On 23 December 2011, parliament approved the new financial reporting legislation. The Federal Council has yet to decide when it will come into force. The overhaul of the financial reporting legislation is only part of a comprehensive revision of company law. With the revision, some areas of the financial reporting legislation are being modernised and the whole thing will receive a new structure within the text of the law. As is already known from the audit legislation, financial reporting is being introduced in which all legal entities are treated equally, with graduations according to size and importance. The protection of minorities is to receive increased consideration (qualified minorities are shareholders who represent at least 10% of the share capital, or 20% in the case of consolidated financial statements). All corporate entities, sole traderships and unincorporated partnerships with a minimum turnover of CHF 500,000 have to prepare financial records in accordance with the new legislation. An income/expenses account providing information about the net assets also has to be kept by exempt enterprises. If the turnover is less than CHF 100,000, accruals and deferrals do not have to be recognised. Financial reporting can now also be carried out in a currency other than CHF. The minimum classification of the balance sheet and income statement is based on the current practice of accepted standards. The notes to the annual financial statements contain some additional information compared with the current situation; larger sole traderships and partnerships are not obliged to prepare notes. Larger companies are subject to regular audits. In addition to extra information in the notes, these companies have to prepare a directors' report. The cash flow statement becomes a fourth element of the financial statements for these large companies, in addition to the balance sheet, income statement and notes. A qualified minority can demand financial statements in accordance with an accepted standard (Swiss GAAP FER or IFRS) in addition to financial statements according to the Swiss Code of Obligations [OR]. Businesses have to prepare consolidated financial statements if the size criteria for a regular audit are met when financial statements are consolidated (total assets CHF 20 million, sales revenue CHF 40 million and 250 full-time employees). If the thresholds are exceeded or if a qualified minority demands additional financial statements, companies are faced with a need to take major action. In the case of traditional SMEs (below the thresholds), checks should be made as to whether all assets and liabilities have been recognised and reported. In addition, the notes have to be changed, e.g. the formulation of the valuation principles.
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