Ordinary or Limited Audit in Switzerland? Key Differences, Thresholds & Requirements

Which type of statutory audit applies to your Swiss company has real implications for cost, process, and how your financial statements are perceived by external stakeholders. The Swiss Code of Obligations (CO) distinguishes between two types: the ordinary audit (ordentliche Revision) for larger, economically significant companies, and the limited audit (eingeschränkte Revision) for most SMEs. They differ significantly in scope, cost, auditor requirements, and what they signal to shareholders, lenders, and the market.

This article explains who is required to undergo which type of audit, what each one actually involves, how they compare side by side, and what growing companies need to know as they approach the legal thresholds.

Ordinary audit vs. limited audit

*Note: Associations and foundations are subject to separate audit rules under the ZGB — see the FAQ below for details.

The obligation to conduct an ordinary audit applies to companies that are economically significant under Swiss law, regardless of their legal form. According to the Federal Audit Oversight Authority, Switzerland has approximately 10,000 ordinary audits per year compared to around 80,000 limited audits, meaning only a small fraction of Swiss companies are subject to the full regime.1

The ordinary audit thresholds

Under Art. 727 para. 1 no. 2 CO, a company is subject to an ordinary audit if it exceeds two of the following three thresholds in two consecutive financial years:

• Balance sheet total: more than CHF 20 million
• Revenue: more than CHF 40 million
• Full-time equivalent employees: more than 250 on annual average

The two-year rule applies in both directions: in order for a company to return to the limited audit, it must fall below two of the three thresholds for two consecutive financial years.

Practical example: the table below follows a growing GmbH across three financial years.

In year 1 the company exceeds only one threshold, so nothing changes. In year 2 it exceeds two for the first time, but a single year is not enough to trigger the obligation. In year 3 it exceeds two again, and because the assessment looks at the current year together with the one immediately before it, an ordinary audit is required for year 3's financial statements.

The audit itself is carried out in the months following year-end, so the practical consequence lands early in year 4. Companies that only notice the change at that point have very little time to appoint a qualified auditor and prepare.

Other mandatory cases

Irrespective of the size thresholds, certain company types are always subject to an ordinary audit under Art. 727 para. 1 CO:

• Publicly listed companies: companies whose shares or bonds are listed on a stock exchange, or which have issued bonds outstanding
• Companies required to prepare consolidated financial statements under Art. 963 CO: typically parent companies of corporate groups that control one or more subsidiaries and must present group-level accounts
• Opting-up: companies where shareholders holding at least 10% of the share capital formally request an ordinary audit under Art. 727 para. 2 CO
• Companies whose articles of association or a resolution by the general meeting of shareholders provide for an ordinary audit

For international subsidiaries operating in Switzerland, the ordinary audit is frequently triggered not by the size thresholds but by group-level consolidation obligations or by the requirements of the parent company.

A limited audit is a structured but narrower review of the annual financial statements, based on inquiries, analytical procedures, and selective detail testing. It is the standard audit type for Swiss SMEs that fall below the ordinary audit thresholds.

It is governed by Art. 727a CO, which establishes the obligation, and Art. 729a CO, which defines the scope of procedures. It applies to any AG, GmbH, or cooperative with more than 10 full-time equivalent employees (on annual average) that does not meet the ordinary audit criteria. The auditor's procedures consist of three types:

• Inquiries: interviews with management and relevant staff about significant transactions, accounting policies, and business developments
• Analytical procedures: year-on-year comparisons of financial statement items to identify anomalies and inconsistencies
• Limited detail testing: spot-checks of selected transactions and supporting documentation

Limited audits are carried out in accordance with SER, the Swiss Standard on Limited Statutory Examinations, issued jointly by EXPERTsuisse and TREUHAND|SUISSE. The current edition has applied since 1 January 2023.

What a limited audit explicitly does not include is the review of the internal control system, third-party balance confirmations, physical inventory observations, or specific fraud detection procedures. These are reserved for the ordinary audit.

The auditor for a limited audit must be a licensed auditor (zugelassener Revisor) registered with the RAB under Art. 727c CO, a lower qualification threshold than the licensed audit expert required for an ordinary audit. You can verify any auditor's registration status via the RAB public register.

Independence requirements are not as stringent for a limited audit. The same firm can provide both accounting and audit services, provided it implements appropriate organisational and personnel safeguards to ensure the person conducting the audit review is not the same person who prepared the accounts (Art. 729 para. 2 CO). This can be a practical arrangement for Swiss SMEs working with a single fiduciary partner.

The limited audit concludes with a written report to the general meeting of shareholders containing a negative assurance: nothing came to the auditor's attention suggesting the annual financial statements do not comply with the law and the company's articles of association. No separate report to the board of directors is required.

The internal control system (ICS) is the set of processes, procedures, and controls a company has in place to ensure that its accounting is complete, accurate, and compliant. It covers everything from how invoices are approved and recorded to how access to financial systems is managed and how reconciliations are performed.

In an ordinary audit, the existence and functioning of the ICS is a mandatory area of examination, governed by Swiss Auditing Standard PS 890. The auditor does not design or implement the ICS (that is management's responsibility) but must assess whether one exists and report their findings to the board of directors. Weaknesses must be flagged, and significant deficiencies can result in a qualified audit opinion — meaning the auditor cannot give a clean sign-off and must formally flag the issue in their report.

Companies that reach the ordinary audit thresholds without having structured their internal controls tend to face significantly higher audit costs and more auditor queries in the first year. For companies using modern, integrated accounting software with digital workflows, clear approval hierarchies, and automated reconciliations, many of the building blocks of a functioning ICS are already in place by design.

It is worth noting that the ICS reviewed in a statutory ordinary audit is distinct from the concept of internal audit as a management function. Internal audit is an ongoing internal activity focused on process improvement and risk management. It is not a legal requirement tied to company size, and is conducted by or on behalf of management rather than by an external auditor.

Four checks determine which audit obligation applies. Work through them in order, since each one can settle the question before you reach the next.

1. Check the legal form: Sole proprietorships and partnerships are not subject to statutory audit at all. The obligation applies to AGs, GmbHs, cooperatives, and partnerships limited by shares. Associations and foundations follow separate rules under the ZGB, covered in the FAQ below.

2. Check for automatic triggers: Publicly listed companies and companies required to prepare consolidated financial statements are subject to an ordinary audit regardless of size. If either applies, the size thresholds are irrelevant.

3. Apply the threshold test: Check whether the company exceeded two of the three thresholds in both the current and the preceding financial year. If so, an ordinary audit applies. If not, a limited audit does.

4. Check the opting-out conditions: If the company has no more than 10 full-time equivalent employees on annual average and all shareholders agree, it can waive the audit entirely.

No one carries out this assessment on your behalf. The commercial register records which auditor a company has appointed, but does not check whether the company's size still matches its audit type. Neither do the tax authorities. Under Art. 716a CO, organising the company and overseeing its finances are non-transferable duties of the board of directors, and Art. 717 CO requires board members to carry out those duties with due care.

The practical effect is that reviewing the thresholds each year is the board's job. Failing to appoint an auditor when the company has become subject to one is not simply an administrative oversight. It is a breach of duty, and it can expose board members personally if creditors are harmed as a result.