Since 2000, Swiss life has been using the International Financial Reporting Standards (IFRS; formerly IAS) as its accounting standards in connection with its consolidated annual financial statements. The sanctions procedure conducted by the SWX applies to the following false entries, which were published by Swiss Life in 2002:
Annual report for 2001
In the consolidated annual financial statements for 2001, a valuation adjustment of shares ("available for sale") to the value of CHF 316 million was entered in the income statement (realized profits) rather than under the valuation reserves under the equity capital. This false entry was corrected in the semi-annual report for 2002 by means of an adjustment of the previous year's figures (restatement) and the equity capital. This means that the consolidated annual profit for 2001 as published in the annual report for 2001 was CHF 239 million too high (CHF 316 million less the tax impact).
Semi-annual report for 2002
In the consolidated report for the first semester of 2002, securities profits to the value of CHF 192 million (after tax) were falsely entered as realized profits rather than unrealised profits. The reason for this error lay in a new data-processing system that had not been adequately tested by Swiss Life before its introduction. The error was only discovered in connection with an extraordinary review by the auditors and meant that the semi-annual loss for 2002, which had already been published, subsequently had to be corrected from CHF 386 million to CHF 578 million. In a second - corrected and published - version of the semi-annual report for 2002 ("second issue"), the semi-annual loss for 2002 was correct.
A reprimand has already been issued against Swiss Life on 3 April 2002 for failure to disclose the previous year's figures in the income and cash flow statement of the semi-annual report for 2001. The false entries to be assessed in the present procedure cannot, when viewed in their entirety, be considered minor infractions, since in both cases the published net profit/loss was seriously inaccurate. Swiss Life could have prevented or discovered the false entries with a properly functioning internal control system and sufficient system tests. The circumstances of these cases call for rigorous sanctions.
Swiss Life, however, has made considerable organizational and technological efforts to prevent future violations of the Listing Rules. Furthermore, some of the persons who were responsible at the time have departed from Swiss Life, and others have announced their resignation. Swiss Life also informed the public of its false entries in a fair and transparent manner and on its own initiative. In consideration of all the circumstances, therefore, the Executive Committee of the Admission Board has decided to publish a reprimand against Swiss Life.
