Family Foundation Audit

One decision. Three perspectives. A coherent view of risk. 

A family foundation is designed to facilitate long-term wealth management and the achievement of succession planning objectives. However, its effective operation requires consistency between asset management decisions, tax compliance, and the rules set out in applicable law and the foundation's statute. 

At Baker Tilly TPA, we combine financial, tax and legal expertise to provide the foundation's governing bodies with an independent assessment of its operations and identify areas requiring attention. 

More than a statutory requirement 

A family foundation audit covers the management of assets and the incurring and fulfilment of obligations, including public-law liabilities, assessing their propriety, reliability and compliance with applicable law, the foundation's purpose and its statutes. 

The value of such an audit extends beyond fulfilling a statutory requirement. It also provides a deeper understanding of the risks associated with the foundation's assets, benefits provided to beneficiaries and decisions made by its governing bodies. 

Who is this service for? 

Our services are intended for: 

• family foundations preparing for their first or subsequent mandatory audit, 

• management boards responsible for the proper operation of the foundation, maintenance of documentation and providing auditors with access to information, 

• assemblies of beneficiaries responsible for selecting the entity that will conduct the audit, 

• founders and beneficiaries seeking an independent assessment of how entrusted assets are managed, 

• foundations whose financial statements are subject to a statutory audit and which, consequently, are required to undergo a family foundation audit annually, 

• foundations where the complexity of assets, transactions or relationships with beneficiaries requires particularly careful assessment of financial, tax and legal risks. 

Three perspectives. Integrated conclusions. 

A family foundation audit requires a broader perspective than a traditional financial analysis. A single management board decision may simultaneously affect accounting records and asset valuations, tax compliance, and compliance with applicable law and the foundation's statutes. 

Our approach begins with the foundation's specific decisions, transactions and processes. At Baker Tilly TPA, we analyse them simultaneously from three perspectives: 

Statutory Auditor's Perspective 

Focuses on financial and accounting matters, including the recording and valuation of the foundation's assets, the consistency of financial documentation, liabilities and the recording of benefits provided to beneficiaries. 

Tax Adviser's Perspective 

Focuses on public-law obligations, tax reporting and compliance matters concerning the foundation and its beneficiaries, transactions that may give rise to tax risks, and activities carried out by the foundation within the applicable regulatory framework. 

Legal Counsel's Perspective 

Covers the foundation's compliance with applicable law and its statutes, the propriety of decision-making processes and resolutions adopted by its governing bodies, relationships with beneficiaries, and its legal and organisational documentation. 

We do not conduct three separate parallel reviews. Wherever a single action or decision has consequences across several areas, we bring together financial, tax and legal findings and assess the interdependencies between them. 

For example, a related-party transaction may require three questions to be addressed simultaneously: Has the transaction been properly recorded and valued? What are its tax implications? Is the way it was approved and documented compliant with applicable law and the foundation's statutes? 

It is one decision, examined from three complementary perspectives. 

This approach enables us to provide the foundation's governing bodies with a single, coherent view of the risks associated with specific decisions and the way the foundation operates, rather than several separate lists of observations. 

Scope of the Audit: 

We conduct each audit in accordance with an agreed plan covering the foundation's documentation, key processes and transactions, and decisions made by its governing bodies. Financial, tax and legal matters are examined together wherever they relate to the same event or decision. 

Before accepting each engagement, we also verify compliance with the independence requirements applicable to the individuals and entities involved in conducting the audit. 

Our services include: 

• assessing how the family foundation's assets are managed, 

• reviewing the incurring and fulfilment of the foundation's obligations, including public-law obligations, 

• analysing whether the foundation's activities comply with applicable law, its purpose and internal governing documents, 

• assessing the accuracy of the recording, valuation and documentation of the foundation's assets, 

• reviewing benefits provided to beneficiaries and the manner in which they are documented, 

• analysing selected transactions involving the founder, beneficiaries and related parties, 

• conducting an integrated assessment of key decisions, transactions and processes where financial, tax and legal risks intersect, 

• reviewing tax compliance and the fulfilment of other public-law obligations within the scope of the audit 

• assessing whether the foundation's activities fall within the scope of activities permitted by law, 

• reviewing resolutions, decision-making processes and documentation of the foundation's governing bodies within the scope of the audit, 

• verifying whether the foundation's actual operating practices are consistent with its statutes and adopted governance principles, 

• identifying irregularities, interdependencies between them and areas requiring particular attention from the foundation's governing bodies, 

• preparing an audit report setting out the findings of the work performed. 

Let's discuss an audit of your family foundation

Please contact us to discuss the scope and timing of the audit, as well as the terms of our cooperation.