The Sanction Commission has imposed a fine of CHF 250,000 against Weatherford International Ltd. for an error in its 2011 US GAAP financial statements. The sanction relates to an incorrect calculation of the income taxes in the 2011 financial statements.
Weatherford International Ltd. has violated the Accounting Standards Codification (ASC) 740 “Income Taxes” in its 2011 annual US GAAP financial statements by understating the income tax expense related to changes in the deferred tax provisions by USD 56 million. As a result of this error, the net income for the year was overstated by 20%.
Financial statements position |
2011
in USD million |
2011 (restated)
in USD million |
Error
in USD million ( %) |
Tax expense |
-486 |
-542 |
-56 (+11.5%) |
Net income for the year |
278 |
2221) |
-56 (-20%) |
1) The net income for the year 2011 in the restated financial statements as of 17 December 2012 amounts to USD 205 million. Besides the error correction related to the income taxes, Weatherford International Ltd. recorded further corrections of USD 17 million which were not subject to these sanction proceedings.
SIX Exchange Regulation has submitted a sanction proposal to the Sanction Commission. Considering the severity of the breach and the degree of fault, the Sanction Commission has imposed a fine of CHF 250,000 against Weatherford International Ltd.
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
US GAAP Accounting Standards Codification (ASC) 740 “Income Taxes”
According to ASC 740-10, an entity has to recognize the amount of taxes payable for the current year and the deferred tax liabilities and assets for the future tax consequences resulting from temporary differences between the accounting and tax values of its assets and liabilities.