Switzerland: Financial Sector Stability Assessment; imf country Report 14/143; April 16, 2014

51. FINMA’s oversight of auditors’ work needs to be further enhanced to meet 
international standards. This requires increasing the ability for FINMA off-site staff to direct, 
monitor, and compare the audit work being done on their behalf. In particular, the risk 
assessments driving the supervisory process should be made more forward-looking, granular, and 
consistent across audit firms. Differences in banks’ accounting practices (International Financial 
Reporting Standards (IFRS), U.S. Generally Accepted Accounting Principles (GAAP), and local 
GAAPs) should be rapidly

---

SWITZERLAND
28 
INTERNATIONAL MONETARY FUND
phased out. “Deep dive” onsite work by FINMA itself should be increased in frequency and depth, 
selectively assessing the quality of risk management, governance, and internal control systems on a 
proactive basis. FINMA staff should participate more frequently in foreign supervisory reviews of 
the major Swiss banks.   
52. Although the institutional setup of FINMA is generally adequate, additional skilled 
resources are necessary. FINMA’s onsite and off-site supervisory resources have been increased 
in recent years, but are now subject to a self-imposed headcount cap, which should be relaxed, in 
particular so that medium and small banks can be supervised with comparable intensity to the 
large banks. The responsibilities and objectives of FINMA that emphasize protecting creditors, 
investors, and insured persons, as well as ensuring proper functioning of the financial market, 
should be clearly stated in legislation as preeminent. FINMA has operational independence 
enshrined in legislation, and attention is given to avoiding any conflict of interest. 
53. FINMA could improve the comprehensiveness of qualitative guidance. Guidance 
should be put in place regarding enterprise-wide risk measurement and risk management. While 
the supervisory and auditing process fills gaps on rules and guidance regarding credit risk 
management and provisioning, improved guidance and instructions to regulatory auditors could 
assist the consistency of their work. The recently enhanced liquidity framework should be 
complemented by a close dialogue with mid-size and smaller banks and with regulatory auditors 
to set clear expectations. The application of basic qualitative requirements of operational risk 
should be expanded, and operational risk should be incorporated in FINMA’s supervisory rating 
system.