Switzerland Has Controversy Financial Gains and 21st Century Innovation

Switzerland

The “Financial Times” reports that KPMG Switzerland was the official auditor of the Fédération Internationale de Football Association (FIFA) since 1999, but resigned on June 13, 2016. Switzerland was one of the first nations to join the European Union (EU) and one of the first to leave it. Additionally, Switzerland looks toward the future with goals of using  renewable energy forms as their primary sources.

The resignation of KPMG Switzerland comes after the 2015 scandal when it was discovered the powerful football executives secretly paid themselves $80 million. This type of public scandal does nothing but hurt the image of Switzerland, because it was their auditing team, who allowed the corruption to go unnoticed. This scandal was uncovered by the United States Department of Justice. KPMG’s Swiss branch is a legal entity within KPMG’s global network. These recent allegations have led to a separate investigation at the organization’s United Kingdom (U.K.) branch.

KPMG’s Swiss branch is overseen by the Swiss Federal Audit Oversight Authority. The oversight of this organization related to the discrepancies obfuscated the scenario because the discrepancies could have been viewed as intentional. In the U.K., the KPMG location is being investigated by their financial reporting council, who are responsible for the analysis of the results of the audits conducted.

According to Social Europe, there are several studies focused on the economic costs associated with EU membership. These costs are the result of higher tariff and non-tariff barriers. These associated costs led to Switzerland leaving the EU, with the goals of minimizing costs and increasing profit. This was a risky decision because the economic uncertainty hurt the country’s economy in the long run.

Switzerland is located in central Europe and is considered a founding member in several free trade agreements, which brought together the nations of Europe to increase their access to a single market. The Swiss economy is rich, small, and open, but some Swiss businesses were so nervous about losing access to the EU that they relocated to Austria to continue to access the single market. Swiss and EU leaders later signed an agreement, which granted the country access to the single market again, but allowed them to maintain other trade agreements to increase the productivity of their economy as a whole. Switzerland faced the controversy related to leaving the EU but through innovation, they were able to enjoy their financial gains.

The first European Free Trade Agreement (EFTA), was created in 1960 and included several European nations. By the 1970s and 1980s, the EU was developed, and each country decided to participate in the European Economic Area (EEA). This was a time of economic cooperation, but by 1992, Swiss leaders no longer wanted to be tied to a single market with the understanding the world was heading toward a global economy. Even though the Swiss economy was never able to make up the financial losses when they initially separated from the EU, they did win financially. The country was able to access multiple markets, which enables them to continue to grow today. As of 2016, the Swiss economy has a large current account surplus and fiscal position.

Alternative energy sources have been considered the next international financial boom, because of the effects of global warming and climate change. These changes to the Earth have led countries to consider dramatic changes in how things are done. Switzerland plans to shut down their four remaining nuclear plants located across their country. “le News” reported that Switzerland currently utilizes 35 percent nuclear energy, 59 percent hydropower, and another six percent from other sources. Two of the four Swiss nuclear plants are located on shore, which means they can use hydropower to take over the energy needs of those regions. At the same time, the other two plants are landlocked and would require other alternative energy sources, including solar, and wind.

Switzerland has dealt with controversy, but through innovation, they have continued to experience financial gains. These gains and innovation are the tools necessary for the Swiss energy sources to be completely free of nuclear power by 2034. This can be viewed as a positive process in order to invest in the future of the planet as a whole. As more nations begin to harness alternative energy, Swiss businesses would already be ahead, and prepared to reap the benefits associated with the alternative energy boom.

By Kristina Lasher
Edited by Cathy Milne

Sources:

Social Europe: Brexit’s Economic Consequences: Austria And Switzerland As Potential Counterfactuals
THE FINANCIAL TIMES: KPMG Switzerland resigns as Fifa auditor
LOCAL SEISS NEWS IN ENGLISH: At a glance – Switzerland’s nuclear power stations

Image Courtesy of Belpo’s Flickr Page – Creative Commons License

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