FAQ Enforcement activities
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 at least every five to eight years. 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.
With whom are complex Financial Reporting questions discussed?
To that purpose, SIX Exchange Regulation has established a "Specialist Pool for Financial Reporting issues". In individual cases of IFRS and SWISS GAAP FER-related issues, proven experts in the relevant field can be drawn upon in timely manner to discuss the application of IFRS and Swiss GAAP FER in actual professional practice.
How many violations were identified?
The following chart highlights the results of SIX Exchange Regulation's enforcement activities during the last three years.
Where can I find the latest areas of focus?
The current areas of focus are published by SIX Exchange Regulation in a Communiqué 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.
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 Sanctions Commission.
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.
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.
Is there also a review by SIX Exchange Regulation of the financial reporting of banks and insurances?
With regard to the financial reporting of Swiss banks, securities dealers and insurances listed on SIX Swiss Exchange, either SIX Exchange Regulation or the Swiss Financial Market Supervisory Authority (FINMA) is responsible for enforcement activities. In this context SIX Exchange Regulation enforces the accounting standards IFRS, US GAAP and Swiss GAAP FER. The FINMA for her part focuses on the accounting standard stipulated in the Swiss Banking Act.