Enforcement activities

1. How frequently are an issuer's financial statements reviewed?
2. With whom are complex IFRS questions discussed?
3. How many violations were identified?
4. Where can I find the latest areas of focus?
5. Is it possible to obtain "pre-clearance"?
6. What are the consequences of a Comment Letter?
7. What happens after the pronouncement of a sanction or agreement?

1. How frequently are an issuer's financial statements reviewed?

The yearly selection of the annual and semiannual financial statements that will be subjected to review is based on a risk-oriented concept and is supplemented by random samplings. In this connection, an issuer's financial statements should in principle be reviewed once every five years (for main standard), resp. ten years (for other standards). In terms of substance, extent and manner of execution, the review by SIX Exchange Regulation differs significantly from an audit of financial statements. The enforcement activities of SIX Exchange Regulation center on certain key focal points deemed to be critical in financial reporting; however, no full examination of the financial statements is made.

2. With whom are complex IFRS questions discussed?

To that purpose, SIX Exchange Regulation has established a "Specialist Pool for IFRS Issues". In individual cases of IFRS-related issues, proven experts in the relevant field can be drawn upon in timely manner to discuss the application of IFRS in actual professional practice. Available for consultation are roughly 30 IFRS specialists, half of whom are from listed companies and half from audit firms.

3. How many violations were identified?

The following chart highlights the results of SIX Exchange Regulation's enforcement activities:

The above statistics show the number of concluded cases in the corresponding calendar year. "Direct Comment Letters" were issued for the first time in 2008.

4. Where can I find the latest areas of focus?

The changing areas of focus are published by SIX Exchange Regulation with a sufficient lead time to enable the preparer of the financial statements to take them into account. In principle, the key focal points are directed at users of IFRS but are valid analogously to users of other recognized accounting standards such as US GAAP and Swiss GAAP FER.

Key focal points in the review of annual and interim financial statements	Download
Communiqué No. 04/2011 dated 29.09.2011 Areas of focus for the review of 2011 annual financial statements
Communiqué No. 01/2011 dated 24.05.2011 Area of focus for the review of 2011 semi-annual financial statements
Communiqué No. 09/2010 dated 17.09.2010 Areas of focus for the review of 2010 annual financial statements
Communiqué No. 02/2010 dated 28.05.2010 Areas of focus for the review of 2010 semiannual financial statements
Communiqué No. 05/2009 dated 30.09.2009 Areas of focus for the review of 2009 annual financial statements
Communiqué No. 01/2009 dated 29.05.2009 Areas of focus for the review of 2009 semiannual financial statements
Communiqué No. 09/2008 dated 09.10.2008 Areas of focus for the review of 2008 annual financial statements
Communiqué No. 08/2007 dated 26.10.2007 Areas of focus for the review of 2007 annual financial statements
Communiqué No. 10/2006 dated 20.11.2006 Areas of focus for the review of 2006 annual reports
Communiqué No. 13/2005 dated 21.11.2005 Areas of focus for the review of 2005 annual reports

5. Is it possible to obtain "pre-clearance"?

Understood to be "pre-clearance" is the regulator's advance approval of the treatment or presentation of a certain matter in the financial statements. In exceptional cases, it may appear necessary to the issuer that an opinion from SIX Exchange Regulation be obtained with regard to the treatment of a given matter. The issuer's related questions must be submitted to SIX Exchange Regulation in written form. The issuer must describe the facts of the matter comprehensively and in reflection of the appropriate accounting standards as well as the means of treatment or presentation the issuer intends to use, supported if possible by a third-party opinion. The approval of the issuer's auditing body is also necessary. A ruling in this regard is subject to a fee and has no binding legal effect on the Sanction Commission.

6. What are the consequences of a Comment Letter?

In Comment Letters, SIX Exchange Regulation draws a clear line of demarcation between its recommendations and the adjustments it expects with regard to specific aspects of the financial statements. The proper implementation of those adjustments is routinely verified in the immediately following annual or semiannual financial statements. If in conjunction with this follow-up examination it is determined that the issuer has not made the expected adjustments, SIX Exchange Regulation will initiate an investigation. Thus if any questions should arise regarding the content of a Comment Letter, it is recommended that the Financial Reporting department of SIX Exchange Regulation be contacted immediately.

7. What happens after the pronouncement of a sanction or agreement?

The violations that form the basis for either a sanction decision/notice or agreement are to be rectified in keeping with the applicable rules of the entity's accounting standard in its next financial statements and disclosed as an error. SIX Exchange Regulation will review those financial statements to verify the correct implementation. If within the scope of this subsequent review it is determined that the error correction has not be made according to the specifications of the applicable accounting standard, SIX Exchange Regulation will initiate an investigation.