Auditors

If so required by the articles of association or special accounting regulations, the auditors review whether the association keeps true and accurate accounting records. They assess whether the accounting is done properly in accordance with the applicable accounting principles. Using random checks, they verify whether the income statement and balance sheet are consistent. Even though many associations are not required by law to appoint an independent auditor, it is highly recommendable to provide in the articles of association for such an audit requirement. If an association exceeds two of the following figures in two consecutive financial years, it must have its accounting duly audited by an independent auditor: Balance sheet total of CHF 10 million / sales revenue of CHF 20 million / 50 full-time jobs on annual average. The association must allow a qualified audit of its accounts if a member who is subject to personal liability or an additional payment obligation requests this.

The auditor prepares a report on the results of the audit for the attention of the general assembly, recommends acceptance or rejection of the accounts and makes additional recommendations if necessary. The audit report is not voted on. It serves as a decision-making aid for members when approving the annual financial statements. As a rule, the report is first submitted to the committee. It is not obligatory but it is of advantage if the auditor is personally present at the general meeting and can answer questions as needed.

Question

Is it right that the audit report isn't to be voted on? Is it true that following the approval of the annual report a vote is to be held on the audit report and then the annual financial statements?

Answer

The audit report is prepared by an independent person or body. It recommends whether the financial statements should be accepted or rejected and may also contain further recommendations.

A vote is not held on the audit report; it serves as an opinion-forming aid for members with respect to the annual financial statements. If the members are not satisfied with the work of the auditor, they can vote the auditor out and propose somebody else.

If so required by the articles of association or special accounting regulations, the auditors review whether the association keeps true and accurate accounting records. They assess whether the accounting is done properly in accordance with the applicable accounting principles. Using random checks, they verify whether the income statement and balance sheet are consistent. Even though many associations are not required by law to appoint an independent auditor, it is highly recommendable to provide in the articles of association for such an audit requirement. If an association exceeds two of the following figures in two consecutive financial years, it must have its accounting duly audited by an independent auditor: Balance sheet total of CHF 10 million / sales revenue of CHF 20 million / 50 full-time jobs on annual average. The association must allow a qualified audit of its accounts if a member who is subject to personal liability or an additional payment obligation requests this.

Question

Is it admissible for an association to consist of committee members only?

Answer

An association that has no members other than committee members is legitimate, too. In this case, the general meeting consists of the committee members only. It is important that such an association comply with the legal provisions governing associations: It has to convene a general meeting, hold elections, adhere to democratic processes, observe obligations to refrain from voting, etc. For such an association it is particularly important to choose one or two auditors in order to provide supervision and some sort of protection for the executive committee, because the committee cannot relieve itself.

It may be stipulated in the articles of association that the executive committee shall decide on the admission of new members. The executive committee thus determines whether further members are to be admitted or whether membership remains limited to members of the executive committee.

If so required by the articles of association or special accounting regulations, the auditors review whether the association keeps true and accurate accounting records. They assess whether the accounting is done properly in accordance with the applicable accounting principles. Using random checks, they verify whether the income statement and balance sheet are consistent. Even though many associations are not required by law to appoint an independent auditor, it is highly recommendable to provide in the articles of association for such an audit requirement. If an association exceeds two of the following figures in two consecutive financial years, it must have its accounting duly audited by an independent auditor: Balance sheet total of CHF 10 million / sales revenue of CHF 20 million / 50 full-time jobs on annual average. The association must allow a qualified audit of its accounts if a member who is subject to personal liability or an additional payment obligation requests this.

Question

A member wishes to inspect and recheck the complete accounts (balance sheet and income statements) for the last five years of the association's existence. The member is not part of the committee and thus also has no direct access to the accounts. Is it permitted to deny the member access to the accounts? Or, as a rule, do all members have the right to check the complete accounts themselves or at least to view them?

Answer

The provision of Article 802(2) of the Swiss Code of Obligations (SCO) also applies to associations:
"Unless the company has an auditor, company members have unrestricted access to the company books and files. If the company has an auditor, the books and files may be inspected only if a legitimate interest is credibly demonstrated".

If the association has an auditor, the member in question must therefore justify their interest in viewing the accounts. A general need to check the accounts or distrust do not represent relevant reasons.