2020
Activity
The activities of STIFA focus on the supervision of common-benefit foundations and establishments as well as private-benefit foundations and establishments that have voluntarily submitted to supervision. Unless the entity is exempted from the obligation to appoint an auditor, STIFA receives an annual audit report on the proper management and use of the assets for its supervisory purposes. These reports are processed by STIFA and, if necessary, regulatory measures are requested from the Princely Court of Justice. In the case of foundations and establishments that are exempt from the obligation to appoint an auditor, STIFA normally carries out audits itself every three years. Furthermore, STIFA’s remit also includes checking the accuracy of the filed notifications of formation and amendments in the event of private-benefit foundations not entered in the Commercial Register.
Projects
In the year under review, STIFA held various workshops with representatives of the private sector and public authorities as part of the project “Optimisation of the Foundation Law”. These workshops were designated to analyse the possible need for optimisation in the foundation law. The project will continue in 2021. In addition, the IT project for the technical connection of the professional application “STIFA Case Handling” to LiVE was completed in the year under review.
Supervised entities
1 These numbers include common-benefit and private-benefit foundations and establishments.
Besides the 49 foundations and establishments that came under supervision for the first time in the year under report, 56 supervised foundations were put into liquidation and 63 were removed from the Commercial Register. The decline in the number of common-benefit foundations recorded for the first time in 2019 thus continued in the year under review (reduction of 1.2 % compared to the previous year). The number of common-benefit foundations that came under supervision of STIFA for the first time is thus lower than the number of terminations. It can be noted that the number of terminations in the year under review remained at the level of previous years, while the number of common-benefit foundations newly placed under supervision of STIFA decreased.
Proceedings concerning auditors
During the year under review, 67 foundations and establishments applied to the Princely Court of Justice for statutory auditors to be appointed. This also includes those proceedings in which an application was made for the replacement or dismissal of auditors. STIFA was a party to each of these proceedings. During the year under review, 9 common-benefit foundations applied to STIFA to be exempted from the obligation to appoint an auditor (Art. 552 § 27 Para. 5 PGR).
Audits conducted by the auditors
On 31 December 2020, 83 (previous year 127) audit reports relating to the financial year 2019 were still outstanding. This means the above stated number of objections and referrals relating to the audited 2019 financial year will increase slightly until the reports have been submitted in full.
With regard to the objections raised by auditors relating to the 2019 financial year, it should be noted that these were largely due to improper use of the assets, in particular due to the lack of distributions over a longer period of time. Furthermore, disproportionately high costs for the administration of the foundation or establishment as well as organisational shortcomings (e.g. lack of documentation of foundation council resolutions) also led to objections.
With regard to the referrals made by auditors concerning the 2019 financial year, the picture is broadly similar, namely that a large proportion of the matters requiring notification related to deficiencies in distribution practice. A large number of referrals were also made for the purpose of informing STIFA about pending legal proceedings or about an accounting over-indebtness pursuant to Art. 182e and Art. 182f PGR.
STIFA has examined the objections and referrals identified by the auditors and has taken the necessary measures.
Audits conducted by STIFA
In the case of foundations and establishments that are exempt from the obligation to appoint an auditor (by the end of 2020: 125), STIFA normally carries out the audit itself every three years. STIFA subjected a total of 45 (67 in the previous year) common-benefit foundations to an independent audit during the year under review.
With regard to the objections and referrals ascertained by STIFA, it should be noted that the picture is broadly analogous to the objections and referrals made by the auditors. The findings were mainly made due to the improper use of the assets of the foundation, in particular the lack of distributions over a longer period of time, as well as organisational shortcomings (i.e. lack of documentation of foundation council resolutions, contradictory provisions in statutes and by-laws). In addition, as in the previous year, STIFA increasingly highlighted the disproportionately high costs of foundation management.
STIFA took the necessary measures based on the objections and referrals identified.
Supervisory proceedings and other proceedings
In 17 cases STIFA applied to the Princely Court of Justice for supervisory measures during the year under review (Art. 552 § 29 Para. 3 PGR). In addition, in 2 instances foundation participants applied to the Princely Court of Justice for supervisory measures to be taken against foundations and establishments subject to STIFA supervision (Art. 552 § 29 Para. 4 PGR). STIFA was a party to each of these cases.
Furthermore, in the year under review STIFA was asked to issue statements in 4 cases on account of its party status in respect of changes to the purpose and other contents of the foundation documents, in particular the organisation, that had been requested at the Princely Court of Justice (Art. 552 § 33 and 34 PGR).
Audits of formation and amendment notifications
In the case of a total of 22 representatives, the accuracy of the notifications of formation and amendments of private-benefit foundations not entered in the Commercial Register (Art. 552 § 21 PGR) was verified on a random basis during the year under review. Of the total of 122 foundations audited, referrals due to organisational deficiencies were communicated by the commissioned auditors to STIFA at 3 foundations. However, the deficiencies were of a purely formal nature and did not require any further action on the part of STIFA. One objection was found for each of two foundations. The reasons for these objections were that the foundations, despite their common-benefit status, were not registered in the Commercial Register and were therefore not subject to STIFA supervision.