Annual Report 2016

42
Enforcement and court rulings | FAOA 2016
FAOA discretion
After finding significant deficiencies
in the audit of a pension scheme’s financial
statements (insufficient consideration
of legal, regulatory and
professional law requirements; lack
of an audit plan; insufficient professional
scepticism) the FAOA concluded
that the auditor-in-charge did
not have the necessary basic audit
knowledge and withdrew his audit
expert licence for five years. The FSC
confirmed the length of the withdrawal
in the last instance. In doing
so, it had ruled that the FAOA may
base its decision on an analysis of a
single audit engagement. Therefore,
the FAOA did not necessarily have
to analyse multiple engagements
(possibly also from areas other than
pensions) to justify a withdrawal 52 .
In the same case, the FSC found that
the FAOA could expect greater assurance
of a proper audit from the
auditor-in-charge as there is heightened
public interest in the pension
scheme audit 53 .
In the view of the FAC, when considering
a licence withdrawal, the
FAOA may also take account of audit
law violations that pre-date the decision
of withdrawal by more than
ten years. A necessary pre-requisite
is, however, that the licence holder
again failed to assure the conduct of
a proper audit 54 .
Audit secrecy
During the course of an investigation
into a possible violation of independence
requirements and of the
duty to notify the court of obvious
over-indebtedness, the licence holder
referred to audit secrecy in refusing
to provide requested information
and documents to the FAOA.
On appeal, the FAC ruled that the
release of documents to the FAOA
was not a violation of audit secrecy,
the scope of which the appellant
had misjudged 56 . The auditor
is indeed bound to keep its findings
secret and protect the business secrets
of the audited company when
reporting, making notifications
and informing the general meeting
(Art. 730b para. 2 CO). However,
this applies only to the extent that
auditor disclosure is not legally required.
The law specifically stipulates
that licensed individuals and
audit firms must provide the FAOA
with all the information and documents
it requires to carry out its
tasks (Art. 15a para. 2 letter a AOA).
The FAOA (staff and officers) is also
bound by official secrecy, which protects
audit secrecy sufficiently even if
disclosures are made to it.
Finally, the FAC found that a temporary
licence withdrawal should also
have an individual deterrent effect
on the licence holder 55 . The latter
should thus be deterred from committing
further violations questioning
his good repute, which should
be impeccable at all times.
52 FSC Ruling No. 2C_860/2015 of 14 March 2016,
E. 4.3.
53 FSC Ruling No. 2C_860/2015 of 14 March 2016,
E. 5.3 and 5.4.
54 FAC Ruling No. B-5434/2014 of 14 July 2016, E.
5.1.2, and No. B-5317/2014 of 14 July 2016, E.
6.1.
55 FAC Ruling No. B-7872/2015 of 21 April 2016, E.
4.3.3.
56 FAC Ruling No. B-2626/2015 of 19 January 2016,
E. 1.5.3. FAC Ruling No. B-2626/2015 of 19 January
2016, E. 1.5.3.