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The annual financial statement simply explained

Updated on May 23, 2022

The annual financial statement is the most important means of providing information about the current financial situation and earning power of a company. They must provide a true and fair view of the economic situation of the company, so that the entrepreneurs themselves and third parties can obtain a correct and reliable picture of the company's situation.  Especially for third parties such as financiers (investors, shareholders, banks), the annual financial statement is very important and informative in order to decide on financing. Find out here what needs to be taken into account when preparing the annual financial statements.

What are the annual financial statements?

The annual financial statement is the arithmetical closing of a company's fiscal year / tax period. Most companies close this on 31.12. and start the new fiscal year on 01.01. The financial statements serve to truthfully present the economic situation and the success of a company. In accounting, it is important that all entries are clear and comprehensible and that all information is complete and true. In addition, all supporting documents must be available and balancing between accounts is prohibited.

Who must prepare annual financial statements?

Companies with double-entry accounting obligations (such as AG or GmbH) are required to prepare annual financial statements. This includes all legal entities as well as sole proprietorships and partnerships that have achieved a turnover of at least CHF 500,000 in the last business year.

Who is obliged to audit the annual financial statements?

Stock corporations as well as limited liability companies and cooperatives, limited partnerships as well as associations and foundations are subject to audit law and must have their annual financial statements audited in principle. The type of audit depends on the size and economic significance of the organization.

Large companies must have an ordinary audit if they exceed two of the following three thresholds in two consecutive financial years:

  • Balance sheet total: CHF 20 million
  • Turnover: CHF 40 million
  • Full-time employees: 250

Companies that have to prepare consolidated financial statements are also required to have an ordinary audit if shareholders holding at least 10% of the share capital demand it or if this is stipulated in the articles of incorporation or by the AGM.

Companies to which this does not apply must have their annual reports audited by means of a limited audit. If the company unanimously decides so and the number of full-time employees is less than 10, the audit can be partially or completely waived.

What is included in the annual financial statements?

Balance sheet and income statement

In the annual financial statement, all assets (including debts), accruals and deferrals, expenses and income during the period and as of the balance sheet date (usually 31.12.) must be shown. These are shown in the balance sheet and the income statement.


A further component of the annual financial statement is the appendix. In addition to formalities such as the company name, legal form, registered office and number of full-time employees, it also contains the principles applied (if not prescribed by law) and explanations of certain items in the balance sheet and income statement.

Large companies, which, as already mentioned, are required to undergo an ordinary audit, must also prepare a management report and a cash flow statement.

Management report

The management report should provide information on aspects of the company's business development and economic situation that are not reflected in the annual financial statements. This includes, among other things, a risk assessment, the order situation, research and development activities and future prospects.

Cash flow statement

The cash flow statement should show the change in cash and cash equivalents and reasons for the change. For investors as well as for creditors and other addressees, the disclosure of cash flows in the cash flow statement is intended to provide a more comprehensive insight into the company's financial position.

By when must the annual financial statements be prepared?

According to the Swiss Code of Obligations, the annual financial statements must be prepared no later than 6 months after the end of the financial year, as the general meetings and shareholders' meetings must also be held during this period. For larger companies, there is even a deadline of only 3 months.

The annual financial statement is submitted to the cantonal tax authorities together with the tax return. The deadlines for this vary from canton to canton. In Geneva, for example, the deadline is already April 30, in Zurich September 30. In almost all cantons, however, it is also possible to extend the deadline.


Are you looking for competent advice and support for the preparation of the annual financial statements? We would be happy to do this for you and provide you with reliable and personal support. Contact us now!

Oliver Diggelmann

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