Why an Audit Firm is Essential

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Why an Audit Firm is Essential

Auditing is an integral part of the Swiss financial system and plays a central role in corporate governance. An audit firm reviews annual financial statements and other financial reports of companies to ensure their accuracy and compliance with the law. This is not only a legal requirement but also offers numerous benefits to companies and investors.

1. Legal Requirements and Protection Against Insolvency

In Switzerland, the Swiss Code of Obligations (CO) mandates that companies must appoint an audit firm to review the proper management of their accounting. This review is particularly important in relation to Article 725 CO, which deals with company insolvency. If there is a suspicion of insolvency, it is the duty of the audit firm to notify the board of directors. The board must then prepare an interim balance sheet assessing the company’s going concern and liquidation values. If the balance sheet shows that liabilities exceed assets, immediate action must be taken to avoid insolvency.

2. Strengthening Investor and Stakeholder Trust

Investors and other stakeholders rely on the work of the audit firm to ensure that a company’s finances are in order. An independent and thorough audit provides reassurance and builds trust, especially when it comes to significant decisions such as investments or mergers. In Switzerland, this trust is particularly high due to the strict professional and ethical standards that audit firms must adhere to.

3. Risk Management and Company Security

The audit firm plays a crucial role in risk management. It identifies potential financial risks and helps management address them early. In cases of financial difficulties or insolvency, an efficient and transparent audit is essential to avoid legal consequences and ensure the continuity of the business.

4. Compliance and Legal Conformity

Compliance with legal regulations is crucial for any company. The audit firm ensures that all financial reports meet national and international standards. In Switzerland, this is strictly monitored through the regulations of the Swiss Code of Obligations and other relevant laws.

Summary

An audit firm in Switzerland is much more than a legal requirement. It provides protection against financial risks, strengthens investor trust, and ensures compliance with all relevant regulations. In times of economic uncertainty, the role of the audit firm is invaluable in ensuring financial stability and the continuity of the business.

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