1 Foundations and Organization, Public Charges » 15 Districts and Municipalities » 153 Financial Budget (FHV-BG)

1. Scope of Application

The provisions concerning municipalities apply mutatis mutandis to districts and their institutions.

2. Independence of the District Courts

1 The financial independence of the district courts is guaranteed.

2 Annually, they submit the annual financial statements and a draft financial plan to the District Council for the attention of the District Assembly.

3. Principles

Within the meaning of § 3 FHG-BG, the following apply

a) Legality: Expenditures and revenues require a legal basis.

b) Thriftiness: Expenditure needs must be examined for their necessity and affordability. Expenditures are to be made in order of urgency.

c) Economic Efficiency: For every project, the most economically favorable solution is to be preferred. Assets are to be managed carefully to preserve their substance and usability.

d) Budget Balance: The income statement is to be balanced in the medium term.

e) Polluter-Pays Principle (User-Pays Principle): Those who claim special services must bear the reasonable costs.

f) Benefit Compensation: Those who gain special economic advantages from public regulations and facilities must pay reasonable contributions for them, the amount of which may not exceed the costs.

g) Proper Accounting: Accounting principles are to be followed and deviations disclosed.

4. Handbook

1 The Department of Finance shall create a handbook concerning financial management, expenditures and their approval, as well as accounting.

2 The handbook shall contain binding directives and recommendations and shall be approved by the Government Council. The non-binding recommendations shall be updated by the Department of Finance.

3 The issuance of special directives on individual aspects of financial management and accounting remains reserved.

5. Presentation

a) Degree of Detail

1 The chart of accounts according to the harmonized accounting model is broken

down in the budget, financial plan, income statement, and investment

statement as follows

a) in the ordinary presentation by two-digit object groups;

b) in the detailed presentation by three-digit object groups.

2 Provisions regarding the presentation of the balance sheet remain reserved.

3 All object groups must be reportable to the supervisory authority or the audit

committee.

b) Comparability

1 The financial plan presents in tabular form

a) the estimate to be approved;

b) the financial plan years;

c) the last completed accounts;

d) the last estimate.

2 The annual accounts present in tabular form

a) the accounts to be approved;

b) the corresponding estimate;

c) the accounts of the preceding year.

II. Steering

1. Risk Management

1 Municipalities identify and periodically review their risks, assessing them

with regard to their probability of occurrence and the extent of potential damage.

2 They take precautions and measures to prevent risks from materializing and to

manage and minimize the negative effects of loss events.

3 Risks are understood as events and developments that may occur with a certain

probability and have significant negative effects on the achievement of goals or

the fulfillment of tasks by the municipality.

2. Internal Control System

1 The Municipal Council ensures an appropriate and risk-oriented internal control system (ICS).

2 It takes the necessary regulatory, organizational, operational, and technical measures to

a) ensure a true and fair view of the financial position;

b) guarantee compliance with applicable laws and regulations;

c) prevent criminal behavior;

d) identify, rectify, and prevent errors;

e) eliminate the material operational risks related to the protection of assets;

f) ensure the efficiency and effectiveness of business operations.

3. Controlling

a) Controlling System

1 The municipal council shall determine a controlling system tailored to its financial budget.

2 It shall regulate in particular the process, scope, periodicity, recipient group, and documentation of the controlling.

b) for Equity Holdings

1 Equity holding controlling refers to the municipality's equity holdings in public-law and private-law corporations and institutions.

2 Instruments of equity holding controlling include in particular

a) owner strategies for significant equity holdings;

b) reporting within the scope of the annual report.

3 The municipal council designates the significant equity holdings.

c) for performance agreements and contributions

If the fulfillment of a task is transferred to a third party, the Municipal Council

ensures that

a) it can verify the performance of the task;

b) financial influence is maintained, in particular by agreeing on a budget reservation.

4. Medium-Term Horizon

1 The medium-term horizon according to § 6 FHG-BG comprises a period of eight years.

2 The following are decisive for financial policy control

a) the three preceding fiscal years;

b) the current fiscal year;

c) the four planning years following the current fiscal year.

3 Special financing must be aligned with the life cycle of an asset.

5. Budget

a) Budget Appropriations

The main accounts of the budget within the meaning of § 10 FHG-BG are the two-digit expense groups of the income and investment statements listed in Annex I, according to the chart of accounts of the Harmonized Accounting Model (HRM).

6. Indispensable Expenditures

Indispensable expenditures within the meaning of § 11 para. 2 FHG-BG are, in particular

a) Personnel expenditures for existing appointments and for the approved

re-occupation of vacant positions;

b) Expenditures for which, pursuant to § 13 FHG-BG, an overdraft could be

approved;

c) Further expenditures, without the incurrence of which the principle of economic

budget management or the principle of good faith would be violated.

7. Investment of Financial Assets

1 Financial assets may be invested in

a) cash;

b) claims denominated in a specific amount, namely postal cheque or bank balances, and fixed-term deposits held with companies of good credit standing or with a state guarantee;

c) bonds in Swiss francs issued by public authorities or by private companies and banks of good credit standing;

d) listed shares of domestic debtors;

e) real estate.

2 The following are not permitted

a) bonds in foreign currencies;

b) foreign shares;

c) alternative investments such as hedge funds, derivatives, or other investments with a highly speculative character.

3 The credit standing of an institution or a private company shall be assessed based on recognised standards.

8. Additional Depreciation

As long as there is an accumulated deficit, no additional depreciation may be

claimed.

III. Expenses

1. Types

Expenditures shall be decided for

a) Individual projects (one-time and recurring);

b) Individual projects grouped together in a program;

c) Project planning.

2. Unity of Subject Matter

1 Expenditures for a specific project that are factually and chronologically related or that are mutually dependent shall be included in the same expenditure authorization.

2 If a project contains tied and new expenditures, the tied expenditures may be separated if they are not necessarily connected with the new ones. They must be reported in the statement.

3. Calculation of the Expenditure Amount

1 In the calculation of the expenditure amount, the entire one-time and recurring

expenses arising from the specific project planning of the intended

undertaking until its operational use must be taken into account.

2 This includes, in particular, project planning expenses, land acquisition, the procurement

of materials or the transfer of assets from financial assets to administrative

assets, the construction costs including the costs for temporary facilities

and the equipment necessary for proper use.

3 Expenses for which an earlier expenditure authorization has already been granted are not included.

4. Information on Additional Costs

Additional costs, such as follow-up costs, which are not included in the calculation pursuant to Section 19, will be stated in the report for the expenditure approval.

5. Control

1 The Municipal Council designates the body responsible for the execution of the project.

2 The control body has, in particular, the following tasks

a) it controls the commitments already entered into and future commitments within the framework of an approved expenditure authorization;

b) it regularly prepares final cost estimates to ensure compliance with the expenditure authorization and, if necessary, to request an increase in the expenditure authorization early;

c) it continuously determines inflation-related additional costs based on the construction price or producer price index.

IV. Accounting

1. Applicable Standards

1 The accounting is governed by the professional recommendations listed in Annex III in accordance with HRM.

2 Deviating provisions in law, ordinance, or the handbook according to Section 4 remain reserved.

2. Level of Detail for Balance Sheet

The balance sheet is presented in both the standard and detailed formats, corresponding to the complete chart of accounts as per HRM.

3. Special Financing

1 The following shall be managed as special financing

a) Fire protection services;

b) Wastewater disposal;

c) Waste disposal;

d) Civil defence shelter compensation;

e) Parking space compensation;

f) Retirement and nursing homes;

g) Tourist taxes;

h) Children's playground compensation;

i) Water supply;

j) Electricity supply, energy supply;

k) Community antenna, cable television;

l) Compensation for planning benefits;

m) other special financing established by the municipalities.

2 Obligations and advances of the special financing accounts, as well as credits from

special accounts, shall accrue internal interest. The Government Council shall determine the interest rate.

4. Investment Accounting

Investments up to CHF 75,000 in individual cases are charged to the income statement; amounts exceeding this are charged to investment accounting.

5. Valuation of Assets

a) Financial Assets

1 The fair value of financial assets is determined on the basis of the following values and

taking into account any necessary write-down

a) cash and receivables: nominal value;

b) fixed-interest securities, loans, and mortgages: nominal value;

c) shares and participation certificates: year-end stock exchange closing price or tax value;

d) real estate: acquisition cost;

e) inventories: cost price.

2 The book values of financial assets are reviewed annually and revalued if necessary.

For tangible assets, the review takes place every five years.

3 Material receivables whose collection is at risk must be adjusted accordingly. All other

receivables are to be adjusted annually by a deduction of 5%.

b) Administrative Assets

1 The acquisition value corresponds to the net investment.

2 Administrative assets are depreciated according to Annex II.

3 Loans and participations are to be valued at their acquisition cost and

their recoverability is to be reviewed annually.

c) Change between Financial and Administrative Assets

1 When financial assets are transferred to administrative assets, the market value is decisive.

2 Assets that are no longer required for the performance of public duties must be transferred to financial assets.

d) Fixed Asset Accounting

1 Assets of financial and administrative assets that are used over several

years must be recorded in a fixed asset accounting system.

2 The fixed asset accounting system provides detailed information on the development of these

assets.

3 The asset categories are determined by Annex II.

6. Valuation of Liabilities

a) Principle

Liabilities are recognized at their nominal value.

b) Provisions

aa) Recognition

1 Provisions are liabilities within the meaning of § 34 para. 2 FHG-BG, the amount

or maturity of which is uncertain, but reliably estimable.

2 They are recognized in the balance sheet if they are based on a concrete factual

situation and are material in amount.

3 No provisions are recognized for pre-financing and restructuring obligations towards

pension schemes.

bb) Use and Release

1 Provisions may only be used for the purpose for which they were formed.

2 Provisions shall be released when they no longer meet the recognition criteria.

7. Retention of Documents

1 Accounting records must be retained for as long as required by superior law, or as long as they must be available as evidence and for the determination of debtor-creditor relationships, but for a minimum of ten years.

2 The documents must be protected against loss, destruction, subsequent alteration, and unauthorized access.

8. Electronic Vouchers and Signatures

Electronic vouchers and signatures are equivalent to written ones, provided that

a) the identification, authentication, and authorization of the persons granting

approval and authorizing release are ensured;

b) the approval and release are logged; and

c) the integrity of the data concerning recorded vouchers and documented

approval processes is ensured.

V. Results-Oriented Public Management

1. General

1 The municipality that subjects its administration or parts thereof to the principles of

results-oriented public management (ROPM) must set out its implementation

in a concept.

2 The concept must be issued in accordance with the provisions of §§ 36-38 and must

comply with the framework conditions of §§ 39-45.

2. Introduction

a) Principle Resolution

The voters decide at the ballot box on the principles of implementation by

a) designating the parts of the administration to which results-oriented public management refers;

b) determining the substantive principles of the performance mandates and the global budget;

c) regulating the procedure for granting performance mandates and global budgets;

d) determining the modalities for reporting by the Municipal Council to the Municipal Assembly;

e) providing for the participation of the Financial Audit Commission.

b) Implementation

The Municipal Council takes the necessary execution decisions by

a) determining the contents of the service mandates;

b) preparing the global budget;

c) introducing the controlling system;

d) regulating the delegation of expenditure authorities;

e) making further steering decisions.

c) Approval

The municipal council submits the following documents to the Government Council for approval of the introduction

a) the fundamental decision of the eligible voters;

b) for each administrative unit, the planned implementation including its enforcement decisions.

3. Framework Conditions

a) Administrative Unit

The administration is structured into administrative units, which correspond to the functional

division according to HRM or another division organized by areas of responsibility.

b) Presentation

1 The budget shall set out the gross expenditures and revenues underlying the global

budget.

2 Performance mandates shall be accompanied by background information such as basic

mandate, services (products) and key figures of the relevant administrative unit.

3 The financial plan years shall be appended to the presentation of the global budget

and performance mandates. They must show the planned development of the global

budget.

c) Performance Mandate and Global Budget

1 The municipal council decides on the content of the performance mandate and on

the global budget.

2 The communal assembly approves each performance mandate as a whole and

decides on the global budget.

3 A partial implementation of a performance mandate or a phasing of

individual parts is not possible.

d) Controlling

Through controlling, it must be ensured that

a) the information for assessing the performance and impact objectives is collected and evaluated;

b) the necessary measures are taken if a failure to achieve the service mandate becomes apparent.

e) Voluntary Instruments

The Municipal Council may

a) maintain an integrated tasks and financial plan which links the performance and financial perspectives in a rolling, multi-year planning and is structured by administrative units;

b) restrict account transfers within a global budget for certain individual cases (management decisions).

f) Accounting

1 The remaining financial accounting regulations remain applicable to accounting.

2 The structure of the administrative units has no influence on the presentation of the annual financial statements.

g) Reporting and Auditing

1 The administrative units endowed with a service mandate shall provide

reporting.

2 The Municipal Council ensures that the Audit Committee is sufficiently

informed about the execution of service mandates and compliance with the global budget.

3 The Audit Committee assesses the submitted service mandates and their

execution and reports to the Municipal Assembly with a motion.

VI. Audit Committee (AC)

Examination of the Financial Budget

1 The RPK examines the financial budget through

a) ordinary audits, which follow an audit plan defined by the RPK with specific focus areas;

b) interim audits; and

c) unannounced audits.

2 These examinations comprise

a) in formal terms, particularly the mathematical accuracy of the data and the completeness of records and vouchers;

b) in legal terms, particularly compliance with the constitutional, statutory, regulatory, and other implementing provisions applicable to the financial budget;

c) in substantive terms, particularly the review of the sustainability of expenditures, the appropriateness of investments, and the development of the financial budget.

VII. Transitional Provisions

1. Depreciation of Administrative Assets

(§ 54 para. 2 FHG-BG)

1 If, at the time the Financial Household Legislation for the districts and municipalities comes into force, the remaining useful life of tangible assets in administrative assets has already expired, these shall be depreciated over a period of eight years from the date of entry into force.

2 If the entry into force of the Financial Household Legislation for the districts and municipalities during the last three years before the expiry of the useful life of tangible assets in administrative assets leads to significant hardship for the affected municipality, the Department of Finance may, upon its request, extend the depreciation period to eight years. The granted extension shall commence from the date of entry into force.

2. Revaluation Reserve

(§ 54 para. 3 FHG-BG)

1 The reserves from the revaluation of financial assets are to be dissolved at the end of the

year following the entry into force of the Financial Household Act for the Districts and

Municipalities in favour of equity.

2 For reserves from the revaluation of real estate, dissolution can be waived.

3 Withdrawals from the reserves

a) are mandatory if a previously revalued asset is sold;

b) may be made if losses due to impairment arise on previously revalued assets.

3. Revaluation Reserve

(§ 54 para. 3 FHG-BG)

The reserves from the revaluation of administrative assets are to be dissolved at the end of the year following the entry into force of the Financial Household Act for the Districts and Municipalities, in favour of equity.

VIII. Final Provisions

1. Repeal of Existing Law

With the entry into force of this Ordinance, the following shall be repealed

a) Financial Budget Ordinance for the Districts and Municipalities of December

19, 1995;

b) Ordinance on the Experimental Introduction of Results-Oriented Public

Administration in Municipalities and Districts of June 7, 2005.

2. Amendment of Existing Law

The Implementing Ordinance to the Law on Financial Equalization of January 15,

2002, is amended as follows

§ 2

The districts and municipalities must submit the following to the Department of Finance for the annual municipal financial statistics

a) Financial plan (including budget) by December 31 of each year;

b) Annual accounts by May 15 of each year.

3. Publication, Entry into Force

1 This Ordinance shall be published in the Official Gazette and included in the

Collection of Laws.

2 It shall enter into force on 1 January 2021.6

Appendix I

Budgetary Credits according to § 13

1. Income Statement

Expenditure Revenue

30 Personnel Expenses 40 Fiscal Revenue

31 Material and Other Operating Expenses 41 Royalties and Concessions

33 Depreciation of Administrative Assets 42 Fees

34 Financial Expenses 43 Miscellaneous Revenues

35 Contributions to Funds and Special 44 Financial Revenue

Financing

36 Transfer Expenses 45 Withdrawals from Funds and Special

Financing

37 Throughput Contributions 46 Transfer Revenue

38 Extraordinary Expenses 47 Throughput Contributions

39 Internal Allocations 48 Extraordinary Revenue

49 Internal Allocations

2. Investment Statement

Investment Expenditure Investment Income

50 Property, Plant and Equipment 60 Transfer of Property, Plant and Equipment

to Financial Assets

51 Investments on Account of Third Parties 61 Reimbursements

52 Intangible Assets 62 Transfer of Intangible Assets to

Financial Assets

54 Loans 63 Investment Contributions for Own Account

55 Participations and Share Capital 64 Repayment of Loans

56 Own Investment Contributions 65 Transfer of Participations

57 Throughput Investment Contributions 66 Repayment of Own Investment Contributions

58 Extraordinary Investment Expenditure 67 Throughput Investment Contributions

59 Transfer to Balance Sheet 68 Extraordinary Investment Income

69 Transfer to Balance Sheet

Appendix II

Asset Categories according to HRM and Depreciation

Asset Category Useful Life Depreciation

in years Rate (in %)

Land – –

2a Buildings/Superstructures 4.00

2b Old People's and Nursing Homes 3.03

3a Roads 4.00

3b Bridges 4.00

Forest – –

5a Canal Structures 2.50

5b Watercourse Revetments 2.50

Local/Regional Planning – –

7a Movable Assets 20.00

7b Machinery 20.00

7c Vehicles, Emergency Vehicles 20.00

Districts

Special Vehicles 6.67

Information Technology, Hardware 20.00

10a Intangible Assets 20.00

10b Information Technology, Software 20.00

Asset Category Useful Life Depreciation

in years Rate (in %)

11a Investment contributions for the fulfilment according to the useful life of the

of a public task financed object

11b Investment contributions to private entities

Assets under Construction - -

13. Loans and participations in - -

administrative assets

Wastewater facilities 4.00

Waste facilities 4.00

Appendix III

The following specialist recommendations of the Harmonized Accounting Model

(§ 26 para. 2 FHG-BG) apply

No. Specialist Recommendation Valid Version Deviation

Elements of the

Accounting Model

Principles of proper

accounting

Chart of Accounts and

functional classification

Income Statement

Accruals and

deferrals

Valuation adjustments

Tax revenues

Special financing Special funds are only shown in the

and pre-financing balance sheet. Expenditure and

income (fund accounting) take place

outside the income statement and

the investment statement.

The formation of reserves for

projects not yet decided (pre-

financing) is not permissible.

No. Specialist Recommendation Valid Version Deviation

Provisions and For future employer restructuring

Contingent Liabilities contributions to the Canton of Schwyz

Pension Fund in the event of a

shortfall according to § 11 of the Act

on the Canton of Schwyz Pension Fund

(PKG) of 21 May 20147 or other

pension schemes, neither provisions

are formed nor deferred liabilities are

booked. The employer restructuring

contributions are booked like ordinary

contributions in the year of maturity

and are taken into account in the budget

and financial plan. The coverage ratio

as of 31 December is reported in the

notes to the annual financial

statements.

10 Investment Statement

11 Balance Sheet

12 Fixed Assets and

Fixed Asset Accounting

13 Consolidated

View

14 Cash Flow Statement

15 Statement of Changes

in Equity

16 Notes to the Annual

Financial Statements

17 Financial Policy

Target Figures and

Instruments

18 Financial Ratios

19 Procedure for The reserves from the revaluation of

Transition to HRM2 financial assets and from the

revaluation of administrative assets

are to be dissolved after one year. For

reserves from the revaluation of land,

dissolution may be waived.

No. Specialist Recommendation Valid Version Deviation

21 Financial Instruments Investments of financial assets in

foreign currency bonds, foreign

shares and alternative investments

such as hedge funds, derivatives or

other investments with a highly

speculative character are not

permitted.

1 GS 25-56.

2 SRSZ 153.100.

3 GS 19-84.

4 GS 21-28.

5 SRSZ 154.111.

6 Abl 2019 1581.

7 SRSZ 145.210.