Foundation auditor in an Austrian private foundation: appointment, independence and audit report

Under section 20(1) PSG, the court generally appoints the foundation auditor. Where a supervisory board exists, that body makes the appointment. A foundation board resolution or an informal family agreement does not replace the statutory appointment.

Under section 9(2)(2) PSG, the foundation declaration may contain rules on appointment, removal and term of the foundation auditor. Those rules have to operate together with the statutory appointing authority. Before an appointment, the current foundation deed, any amendments, the commercial register position and the existence of a supervisory board must therefore be examined.

The overview of the advisory board and supervisory bodies places the control structure in context. The foundation auditor is a mandatory body with distinct rules on appointment, independence and reporting.

Only the qualified professionals or professional entities listed in section 20(2) PSG may act as foundation auditor. Section 20(3) PSG adds personal and professional exclusions. In particular, the auditor may not be a beneficiary, a member of another foundation body or an employee of the private foundation.

A person employed by an entity over which the foundation can exercise material influence is also excluded. The statute further covers a person who held such a position during the preceding three years, practises with an excluded person or is a close relative of an excluded person.

The independence review should go beyond a general self declaration. Useful records include current lists of bodies and beneficiaries, a corporate structure chart, information about employment and professional cooperation and a documented declaration addressing each statutory exclusion. The glossary entry on the foundation auditor gives a concise description of the role.

Under section 21(1) PSG, the foundation auditor audits the annual financial statements, the accounting records and the management report. Section 18 PSG requires the management report to address fulfilment of the foundation purpose. The audit therefore concerns not only figures but also the required account of how the foundation pursues its purpose.

The audit must be completed within three months after the records are presented. The period runs from presentation, not automatically from the financial year end. For a reliable process, the foundation board and auditor should record when complete documents were delivered and which requests remain outstanding.

The subject matter and scope of the audit, information rights, audit report and audit opinion follow the company law provisions incorporated by section 21 PSG. The foundation board must therefore provide books, evidence, agreements and the information needed for the management report in a form that permits a genuine audit.

Section 21(3) PSG requires the audit report to be presented to the other bodies of the private foundation. Under section 21(2) PSG, the foundation auditor owes no duty of confidentiality towards other foundation bodies and persons entrusted with audit tasks in the foundation declaration. This permits findings to be addressed across the relevant bodies.

Beneficiaries have a separate information route under section 30 PSG. They may request inspection of the annual financial statements, management report and audit report. The article on beneficiary information rights explains the request and court enforcement if the foundation does not respond.

The annual audit report is not a substitute for a special audit. The statutory annual audit has a defined subject matter. If specific suspicious transactions require investigation, the special audit under section 31 PSG may be the appropriate instrument.

If the foundation auditor and another foundation body disagree on the interpretation or application of statutory provisions or the foundation declaration, section 21(4) PSG allows a foundation body to apply to the court for a decision. This route concerns a genuine legal disagreement, not merely dissatisfaction with a critical finding.

Before an application, the disputed question, each position, the relevant deed text and the effect on the financial statements or report should be recorded precisely. A clear issue helps the court and prevents accounting questions from being mixed with a general dispute among the bodies.