separate sustainability department unnecessary: medium and long-term value creation is enabled by integrated thinking and acting. A strategic commitment is required from management so that key aspects are linked to strategy and not outsourced to operational units.

We are pleased to be able to share the main findings of the survey based on a questionnaire that was designed and distributed by PwC in association with the professors of the Accounting department at the Institute for Public Finance, Fiscal Law and Law and Economics of the University of St. Gallen. The goal of the St. Gallen researchers (led by Prof. Dr. Thomas Berndt and Tobias Müller) and the PwC team (under the direction of Peter Eberli and Stephan Hirschi) was to gain valuable insights into the organisation of performance management systems and the external stakeholder management of the participants, and to draw conclusions from the information that was gathered.

As senior managers (from CEOs to heads of risk management) from a variety of different fields and a wide range of companies took part in the survey, we consider the survey for companies in Switzerland to be meaningful. Firms from the financial sector had the largest voice, with over 40% of the participants coming from this field.

This publication is designed to provide a comprehensive overview of our findings, which are divided into the following sections:

  1. Private standard setters and regulation
  2. Performance management systems
  3. Relationship between financial and non-financial performance
  4. Importance of modern performance management systems
  5. Usefulness of standards and frameworks
  6. Success through integrated thinking and acting


Read the paper


Peter Eberli
Assurance Partner
Technical Accountant Leader IFRS 17
Office: +41 58 792 28 38

Stephan Hirschi
Advisory Director
Office: +41 58 792 2789

Raphael Rutishauser
Assurance & Advisory Senior Manager
Office: +41 58 792 5215

Regulatory developments (TCFD)

Financial Stability Board Task Force on Climate-related Financial Disclosures (TCFD)

The G20’s Financial Stability Board (FSB) Task Force on Climate-related Financial Disclosures (TCFD) was convened to address concerns that companies are not sufficiently disclosing the impacts that climate change poses to their strategy, businesses and financial plans. Without adequate disclosure markets cannot function efficiently and risks are not appropriately priced.

Broadly climate risks can be divided into:

  • Transition risks such as climate policy (e.g. a carbon tax) or technological shifts (e.g. the rise of electric vehicles) which impact demand and costs of supply; and
  • Physical risks such as the impacts of more frequent/extreme weather events on assets, operations or supply chains.

The TCFD’s recommendations were launched in June 2017 and presented to the G20 Summit on 7–8 July. The report’s scope covers all companies with listed equity/debt in the G20.

Additionally, to address where concentrations of risk might lie, the scope also includes asset managers and asset owners e.g. pension funds, so covering the whole investment chain. Shareholders and other capital providers are increasingly looking to understand the resiliency of the companies they are invested in or lend to. Major institutional investors have publicly called for companies to make disclosure of climate risks a priority or face shareholder action.

TCFD recommendations and implications
The TCFD structured its recommendations on climate-related disclosures around four thematic areas:

  • Governance: extent of board and senior management oversight on the issue;
  • Strategy: risks and impacts on strategy, business and forward looking scenario analysis;
  • Risk Management: how climate risks are identified, assessed, managed and integrated into existing risk management frameworks; and
  • Metrics and Targets: how is performance on climate risk being measured.

The TCFD recommends disclosure in mainstream annual reports. It is a major shift away from sustainability reports where climate issues typically currently reside. This means that functions such as Finance and Investor Relations as well as the Audit Committee need to understand the financial implications of climate change and be in a position to explain whether such implications are material and how this is being governed, managed and disclosed.

Strategy functions will also need to consider how to incorporate such implications into long term plans. The TCFD recommends that companies conduct forward-looking scenario analyses to understand how their businesses will be impacted by climate change.


Stephan Hirschi
PwC ADV Consulting | Adv Consulting TIS
+41 58 792 2789

Raphael Rutishauser
ADV Consulting | Adv Consulting TIS
+41 58 792 52 15


Regulatory developments

Non-financial reporting – International Integrated Reporting Framework

The International Integrated Reporting Council (IIRC) launched the first version of the Integrated Reporting (IR) Framework in December 2013. The IICR unites representatives from all major international standards setting bodies and regulators with company representatives, investors and other key representatives to develop an internationally recognised framework. The IR Framework identifies investors and capital providers as the primary addressees for an integrated report.

Key elements
The Framework is intended to show how companies create long-term value by incorporating information on the environment, strategy, governance, performance and outlook. Investors should be informed about how a company’s strategy can create value in the long term as well as where a company actually stands regarding the achievement of its goals as defined in the strategy.
The Framework focuses on different types of capital, which are created and used by an entity. Based on the respective business model, the different types of capital (e.g. financial, produced, intellectual, human, social and natural capital) are used to create value (also a type of capital). These types of capital are said to have ‘connectivity’. Such connectivity can be illustrated particularly well in the case of pharmaceutical companies in the field of intellectual capital, the investments it makes in potential products and the sales that are subsequently generated.

It can also be demonstrated in other areas, such as human capital, for example: investing in the development of employees’ competencies has an influence on resource management and, ultimately, on the financial performance of a company. Non-financial objectives can also lead to the achievement of financial objectives.

Importance and implementation in practice
Within the Framework of the IIRC Pilot Program Business Network, more than 100 companies from 25 countries have implemented the principles of the Framework. However, apart from companies listed in South Africa (where IR is mandatory), almost no companies apply the entire Framework at present, although most of them intend to continue to work towards it.
The same dynamic is visible in Switzerland. To date, no single company has applied the Framework as such. However, more and more Swiss companies are moving towards adopting the Framework, as the implementation of individual elements from the IR concept is becoming evident. Most of the companies are developing the concept by integrating elements of the Framework in their annual reports. Some companies publish a short report (‘review report’), in addition to their annual report, using the Framework as a base. Detailed information on sustainability is generally published in a separate and distinct ‘sustainability report’.

Non-financial reporting – SIX Directive on Sustainability Reports

Key elements
In July 2017, SIX issued new regulations regarding sustainability reporting by amending the Directive on Information relating to Corporate Governance (DCG). Issuers have the opportunity to inform SIX that they issue a sustainability report in accordance with an internationally recognised standard (art. 9 DCG in conjunction with art. 9 para. 2.03 DRRO). SIX will make public the names of those companies that decide to publish sustainability information (‘opting in’) on their websites.

If an issuer decides to opt in, the sustainability report has be produced in accordance with an internationally recognised standard as published by the SIX:

  • Global Reporting Initiative (GRI)
  • Sustainability Accounting Standards Board Standard (SASB Standard)
    United Nations Global Compact (UNGC)
  • European Public Real Estate Association Best Practices Recommendations on Sustainability Reporting (EPRA Sustainability BPR)

The sustainability report must be published on the issuer’s website within eight months of the balance sheet date for the annual financial statements. It must subsequently remain available in electronic form on the issuer’s website for five years from the date of publication.

Companies remain free to issue and publish a sustainability report in line with an internationally recognised standard without reporting this to SIX. It is also permissible to include certain sustainability topics in their annual report.

More and more stock exchanges (about one-third worldwide) provide guidelines for disclosing information on the environment, social and governance (ESG) matters. The UN Sustainable Stock Exchanges Initiative (SSE) recommends exchanges provide companies with principles-based guidelines, whilst the World Federation of Exchanges (WEF) proposes that stock exchanges provide companies with specific ESG indicators. This has already been done by a number of stock exchanges, in particular in emerging economies such as Brazil, South Africa, Singapore and Taiwan. ESG indicators are provided, which are to be reported either on a voluntary or binding basis and which can often be derogated in justified cases (‘report or explain’).

In contrast to this, SIX requires only those companies that opt in on a voluntary basis to adopt an internationally recognised standard.

Non-financial reporting – EU Directive on the disclosure of non-financial and diversity information

EU Directive on the disclosure of non-financial and diversity information
The purpose of the EU Directive as regards the disclosure of non-financial and diversity information is that companies of public interest with more than 500 employees (in particular, listed companies) provide information on environmental, social and workers’ rights topics, respect for human rights and the fight against corruption as well as its strategy, results, risks and business model. If the undertaking does not pursue a strategy on one or more of those topics, this has to be explained (‘report or explain’).

In addition, listed and certain other capital-market-oriented companies must describe their diversity policy with regard to management and control bodies in the corporate governance report. This disclosure should also include information on age, gender, educational background and the objectives of this policy and its implementation and results.

Member States were obliged to transpose the directive into national law by 6 December 2016. The directive applies to financial years beginning after 1 January 2017.

This EU Directive is also relevant to Swiss companies whose subsidiaries are active in the EU and which are regarded as companies with a public interest (such as banks and insurance companies).


Stephan Hirschi
PwC ADV Consulting | Adv Consulting TIS
+41 58 792 2789

Raphael Rutishauser
ADV Consulting | Adv Consulting TIS
+41 58 792 52 15


Webinar: Mastering the fast closing and off-invoice deduction

Beyond a traditional financial close, which typically needs a full accounting cycle with a group ERP supporting the data feeding and multiple manual exercises for group consolidation, a “flash” close provides swift support for the decision-making process, thus enhancing data quality and eliminating internal inefficiencies.

We will demonstrate how the closing process can be mastered with Tagetik natively integrated with one of the Akeron departmental tools, namely Akeron TP, for streamlined contract management by automatically processing accruals and providing a comprehensive check of the “off-invoice” for the business.

A state-of-the-art EPM solution for a smooth and fast-closing process.

Register online

Once you have registered, you will receive the WebEx access details. The WebEx will be recorded and we will email you a link to the recording after the event using the same details. There will be time for questions and answers with your speakers during the WebEx. Questions can also be sent in advance of the WebEx session to the following email address:


Alberto Della Santina
+41 58 792 4950

ECIIA Conference 2017 is coming to Switzerland!

The ECIIA Conference will take place at the Congress Center Basel from Wednesday 20 September to Friday 22 September 2017.

We are proud to announce that PwC is a Gold Sponsor of the ECIIA Conference. 

Frederik Gregaard, Head of the PwC Switzerland Digital Accelerator, will present the topic: 

Re-imagining Internal Audit in a Digital Age, where digital is mainstream and humans become a scarcity

The presentation aims at demystifying emerging digital technologies and diving into what impact these will have for the internal audit function. Not only will we revisit working with unstructured data and the potential of using artificial intelligence, but also look at how several of these technologies might change the way Internal Audit will be designed in the future and how execution might look. Critical questions are:

  • If robots take over massive parts of processes, will Internal Audit be redundant?
  • If Blockchain has embedded security and makes the use of trusted 3rd parties redundant, what role does Internal Audit have?
  • Robotics are taking over monotonous day-to-day tasks in corporate life, but with NO people interference, how will the optimal design of internal controls look?
  • How do you audit the processes of Robotics and Artificial Intelligence?

Come see us at the ECIIA and find out the answer to these questions and more.

Where: ECIIA Conference, Congress Center Basel, Room “Singapore”
When: September 21, 2017
Time: 12:20 – 12:50


Read more


Frederik Gregaard
Head of the PwC Switzerland Digital Accelerator
+41 58 792 2481

Richard Thomas

Partner and Territory Leader Internal Audit, PwC Switzerland
+41 58 792 2782

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.
  • 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 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 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 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.