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In Switzerland, companies with more than 10 full-time employees (FTE) are subject to an audit obligation. Failing to appoint an audit firm, despite this legal requirement, can have serious legal and financial consequences. An audit firm ensures compliance with regulations, builds trust among investors and stakeholders, and minimizes financial risks. Without this oversight, companies jeopardize their stability and reputation.
According to Article 727 of the Swiss Code of Obligations (CO), companies that fall under the audit obligation - such as those with more than 10 FTE - must undergo either a limited or ordinary audit. Not appointing an audit firm constitutes a violation of this regulation and exposes the company to fines and legal actions. Additionally, board members and management may be held personally liable for failing to fulfill their obligations.
Trust from investors and lenders is built on transparency and reliability. A company without an audit firm risks being perceived as unprofessional or opaque. This perception can make it difficult to secure capital and may strain existing business relationships. Investors may decide against engaging with a company that does not meet its audit obligations.
Without the independent review provided by an audit firm, the likelihood of errors or financial irregularities increases significantly. Audit firms review accounting practices and identify weaknesses, allowing issues to be addressed proactively. Without this safeguard, companies risk severe financial losses or even insolvency.
A company that fails to meet its audit obligations risks damaging its reputation. In a highly regulated market like Switzerland, this can have serious consequences, particularly if it creates the impression of mismanagement or a lack of professionalism. A damaged reputation can deter customers, partners, and employees.
An audit firm provides reliable and verified financial data that supports strategic decision-making. Without this foundation, companies may struggle to make informed decisions or effectively implement growth strategies. This can negatively impact long-term competitiveness and growth potential.
Failing to appoint an audit firm despite being subject to audit obligations in Switzerland is not only a legal violation but also exposes companies to significant risks. Legal consequences, loss of trust, financial risks, and damage to reputation can cause long-term harm. Companies must ensure they fulfill their audit obligations to protect their stability and success.
