According to a self-assessment prepared in September 2006 by the Swiss Institute of Certified Accountants and Tax Consultants (Treuhand-Kammer, or TK) as part of the International Federation of Accountants' Member Body Compliance Program, pronouncements of the International Auditing and Assurance Standards Board (IAASB) are adopted in Switzerland as national standards with modifications to reflect the local legal environment. In September 2004, the TK issued new Swiss Auditing Standards (Schweizer Prüfungsstandards), which constitute the official Swiss translation of the International Standards on Auditing (ISAs) effective as of June 2003. The IAASB has since revised the ISAs, and the TK's 2006 self-assessment asserted that these revisions will be incorporated in the Swiss standards only after the IAASB has finalized its Clarity Project. Additionally, the 2005 Swiss Federal Banking Commission (SFBC) Annual Report noted that, in line with international developments in the area of auditing, in 2000 the SFBC launched the reform of rules governing auditing practices aimed at modernizing the regulations. The reform was accomplished by implementing a number of SFBC circulars on auditing practices.

General Overview

According to the September 2006 self-assessment prepared by the Swiss Institute of Certified Accountants and Tax Consultants (Treuhand-Kammer, or TK), the national auditing standards setter, "IAASB [International Auditing and Assurance Standards Board] pronouncements are adopted as national standards and amended as necessary to address differences due to conflicts with legal or regulatory requirements" (p. 28). In September 2004, the TK issued new Swiss Auditing Standards (Schweizer Prüfungsstandards, or PS) which constitute the official Swiss translation of International Standards on Auditing (ISAs) effective as of June 2003. However, the IAASB has since revised many of ISAs and, per the self-assessment, the TK plans to incorporate subsequent revisions in ISAs into national requirements only after the IAASB has completed its Clarity Project. The TK self-assessment stated that "as soon as the IAASB has finished its so-called Clarity Project, the key German- and French-speaking IFAC member organizations from Germany, Austria and Switzerland (Swiss German) and from France, Belgium, Canada, Luxembourg and Switzerland (Swiss French), respectively, will publish official translations of the clarified IAASB pronouncements in these two languages" (p. 33). The self-assessment added that "[TK] will no longer issue national standards except that national laws or regulations force us to do so" (p. 33).

Part II of the TK's 2006 self-assessment reported that the legal framework for financial reporting in Switzerland is governed by the Swiss Code of Obligations which "provides for the mandatory audit for legal entities that fulfill certain size or accountability criteria" (pp. 39-40). Furthermore, the Federal Law on Statutory Audit Oversight (Revisionsaufsichts-Gesetz, or RAG) specifies prerequisites for (1) admission as a statutory auditor; (2) oversight of statutory auditors of listed entities; and (3) organization of the stately oversight agency.

The Swiss securities market is supervised and regulated by the Swiss Federal Banking Commission (Eidgenössische Bankenkommission, or SFBC). The 2005 SFBC Annual Report noted that the rules governing auditing practices were reformed in 2000 to modernize the regulations by implementing a range of circulars. For instance, "the Audit circular gave practical effect to the risk-oriented auditing approach, with reference to internationally recognized auditing standards, while dividing up the tasks of auditors into accounting audit and supervisory audit resulted in a clearer structure and delimitation" (p. 16). Others circulars include, but are not limited to, the Circular on Audit Report for timely reporting and the Circular on Audit Companies which, in line with international standards, updates the independence rules for auditors. The Swiss Stock Exchange (SWX), a self-regulating body, ensures compliance with listing rules. The banking sector is also regulated by the SFBC. As explained on the SFBC website, the Swiss banking framework has a two-tiered supervisory system where the SFBC is in-charge of the overall supervision, whereas authorized audit firms conduct on-site inspections. The supervisory authority for the insurance sector rests with the Federal Office of Private Insurance (FOPI). However, an integrated financial supervisory authority -- the Financial Market Supervisory Authority (FINMA) -- was established under the 2007 FINMA Act, which incorporates the FOPI, the SFBC, and the Anti-Money Laundering Control Authority. Per the SFBC's 2005 Annual Report, the FINMA Act is expected to come into force by 2008.

According to its 2006 self-assessment, the TK develops its own Code of Ethics based on the International Federation of Accountants' (IFAC) code issued prior to 2004. The IFAC has since revised its code of ethics, and there is no further information on whether Switzerland intends to adopt the revised code. The TK is listed as a member on the IFAC website.

The Principles

ISA 200 Objective and General Principles Governing an Audit of Financial Statements (effective 2006)

ID

PS 200, Objective and General Principles Governing an Audit of Financial Statements, was approved in June 2004 and constitutes a translation of ISA 200, Objectives and General Principles Governing an Audit of Financial Statements as of June 2003. The standard is effective for periods commencing on or after January 1, 2005. However, the IAASB has since revised ISA 200 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 210 Terms of Audit Engagements (effective 2006)

ID

PS 210, Terms of Audit Engagements, was approved in June 2004 and constitutes a translation of ISA 210, Terms of Audit Engagements, as of June 2003. The standard is effective for periods commencing on or after January 1, 2005. However, the IAASB has since revised ISA 210 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed..

ISA 220R Quality Control for Audits of Historical Financial Information (effective 2005)

ID

PS 220, Quality Control for Audits of Historical Financial Information, was approved in June 2004 and constitutes a translation of ISA 220, Quality Control for Audits of Historical Financial Information, as of June 2003. The standard is effective for periods commencing on or after January 1, 2005. However, the IAASB has since revised ISA 220 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 230R Documentation (effective 2006)

ID

PS 230, Documentation, was approved in June 2004 and constitutes a translation of ISA 230, Documentation, as of June 2003. The standard is effective for periods commencing on or after January 1, 2005. However, the IAASB has since revised ISA 230 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 240 The Auditor’s Responsibility to Consider Fraud in an Audit of Financial Statements (effective 2004)

ID

PS 240, Auditor's Responsibility to Consider Fraud in an Audit of Financial Statements, was approved in June 2004 and constitutes a translation of ISA 240, Auditor's Responsibility to Consider Fraud in an Audit of Financial Statements, as of June 2003. The standard is effective for periods commencing on or after January 1, 2005. However, the IAASB has since revised ISA 240 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 250 Consideration of Laws and Regulations in an Audit of Financial Statements (effective 2004)

ID

PS 250, Consideration of Laws and Regulations in an Audit of Financial Statements, was approved in June 2004 and constitutes a translation of ISA 250, Consideration of Laws and Regulations in an Audit of Financial Statements, as of June 2003. The standard is effective for periods commencing on or after January 1, 2005. However, the IAASB has since revised ISA 250 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 260 Communications of Audit Matters With Those Charged With Governance (effective 2004)

ID

PS 260, Communications of Audit Matters With Those Charged With Governance, was approved in June 2004 and constitutes a translation of ISA 260, Communications of Audit Matters with Those Charged with Governance, as of June 2003. The standard is effective for periods commencing on or after January 1, 2005. However, the IAASB has since revised ISA 260 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 300 Planning an Audit of Financial Statements (effective 2004)

ID

PS 300, Planning, was approved in June 2004 and constitutes a translation of ISA 300, Planning, as of June 2003. The standard is effective for periods commencing on or after January 1, 2005. However, the IAASB has since revised ISA 300 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 315 Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement (effective 2004)

ID

ISA 315, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement, has not been adopted in Switzerland. The IAASB has since revised ISA 315 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 320 Audit Materiality (effective 2004)

ID

PS 320, Audit Materiality, was approved in June 2004 and constitutes a translation of ISA 320, Audit Materiality, as of June 2003. The standard is effective for periods commencing on or after January 1, 2005. However, the IAASB has since revised ISA 320 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 330 The Auditor’s Procedures in Response to Assessed Risks (effective 2006)

ID

ISA 330, Auditor's Procedures in Response to Assessed Risks, has not been adopted in Switzerland. However, the IAASB has since revised ISA 330, and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 402 Audit Considerations Relating to Entities Using Service Organizations (effective 2004)

ID

PS 402, Audit Considerations Relating to Entities Using Service Organizations, was approved in June 2004 and constitutes a translation of ISA 402, Audit Considerations Relating to Entities Using Service Organizations, as of June 2003. The standard is effective for periods commencing on or after January 1, 2005. However, the IAASB has since revised ISA 402 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 500 Audit Evidence (effective 2004)

ID

PS 500, Audit Evidence, was approved in June 2004 and constitutes a translation of ISA 500, Audit Evidence, as of June 2003. The standard is effective for periods commencing on or after January 1, 2005. However, the IAASB has since revised ISA 500 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 501 Audit Evidence - Additional Considerations for Specific Items (effective 2004)

ID

PS 501, Audit Evidence - Additional Considerations for Specific Items, was approved in June 2004 and constitutes a translation of ISA 501, Audit Evidence - Additional Considerations for Specific Items, as of June 2003. The standard is effective for periods commencing on or after January 1, 2005. However, the IAASB has since revised ISA 501 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 505 External Confirmations (effective 2004)

ID

PS 505, External Confirmations, was approved in June 2004 and constitutes a translation of ISA 505, External Confirmations, as of June 2003. The standard is effective for periods commencing on or after January 1, 2005. However, the IAASB has since revised ISA 505 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 510 Initial Engagements — Opening Balances (effective 2004)

ID

PS 510, Initial Engagements - Opening Balances, was approved in June 2004 and constitutes a translation of ISA 510, Initial Engagements - Opening Balances, as of June 2003. The standard is effective for periods commencing on or after January 1, 2005. However, the IAASB has since revised ISA 510 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 520 Analytical Procedures (effective 2004)

ID

PS 520, Analytical Procedures, was approved in June 2004 and constitutes a translation of ISA 520, Analytical Procedures, as of June 2003. The standard is effective for periods commencing on or after January 1, 2005. However, the IAASB has since revised ISA 520 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 530 Audit Sampling and Other Selective Testing Procedures (effective 2004)

ID

PS 530, Audit Sampling and Other Selective Testing Procedures, was approved in June 2004 and constitutes a translation of ISA 530, Audit Sampling and Other Selective Testing Procedures, as of June 2003. The standard is effective for periods commencing on or after January 1, 2005. However, the IAASB has since revised ISA 530 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 540 Audit of Accounting Estimates (effective 2004)

ID

PS 540, Audit of Accounting Estimates, was approved in June 2004 and constitutes a translation of ISA 540, Audit of Accounting Estimates, as of June 2003. The standard is effective for periods commencing on or after January 1, 2005. However, the IAASB has since revised ISA 540 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 545 Auditing Fair Value Measurements and Disclosures (effective 2004)

ID

PS 545, Auditing Fair Value Measurements and Disclosures, was approved in June 2004 and constitutes a translation of ISA 545, Auditing Fair Value Measurements and Disclosures, as of June 2003. The standard is effective for periods commencing on or after January 1, 2005. However, the IAASB has since revised ISA 545 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 550 Related Parties (effective 2004)

ID

PS 550, Related Parties, was approved in June 2004 and constitutes a translation of ISA 550, Related Parties, as of June 2003. The standard is effective for periods commencing on or after January 1, 2005. However, the IAASB has since revised ISA 550 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 560 Subsequent Events (effective 2006)

ID

PS 560, Subsequent Events, was approved in June 2004 and constitutes a translation of ISA 560, Subsequent Events, as of June 2003. The standard is effective for periods commencing on or after January 1, 2005. However, the IAASB has since revised ISA 560 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 570 Going Concern (effective 2004)

ID

PS 570, Going Concern, was approved in June 2004 and constitutes a translation of ISA 570, Going Concern, as of June 2003. The standard is effective for periods commencing on or after January 1, 2005. However, the IAASB has since revised ISA 570 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 580 Management Representations (effective 2004)

ID

PS 580, Management Representations, was approved in June 2004 and constitutes a translation of ISA 580, Management Representations, as of June 2003. The standard is effective for periods commencing on or after January 1, 2005. However, the IAASB has since revised ISA 580 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 600 Using the Work of Another Auditor (effective)

ID

PS 600, Using the Work of Another Auditor, was approved in June 2004 and constitutes a translation of ISA 600, Using the Work of Another Auditor, as of June 2003. The standard is effective for periods commencing on or after January 1, 2005. However, the IAASB has since revised ISA 600 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 610 Considering the Work of Internal Auditing (effective 2004)

ID

PS 610, Considering the Work of Internal Auditing, was approved in June 2004 and constitutes a translation of ISA 610, Considering the Work of Internal Auditing, as of June 2003. The standard is effective for periods commencing on or after January 1, 2005. However, the IAASB has since revised ISA 610 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 620 Using the Work of an Expert (effective 2005)

ID

PS 620, Using the Work of an Expert, was approved in June 2004 and constitutes a translation of ISA 620, Using the Work of an Expert, as of June 2003. The standard is effective for periods commencing on or after January 1, 2005. However, the IAASB has since revised ISA 620 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 700 The Auditor’s Report on Financial Statements (effective 2006)

ID

PS 700, Auditor's Report on Financial Statements, was approved in June 2004 and constitutes a translation of ISA 700, Auditor's Report on Financial Statements, as of June 2003. The standard is effective for periods commencing on or after January 1. 2005. However, the IAASB has since revised ISA 700 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 701 Modifications to the Independent Auditor's Report (effective 2006)

II

There is insufficient publicly available information that directly addresses this principle. However, the IAASB has revised ISA 701 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 710 Comparatives (effective 2004)

ID

PS 710, Comparatives, was approved in June 2004 and constitutes a translation of ISA 710, Comparatives, as of June 2003. The standard is effective for periods commencing on or after January 1, 2005. However, the IAASB has since revised ISA 710 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 720 Other Information in Documents Containing Audited Financial Statements (effective 2004)

ID

PS 720, Other Information in Documents Containing Audited Financial Statements, was approved in June 2004 and constitutes a translation of ISA 720, Other Information in Documents Containing Audited Financial Statements, as of June 2003. The standard is effective for periods commencing on or after January 1, 2005. However, the IAASB has since revised ISA 720 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.

ISA 800 The Auditor’s Report on Special Purpose Audit Engagements (effective 2006)

ID

PS 800, Auditor's Report on Special Purpose Audit Engagements, was approved in June 2004 and constitutes a translation of ISA 800, Auditor's Report on Special Purpose Audit Engagements, as of June 2003. The standard is effective for periods commencing on or after January 1, 2005. However, the IAASB has since revised ISA 800 and in September 2006, the Swiss authorities declared their intent to delay incorporating changes made to ISAs until the IAASB Clarity Project has been completed.