Verify entitlement to apply
Document the body, membership and foundation purpose.
Derive the particular governing status from statute and declaration.
Legal basis: Section 31(1) PSG
Foundation dispute
Special audit under section 31 PSG: standing, suspicion and judicial scope
Who may seek a special audit under section 31 PSG, how suspicions are substantiated and what follows from the court-appointed report.
Your foundation law team
BRANDAUER Rechtsanwälte
Foundation law team, Salzburg and throughout Austria
Your matter is handled by a team combining corporate law, asset succession, real estate law and dispute resolution. We review the foundation declaration, board resolutions, information rights and liability issues and set out clear next steps. Mag. Bernhard Brandauer is responsible for the legal advice, supported by further specialised lawyers of the firm where the matter requires it.
17 July 2026, Mag. Bernhard Brandauer, Rechtsanwalt
A special audit under section 31 PSG is neither a general information procedure nor a second annual audit. It protects the foundation purpose where specific transactions support a suspicion of dishonest management or serious breaches of statute or foundation declaration.
The statute gives standing to each foundation body and each member of such a body. Beneficiary status alone does not confer that right. Beneficiaries may pursue information under section 30 PSG and must examine whether they also hold a governing-body position or have another procedural route.
This article focuses on the court-defined audit. The broader options are explained under foundation disputes and enforcement. The glossary entry on the foundation auditor explains ongoing annual control.
Who has standing and which foundation interest the claim serves
Who has standing and which foundation interest the claim serves
Section 31(1) PSG names every foundation body and every member. This includes the statutory bodies; an additional body created by the declaration may qualify depending on its legal design. Both the person’s current membership and the body’s governing status must therefore be established.
The application must serve protection of the foundation purpose. Dissatisfaction with a missed distribution, a family quarrel or a desire to investigate everything is not sufficient. The alleged conduct must concern the foundation and the proper pursuit of its purpose.
Beneficiaries have their own information and inspection right under section 30 PSG concerning fulfilment of the purpose, annual accounts, management report, audit report, books and foundation declaration. Those beneficiary rights may provide facts from which a governing-body member develops a special-audit application. The procedures remain distinct.
The application is directed against the private foundation and filed with the commercial register court at its seat in non-contentious proceedings. Service alone can intensify the internal conflict, making a reliable chronology and focused audit question more valuable than a long list of accusations.
Choose the correct instrument
Information, annual audit and special audit perform different functions.
A remedy does not become stronger by assigning it the subject matter of another remedy.
| Instrument | Subject | Typical outcome |
|---|---|---|
| Access to information Section 30 information | information and inspection for beneficiaries | court-enforced disclosure |
| Annual foundation audit | annual accounts, accounting and management report | foundation auditor’s report |
| Section 31 special audit | specified suspicious transactions | report to court and necessary measures |
| Personal measure Section 27 removal | important cause concerning a body member | termination of governing office |
Removal, damages and interim protection are separate routes. Whether parallel action is useful depends on the specific risk.
Substantiating suspicion without having to prove the final case
Substantiating suspicion without having to prove the final case
The court orders the audit when the suspicious circumstances are credibly substantiated. The applicant need not yet prove the ultimate breach, but speculation is insufficient. The application needs specified transactions, periods, functions involved and tangible indications.
Relevant indications may include inconsistent resolutions, unusual transfers, missing consideration, related-party dealings without visible review, differences between reports and records, or unjustified refusal of documents. Each indication must connect to the foundation purpose, statute or declaration.
An excessively broad application is not more thorough. “All management for the last ten years” does not identify an audit scope. A workable question asks, for example, whether a specified transaction was completed without required consent and without an appropriate valuation basis.
Documents must not be obtained unlawfully. Existing resolutions, minutes, correspondence, annual accounts and lawfully received information are arranged in an evidence matrix. Gaps remain identified as gaps; they are not filled with assumptions.
A special audit is not a fishing expedition. The clearer the transaction, legal duty and supporting indication, the more effectively the court can define a limited audit mandate.
Prepare the procedure
From the first indication to measures after the court report.
Work starts before the application and does not end with the report.
- 01Standing01Standing
- 02Facts02Facts
Build the chronology
Who did what, when and under which resolution?
Separate uncontested facts, indications and unresolved gaps. - 03Suspicion03Suspicion
Link evidence and legal duty
Connect each indication to a document and potential breach.
Explain why the transactions may be dishonest or seriously non-compliant.Legal basis: Section 31(2) PSG
- 04Application04Application
Define a precise audit scope
Limit questions, period and transactions sensibly.
Prepare for possible security and costs. - 05Audit05Audit
Work with the expert in an orderly way
Provide complete and consistent records.
Court appointment ensures independence; the mandate controls scope. - 06Outcome06Outcome
Turn findings into measures
Separate governing action, claims and structural repair.
The court ensures necessary measures under section 31(5); separate proceedings may still be required.
Security, costs and liability for an unfounded application
Security, costs and liability for an unfounded application
At the foundation’s request, the court may make the order conditional on security. That security addresses the risk of an unfounded procedure and should be considered from the start.
If the allegations prove unfounded, the applicant generally bears the costs under section 31(4) PSG. If they are substantiated, the foundation bears them. A report with several issues can require a differentiated assessment.
An applicant who intentionally or with gross negligence obtains an audit through false allegations is liable for damage to the foundation. Careful source work is therefore mandatory. Strong language is no substitute for facts.
The foundation also risks harm through blanket resistance. Orderly production, preservation of electronic records and one responsible contact reduce cost and prevent the appearance that evidence is disappearing or being changed.
What must be decided after the special-audit report
What must be decided after the special-audit report
The expert reports to the court whether breaches occurred. The court then arranges the measures required by the result. Not every civil-law or governance consequence is thereby resolved automatically.
Where breaches are found, structural correction, removal under section 27 PSG, damages claims and repair of defective resolutions may be considered. The article on removal of the foundation board covers the personal remedy.
Even a report finding no breach can reveal weak documentation or unclear allocation of powers. An unsuccessful application may still expose a genuine governance or communication problem.
The report should be handled confidentially. Family communication, the court file and any regulatory notification have different recipients. Uncontrolled circulation can intensify the conflict and create new risk.
Initial orientation
Is a special audit the appropriate instrument?
The tree addresses standing, suspicion and scope. It does not replace case-specific advice.
Would you like us to review the suspicion and remedy?
In which role are you acting?
Your result
Preliminary assessment
Beneficiary status alone does not confer standing under section 31.
Examine information rights under section 30 PSG, any governing position and other procedural routes.
Standing must be established first.
Use the declaration to determine whether the body is a foundation body and whether membership remains current.
The proposed audit subject is too broad.
Narrow the transaction and legal duty. Information or internal evidence preservation may be the appropriate first step.
The suspicion needs objective support.
Preserve lawfully available resolutions, reports and correspondence and organise them in an evidence matrix.
A structured application can be prepared.
Define a limited mandate, attach the substantiation and calculate security and cost exposure.
Frequently asked questions
Special audit under the Private Foundation Act
Can every beneficiary apply for a special audit? +
No. Section 31(1) PSG names foundation bodies and their members. Beneficiary status alone is insufficient, although section 30 PSG provides separate information and inspection rights.
What must be credibly substantiated? +
Specific suspicious circumstances pointing to dishonest management or serious breaches of statute or declaration. The transaction, period, duty and indications must be identifiable.
Who appoints the special auditor? +
The commercial register court orders the audit and appoints the expert. The court-defined mandate controls the scope.
Who bears the costs? +
Generally the applicant if the allegations are unfounded and the foundation if substantiated. At the foundation’s request, the court may require security.
Does a special audit replace removal proceedings? +
No. The audit examines transactions. Removal under section 27 PSG is a separate proceeding requiring important cause concerning a governing-body member.
Continue on the portal
Control mechanisms in foundation disputes
Foundation disputes and enforcement
Information, special audit, removal and claims.
Beneficiaries and information rights
Access to information under section 30 PSG.
Foundation auditor glossary
Role and position of ongoing annual control.
Removal of the foundation board
Personal measures where important cause exists.
Topics
Special auditSection 31 PSGFoundation bodyCommercial register courtFoundation disputeFoundation auditorBeneficiaries
Conflict in the foundation, a blocked board, information denied?
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