Federal Law, Banks And Savings Banks, Section IX, Control and Audit

Section IX - Control and Audit

Art. 18

1. Each year, banks must submit their annual financial statements to audit by an independent auditor.

2. repealed


Art. 19

1. The auditor must examine the annual financial statements to ascertain whether they comply with the requirements of the law, the by-laws and regulations as regards form and content. The auditor must also ascertain that the provisions of the present Law and its Implementing Ordinance, as well as any possible cantonal provisions concerning statutory liens in favour of savings deposits and the prerequisites for its approval, have been adhered to.

2. Banks must make available to the auditor their books, records and other supporting documents as well as any other information needed by the auditor to accomplish his duties.

3. The report of the internal auditors must be submitted to the external auditor. Duplication of auditing efforts shall be avoided as far as possible.


Art. 20

1. In order for an auditing firm to perform bank audits within the meaning of the Law, it must be recognised as a bank auditor. The Implementing Ordinance determines the conditions for recognition. The Banking Commission decides in each individual case.

2. Recognised bank auditors must restrict their activities exclusively to auditing and immediately related professional services such as reviews, liquidations and financial restructurings. They may not engage in actual banking transactions or in trust operations. The Banking Commission will issue directives on the auditing firms' scope of activity.

3. The auditing firm shall be independent of the board and management of the client bank.

4. The audit must be performed with the care of a properly qualified auditor.

5. Except vis-a-vis board and management of the client bank and the Banking Commission, the auditing firm must keep secret all facts of which it received knowledge during the audit.


Art. 21

1. The auditors shall report on the results of the examination made pursuant to Article 19, paragraph 1. The report must clearly show the relation between investments and credits abroad on the one hand and the balance sheet total on the other hand. The Implementing Ordinance shall determine the details of the contents of the audit report.

2. The auditing report shall be communicated to the body responsible for the direction, supervision and control according to the law, the by-laws, the articles of incorporation or the regulations. Where the bank is organised as a legal entity, the auditing report shall be submitted to the controlling body as defined by the Swiss Federal Code of Obligations.

3. In the event that the audit reveals either the violation of a legal provision or any other irregularity, the auditing firm shall set an appropriate time limit for the bank to take corrective action. The auditing firm must inform the Banking Commission if the correction is not carried out within the prescribed time limit.

4. Where the setting of a time limit within the meaning of paragraph 3 appears of no use, or if the auditing firm discovers a criminal offence, serious violations, or losses reducing the capital funds by 50%, or other irregularities jeopardising the security of the creditors, or if it can no longer confirm that the claims of the creditors are still covered by the assets, the Banking Commission shall be informed without delay.


Art. 22

1. The auditing fees shall be borne by the client bank. The level of fees is established in accordance with the scale [QQ] approved by the Banking Commission.

2. The claims of the bank auditors which are based on this article shall enjoy a bankruptcy privilege of the third priority class.

Prepared by: M. J. Wharton.

KPMG Fides unofficial translation of Swiss Federal Law - Banks And Savings Banks.
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