Preparing financial statements: from the trial balance to the closing under the CO
As at: · fastview ag, Suhr
Professionally responsible: Marco Zanetti and Reto Ackermann, fiduciaries and auditors, fastview ag
Financial statements under the Swiss Code of Obligations consist of the balance sheet, income statement and notes and are prepared from the trial balance after the closing entries. They are prepared within six months of the balance sheet date, signed by the most senior management body and the person responsible for financial reporting, and submitted to the general meeting for approval. This page shows the steps in the order in which fiduciaries work through them in the closing, with a template of the minimum structure.
What the CO requires
Anyone entered in the commercial register must keep accounts and prepare financial reports (Art. 957 CO). Sole proprietorships and partnerships with less than CHF 500'000 in revenue in the last financial year may limit themselves to accounting for income, expenditure and assets. For all others: the annual report contains the financial statements, which consist of the balance sheet, income statement and notes (Art. 958 para. 2 CO).
- Deadline: the annual report is prepared within six months of the end of the financial year and submitted to the competent body for approval (Art. 958 para. 3 CO).
- Signing: by the chair of the most senior management or administrative body and the person responsible for financial reporting within the company (Art. 958 para. 3 CO).
- Principles: going concern, accrual basis and matching, clarity, materiality, prudence, consistency and prohibition of offsetting (Art. 958a–958c CO).
- Presentation: in francs or in the functional currency, in a national language or English, with the prior-year figures (Art. 958d CO).
- Valuation: individual valuation, at no more than acquisition or production cost, with the necessary depreciation, value adjustments and provisions (Art. 960–960e CO).
Companies subject to an ordinary audit additionally prepare a cash flow statement and a management report (Art. 961 CO). Whether an audit is required is clarified on the page Opting out and the audit requirement.
The steps at a glance
- Take over the trial balance. The starting point is the trial balance as at the balance sheet date from the client’s accounts, with all balance sheet and income statement accounts. It must balance: assets equal to liabilities and equity, profit per the balance sheet equal to profit per the income statement.
- Closing entries and adjustments. Accruals and deferrals, depreciation, value adjustments, provisions and taxes are posted before the figures go into the structure. Anything that comes up after the export you record as an adjustment.
- Map accounts to items. Each account belongs to an item of the minimum structure. With the SME chart of accounts this follows from the account number, with a different chart of accounts from the name.
- Compare with the prior year. The prior-year figures come from the approved financial statements of the prior year. If the prior year has been reclassified, the column is adjusted and explained in the notes.
- Compile the notes. Principles, explanations and the disclosures under Art. 959c CO, where applicable.
- Review and approve. Second person, reconciliation with supporting documents, approval within the team.
- Sign, have audited, approve. Signing under Art. 958 para. 3 CO, auditor’s report where an audit is required, then approval by the general meeting.
Template: minimum structure under Art. 959a and 959b CO
The following items must, where present, appear individually and in this order. Further items are permitted if they are material for assessing the financial position or results or are customary in the industry.
| Part | Items (minimum structure) | Basis |
|---|---|---|
| Current assets | cash and short-term marketable assets; trade receivables; other short-term receivables; inventories and unbilled services; prepaid expenses and accrued income | Art. 959a para. 1 CO |
| Fixed assets | financial assets; investments; tangible fixed assets; intangible assets; unpaid capital | Art. 959a para. 1 CO |
| Short-term liabilities | trade payables; short-term interest-bearing liabilities; other short-term liabilities; accrued expenses and deferred income | Art. 959a para. 2 CO |
| Long-term liabilities | long-term interest-bearing liabilities; other long-term liabilities; provisions | Art. 959a para. 2 CO |
| Equity | share, participation or foundation capital; statutory capital reserve; statutory retained earnings; voluntary retained earnings or accumulated losses; own shares as a negative item | Art. 959a para. 2 CO |
| Income statement (nature of expense method) | net revenue from goods and services; changes in inventories; cost of materials; personnel expenses; other operating expenses; depreciation and value adjustments on fixed assets; financial expenses and financial income; non-operating expenses and income; extraordinary, non-recurring or prior-period expenses and income; direct taxes; annual profit or annual loss | Art. 959b para. 2 CO |
Instead of the nature of expense method, the income statement may be structured by the cost of sales method (Art. 959b para. 3 CO); personnel expenses and depreciation then belong in the notes.
The notes under Art. 959c CO
The notes supplement and explain the balance sheet and income statement. They state the principles applied, where not prescribed by law, explain items and contain, where applicable, among other things: company name, legal form and registered office; the range of full-time positions on annual average (not more than 10, 50 or 250); investments; own shares; lease liabilities; liabilities to pension institutions; collateral for third parties; contingent liabilities; extraordinary items and significant events after the balance sheet date. If hidden reserves are released on balance and the result is thereby presented substantially more favourably, the net amount belongs in the notes; how to determine it is shown in Hidden reserves.
Adjustments, four-eyes principle and approval
Between the export of the trial balance and the finished financial statements there are often corrections: a forgotten accrual, the tax provision, a reclassification after consulting the client. Good practice is to record these adjustments traceably instead of overwriting the figures in the spreadsheet, and to have the financial statements reviewed by a second person before release. The approval records who is responsible for which status and when.
In nunia you record adjustments as a debit-to-credit entry on the import; the view shows the balance sheet and income statement after the adjusting entries. In the closing process you store supporting documents per audit area, work through checklists and switch the four-eyes principle on or off per engagement. Only the approval completes the closing. What this looks like in practice is shown in the tutorial video “The closing process”; the delivery of the financial statements to the client and auditor in the tutorial video “Data exchange with the client and the auditor”.
Preparing financial statements with nunia
What nunia takes care of
- Read the trial balance from Excel, CSV or PDF, present the columns for confirmation
- Map accounts to items according to the SME chart of accounts or by name
- Balance sheet and income statement under Art. 959a/959b CO with prior year from its own file
- Notes under Art. 959c CO with standard texts, note on the net release of hidden reserves
- Cash flow statement, fixed asset movement schedule and statement of changes in equity
- PDF in German, French, Italian, English or Romansh
What you decide
- valuation, accruals and closing entries
- whether the mapping of the accounts is correct
- which disclosures belong in the notes and how they are worded
- who reviews and who approves
- the proposal on the appropriation of profit to the general meeting
The individual screens from import to PDF are described in Financial statements under the CO from the trial balance; you can see them in the video under Tutorial video “Preparing financial statements”. How the financial statements fit into the whole year-end closing with deadlines, general meeting and tax return is explained on its own page. The proposal on the balance sheet profit follows under Appropriation of profit and dividend. If you have prepared the closing with Aumico so far, you will find the way under Switching from Aumico to nunia.
This page summarises the legal situation in simplified form and does not replace advice in the individual case. The law, the articles of association and current practice are authoritative.
Frequently asked questions
What is part of financial statements under the CO?
Balance sheet, income statement and notes (Art. 958 para. 2 CO). Companies subject to an ordinary audit additionally prepare a cash flow statement and a management report (Art. 961 CO).
By when must the financial statements be prepared?
Within six months of the end of the financial year, the annual report is prepared and submitted to the competent body for approval (Art. 958 para. 3 CO). For a calendar year that is 30 June.
Who signs the financial statements?
The chair of the most senior management or administrative body and the person responsible for financial reporting within the company (Art. 958 para. 3 CO).
Is there a template for the structure of the financial statements?
The minimum structure is set out in Art. 959a CO (balance sheet) and Art. 959b CO (income statement). The table on this page summarises it. nunia structures the imported trial balance accordingly.
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