Periodic reporting on the part of an issuer and its auditing body is part of the information that contributes to transparent trading, as required by the Swiss Stock Exchange Act and the SWX Listing Rules. One of the duties of SWX is to ensure that issuers and auditors are in compliance with the prescribed transparency regulations.
Should an audit firm wish to audit SWX-listed companies, it must be registered in advance with the Admission Board. By registering , the auditing body agrees to be bound by the SWX Swiss Exchange sanction regulations (Art. 82a of the Listing Rules). The registration requirements and procedure are set out in the Directive on the Enforcement of Financial Reporting Regulations and the Registration of Auditing Bodies (http://www.swx.com/admission/09_rl_rechnungslegung_e.pdf)
The auditors' report issued by KPJH Fidelity SA (KPJH) on 19 June 2002 confirmed that the 2001 annual accounts of Habsburg Holdings Ltd. (Habsburg) were an accurate reflection of the company's financial position. However, the audit report did not make reference to an accounting standard. The mandatory confirmation, required by the Listing Rules (Art. 71), that the accounting of the issuer represents a true and fair view of its assets and liabilities, financial position and profits and losses in accordance with an accounting standard recognized by SWX, was omitted by KPJH.
The fact that the KPJH report of 19 June 2002 on Habsburg's consolidated 2001 annual accounts makes no reference as to the application of a recognized accounting standard is to be considered a major failing. Without confirmation that a recognized accounting standard has been applied by the auditing body, investors cannot know the basis on which KPJH conducted its examination. The KPJH report must thus be regarded as in clear violation of the Listing Rules , as it does not state what is actually being confirmed.
The Committee of the Admission Board has decided that this failing constitutes a grave violation of elementary regulations laid down in the Listing Rules. It has thus issued a reprimand, together with related publication, against KPJH Fidelity SA, and has withdrawn the latter's registration as an auditing body. The proper application of accounting regulations by Habsburg Holdings Ltd. in its 2001 annual report is not the subject of this sanction.
