The introduction of an audit
watchdog and much stricter registration laws are proving a burden
on audit firms in Switzerland, according to partners speaking to
the International Accounting Bulletin.

In January, the Federal Audit Oversight Authority (FAOA)
was established to provide oversight of the audit profession in
line with similar regimes in the US and Europe. The FAOA provides
audit reviews of firms and requires them to meet strict criteria in
order to become registered. At present, firms are being
provisionally registered before their first review.

This layer of oversight comes at a time when the market is
adapting to recent anti-money laundering legislation and a growing
number of companies are abiding by US Sarbanes-Oxley regulation and
IFRS.

The International Accounting Bulletin approached three
Swiss firms which have posted strong growth (see graph) to
gather their reaction to the new laws. Switzerland top five growth rate: 2007 2008

KPMG, the third largest firm in Switzerland, said the
regulations directly affect the firm through inspections. “We are
now getting controlled, we get on-site visits and it’s like they
audit us as an official authority,” Stefan Mathys, head of press
communications, said. “We don’t fear any consequences of this. It’s
just a burden to have all the documentation ready and all the facts
and figures ready to show them what we’re doing and our quality in
management.”

Mathys said there has also been more audit and advisory work due
to an increase in the Sarbanes-Oxley and IFRS requirements of
clients.

BDO Visura provides services to listed and privately held
medium-sized enterprises with up to CHF1 billion in turnover. The
firm’s deputy chief executive and board member Werner Schiesser
said new registration and oversight requirements will not have a
massive impact on BDO internally. “I think we will need to do some
homework, improve systems a little bit, improve documentation but
nothing too dramatic that our income statement is hit
significantly,” Schiesser said.

Some benefits

Stricter registration criteria is benefiting BDO Visura as the
firm secures work from those that are forced to exit the market.
“Firms who are not able to register drop out of this type of audit
work. So from smaller firms we pick up work,” Schiesser explained.
BDO Visura’s audit practice grew about 15 percent in the past year
and a third of this growth could be due to work previously carried
out by smaller firms, Schiesser said.

Nexia Switzerland, a smaller association of independent firms,
said the new regulation is making life harder for smaller firms and
clients. “Our profession now has a new overseeing body that is
complicating things,” regional chairman Roland Schaer remarked.
“Now you have to be accredited to this body and you have to fulfil
certain criteria – qualification-wise, size-wise and your top
people have to fulfil some financial and moral criteria.

“This thing is an ongoing process too and has been done in a
hurry. It isn’t really 100 percent clear and it is all a big mess…
for the time being, it is creating a lot of internal work, which is
stressful.”