As a result, these standards of self-regulation become indirect statutory law due to their mandatory application. The decision may indicate that there are no two separate „worlds“ of the Swiss Code of Obligations and Swiss GAAP FER / IFRS, but a unified legal system in which standards, especially also IFRS, may and must be consulted if the code of obligations provides no answer.įurthermore, stock market regulations require consolidated financial statements to be prepared according to IFRS in the case of listed companies. The federal supreme court’s explanation for this is a general tendency prevailing in Switzerland and Europe to approach IFRS standards and the apparent need for a means of interpretation due to the rudimentary rules of Swiss law. According to the Federal Supreme Court, this holds true not only for the Swiss GAAP FER, but also for the IFRS, which are consulted as a means of interpreting items related to balance sheets in an absence of Swiss legal provisions, as long as they are not contradicted. Arising here is the question of whether this can also apply to IFRS.Īccounting standards can be invoked as a means of interpretation, regardless of the question of indirect statutory law. The viewpoint for the Swiss GAAP FER was they had crossed the boundary line to practice and become indirect regulatory content in certain issues, through reference to the principles of proper bookkeeping and accounting. After all, the reference to principles of generally accepted accounting, or principles of proper bookkeeping and accounting relates to what is perceived as factually correct by users of the law during the period of validity. This leads to the question of whether these standards may or must be consulted as a means of interpretation or even indirect rule of law in the scope of application of the code of obligations. IFRS provides answers to many questions which the code of obligations settles in no detail, if at all. Recognised financial reporting standards are more detailed compared with the provisions of the code of obligations. This reference to proper accounting principles results in a continuous evolution of the law: „Legislature has left it up to practice define what is meant by propriety, and has thus also allowed this notion to be adapted continuously to currently applicable requirements“, according to developments in what is deemed „proper“ or „generally accepted“. Must a concept adopted in the code of obligations and possessing a particular meaning in IFRS be interpreted according to this meaning? This question must be assessed methodically, and is not answered for IFRS.Īccounting law is the outcome of general, statutory provisions which must be applied on the basis of the ideas existent at the time of the application. Arising here is the question of how such bonds influence the application of these rules in the case of IFRS. To some extent, IFRS principles and formulations have been incorporated directly into the new accounting law, for example, with regard to the concept of assets and liabilities, valuation of assets with observable market value, provisions or minimum breakdown. IFRS influences Swiss accounting regulations in many ways. Influence of IFRS on commercial accounting regulations 1.
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