Auditing

1. What is it about?

According to Article 36 para. 3 of the FINMA Ordinance on the levying of supervisory fees and duties (FINMA-GebV; SR 956.122), audit firms must notify FINMA of the audit fees they receive.

2. What is an audit fee?

Audit fees are defined as fees generated through the provision of audit services under Article 2 let. a of the Audit Supervision Act (RAG; SR 221.302) and fees generated by audit activities under supervi-sory law. The only fees of relevance here are those generated in the following supervisory areas (see Article 36 in conjunction with Article 3 para. 1 FINMA-GebV):

• banking and stock exchange institutions
• collective investment schemes
• insurance companies

Audit services are audit and certification activities which, under the provisions of federal law, must be provided by a certified audit expert or a licensed auditor (Article 2 let. a RAG). A non-exhaustive list of the audit services which must be taken into account can be found in the Federal Council Dispatch on the amendment of the Swiss Code of Obligations (audit obligations under company law) as well as in the Federal Law on the Recognition and Supervision of Auditors dated 23 June 2004 (Federal Journal 2004, p. 4059 ff.).

Audit activities under supervisory law are all activities carried out by audit firms within the framework of Articles 24 and 36 of the Federal Act on the Swiss Financial Market Supervisory Authority (FINMASA; SR 956.1).

3. What fees must be declared?

The fees which must be declared are those defined above (not including VAT).

There may be a certain amount of overlap between the audit fees of which FINMA must be notified and those which are levied by the Federal Audit Oversight Authority (FAOA). This is tolerated. If it were compulsory to keep the audit fees connected with supervisory-related audits separate from those connected with the auditing of accounts, a considerable amount of time and effort would be required and the subsequent impact on supplementary duties would be negligible in each individual case.

4. What does not have to be declared?

The reimbursement of expenses (compensation for expenses) does not have to be declared, nor do fees from the following services:

• internal audit,
• audits for SAS 70 Reports and/or in accordance with Swiss Auditing Standard 402 for out-sourced providers not subject to supervision by FINMA,
• agreed audit activities pursuant to Swiss Audit Standard 920 (commissioned by clients on a voluntary basis or independently of the requirements of supervisory law),
• AMLA audits of institutions which as group companies are subject exclusively to FINMA anti-money laundering supervision,
• liquidation and restructuring activities.

5. How should fee revenues resulting from audits of consolidated financial statements be dealt with?

The revenues concerned are all those contained in the audit firm's financial statements in Switzerland. The important elements are the net fees posted; i.e. after deduction of any losses on receivables and/or payment transfers within a company network as a result of services provided by foreign com-panies in a network.

Please note: this definition of the fees to be taken into account may change at a later date due to the entry into force of Article 8 of the Audit Supervision Act.

6. Who must submit a declaration?

Every audit firm licensed by FINMA to conduct audits in at least one of the relevant financial market areas must submit a separate fee declaration. Revenues have to be declared even if the threshold of CHF 5 million specified in Article 36 FINMA-GebV has not been attained.

7. From which time do fees need to be declared?

Fees should be declared from the time the licence for the commencement of the institution's business activities is issued (applies to first-time authorisation only).

8. Which period is taken as the basis for the calculation of the information submitted to FINMA?

The relevant fees are the audit fees as specified in the approved financial statements from the preceding year (see Article 36 para. 2 FINMA-GebV). For example, the figures for the financial year ending in 2010 are the relevant figures for levy year 2011.

9. By when does FINMA have to be notified of the fees?

Within 9 months of the last approved financial statements (see Article 36 para. 3 FINMA-GebV). For levy years 2010 and 2011, this would mean the following:

10. How should fees be declared?

The information should be submitted to FINMA using the form provided which is to be duly signed.

11. How does FINMA check that the fees declared are accurate?

FINMA reserves the right to subject the information specified in the fee declaration to a detailed inspection.

B. AMLA AUDIT OF FINANCIAL INTERMEDIARIES PURSUANT TO ARTICLE 2 PARA. 3 OF THE ANTI-MONEY LAUNDERING ACT

12. What are the information and reporting requirements involved?

Article 29 of the Federal Act on the Swiss Financial Market Supervisory Authority (Financial Market Supervision Act, FINMASA; SR 956.1) stipulates that the supervised persons and entities, their audit firms and auditors as well as persons or companies that are qualified investors or that have a substantial participation in the supervised persons and entities must provide FINMA with all the information and documents it requires to carry out its tasks. The supervised persons and entities must also immediately report to FINMA any incident that is of substantial importance to supervision. This would be, for example, a change in the board of directors or executive board, the departure of a lead auditor, changes in address, the instigation of criminal or administrative proceedings, etc. This same duty to report (Article 13 Audit Supervision Ordinance, RAV; SR 221.302.3) also exists in respect of the Federal Audit Oversight Authority (FAOA) for all audit firms and auditors approved by the Authority.

13. What regulations apply with regard to the accreditation of a new audit company or a new lead auditor? (Circular 2004/1 Anti-Money Laundering Control Authority)

Until such time as the Anti-Money Laundering Control Authority's Circulars are fully incorporated into the FINMA Circulars, they will continue to apply analogously (see FINMA Circular 08/41 Audit matters). The application form for accreditation can also be found at the above mentioned link. Applications should be submitted to the following address:

Swiss Financial Market Supervisory Authority FINMA
Audit Firms
Einsteinstrasse 2
CH – 3003 Bern

Please note that FINMA no longer grants accreditation to AMLA audit firms that have provisional accreditation from the FAOA.
FINMA expects the audit firms accredited to conduct AMLA audits of DSFIs each year and without being requested to do so to provide evidence that they have a sufficient number of mandates pursuant to the Anti-Money Laundering Control Authority Circular: they are to use the appropriate form and submit it by 31 March at the latest (the first submission being due 31 March 2010). If the required minimum number of mandates is not met, FINMA will be forced to start proceedings for the withdrawal of the accreditation, with the costs involved being borne by the firm. In such an event, we would ask that you issue us with a waiver in respect of accreditation within the same time period as indicated above. This will enable you to relinquish your right to accreditation and incur no costs, provided the time period has been complied with and we have received a waiver in writing.

14. What needs to be taken into account when there is a change in audit firm?

According to Article 25 para. 2 of the Financial Market Supervision Act (FINMASA; SR 956.1), the appointment of an audit firm requires FINMA’s approval. The supervised DSFI issues FINMA with a written request setting out the reasons for the change and encloses the special audit acceptance declaration signed by the audit firm. FINMA then verifies the independence of the new audit firm and issues the former audit firm with a written invitation to submit its opinion. It is now a new rule that any applications for changes in supervisory auditors must be submitted to FINMA before the beginning of the financial year for which the change is foreseen. In other words, for the financial year ending on 31 December 2012 FINMA has to receive requests for a foreseen change in supervisory auditors by 31 December 2011 at the latest. From now on, changes during the current financial year are permissible only in justified exceptional circumstances. Changes in audit firms are subject to a charge. Pursuant to section 6.2 of the Appendix to the Ordinance of the Swiss Financial Market Supervisory Authority on the levying of supervisory fees and duties (FINMA-GebV; SR 956.122), a charge of up to CHF 2,000 may be incurred.

15. What regulations apply in respect of audits and reporting? (Circular 2004/2 Anti-Money Laundering Control Authority)

Until such time as the Anti-Money Laundering Control Authority's Circulars are fully incorporated into the FINMA Circulars, they will continue to apply analogously (see FINMA Circular 08/41 Audit matters).

The amendments to anti-money laundering legislation of 1 February 2009 have not yet been incorporated into the existing (old) working papers and will be incorporated during the next revision stage for circulars.

A revised version of the audit report and the declaration of completeness can be accessed on the FINMA website.

FINMA reminds AMLA auditors that they, together with the DSFI, are responsible for conducting and submitting their audit reports on time.

Requests for extensions for audit reports must be received by FINMA by letter or e-mail (dufi@finma.ch) at the latest within the 7– month period (i.e. 31 July for DSFIs with financial statements as at 31 December – see Circular 2004/2 of 10 December 2004 from the Anti-Money Laundering Control Authority).

16. What regulations apply in respect of requests from DSFIs for risk-based auditing cycles spanning more than one year? (Circular 2005/1 Anti-Money Laundering Control Authority)

Applications for longer auditing cycles must be submitted by DSFIs in writing to the following address:

Swiss Financial Market Supervisory Authority FINMA
DSFI
Einsteinstrasse 2
CH – 3003 Bern

The condition set out in section 2.1 point 1 of the Circular that one of the last two audits must have been carried out by the Anti-Money Laundering Control Authority's auditors no longer applies.

C. INFORMATIONEN

17. Whom can I contact if I have further questions?

auditfirms@finma.ch or phone +41 (0)31 327 91 00