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The Sanction Commission of SIX Swiss Exchange has imposed a fine of CHF 10,000 against CI Com SA for violating the applicable accounting standards Swiss GAAP FER. The sanction relates to missing disclosures regarding changes in two line items in the 2012 interim financial statements.
CI Com SA has violated the requirements of Swiss GAAP FER 12/5 "Interim Reporting" in its 2012 interim financial statements because the company failed to explain the increase of the loan from shareholders by CHF 300,000 (+150%) as well as the decrease of the financial expense by CHF 35,000 (-51%).
|
Financial statements line item |
Half-year 2012
CHF |
Half-year 2011
CHF |
Change
CHF ( %) |
|
Shareholders loan |
500,000 |
200,000 |
+300,000 (+150%) |
|
Financial expense |
33,608 |
68,487 |
-34,879 (-51%) |
From the 2012 interim financial statements, it was also not apparent for an investor that the decrease of the financial expense was caused by the cessation of foreign exchange losses.
The Sanction Commission has penalized this breach of the applicable Swiss GAAP FER with a fine of CHF 10,000 taking into consideration the severity of the breach and the degree of fault.
With regards to the violation of Swiss GAAP FER 18 "Tangible fixed assets", which was also alleged by SIX Exchange Regulation, the Sanction Commission did not identify any breach of the accounting stan- dard. The omission of a current valuation of the investment property in the 2012 interim financial state- ments was a permitted simplification according to Swiss GAAP FER 12/4, because CI Com SA is a small company with a simple balance sheet structure.
The Sanction Commission further noted that CI Com SA did not violate its reporting obligations according to the Directive on Financial Reporting with regards to a change of business activity. CI Com SA has been through a period of continuous restructuring and the new business activity was not permanently determined. A repeated short-term change of the regulatory segment is not appropriate.
SIX Exchange Regulation regularly publishes the issued sanction decisions in anonymous form on:
http://www.six-exchange-regulation.com/enforcement/sanction_decisions_en.html
Appendix regarding the accounting standards
Periodic financial reporting is part of the information required to ensure a functioning market.
Information regarding financial reporting can be found at:
http://www.six-exchange-regulation.com/obligations/financial_reporting_en.html
Swiss GAAP FER 12 "Interim reporting" - Explanations
Swiss GAAP FER 12/5 requires that the notes must enable the reader to form a well-founded opinion of the development of activities and the course of business of the organisation. Therefore, all the notes must describe all factors, that have a significant impact on the financial position, the cash flows and the result of operations of the organisation during the reporting period.
Swiss GAAP FER 12 "Interim reporting" - Simplifications
Swiss GAAP FER 12/4 requires that the interim reporting be prepared on the basis of the same principles as the annual financial statements. Simplifications are permissible, taking into account the continuity in presentation and valuation as long as the overall picture of the course of business is not significantly distorted.
Swiss GAAP FER 18 "Tangible fixed assets" – Valuation of investment property
According to Swiss GAAP FER 18/14, tangible fixed assets held for investment purposes should subse- quent to initial recognition be measured at actual value or cost less accumulated depreciation. Swiss GAAP FER 2/40 further states that actual values have to be adjusted on an ongoing basis.
Directive on Financial Reporting (DFR) – Reporting obligations regarding a change of business activity
According to articles 15 and 17 DFR, a company has to report immediately to SIX Exchange Regulation a change of business activity, which results in a company being reclassified as an investment or as a real estate company, respectively.
