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Introduction and Implementation of an Internal Control System
Design, Project Process and Significance for Internal Audit within the Sulzer Corporation
A new clause in the Swiss Code of Obligations came into force in 2007 requiring the external auditors of a company to confirm the existence of an internal control system. This clause is an important element of the Swiss reaction to the accounting scandals that shook the world economy at the beginning of this decade. The new regulation had to be put into practice for the first time in the business year ending in 2008, which required the timely, corporation-wide implementation of a higher standard of the already existing ICS for financial reporting. The article shows the design and implementation within the Sulzer Corporation – a pragmatic and practical approach.
1. Legal Basis and Requirements
On July 1, 2007 a new clause in the Swiss Code of Obligations (Article 728a, Section 1, Para 3) came into force that requires the external auditors of a company to confirm the existence of an internal control system (ICS). Through the implementation of this higher standard, it was possible to fulfill the requirements posed by the Swiss Institute of Certified Accountants in the Swiss Auditing Standard (PS 890) regarding the verifiability of the ICS. According to this Auditing Standard, the follo...