SIX Exchange Regulation has reached an agreement with Allreal Holding Ltd in connection with breaches of International Financial Reporting Standards (IFRS) in the 2011 annual financial statements. The identified errors relate to the recognition of profits, the presentation of advance payments as well as the presentation of the statement of comprehensive income. Under the agreement, the company pays CHF 25,000 to the IFRS Foundation.
In its 2011 IFRS annual financial statements, Allreal Holding Ltd violated IAS 18 by recording revenues without recognizing profits for parts of the development properties it had sold. The company was also found to have violated IAS 1, because advance payments received were offset against the book values of the corresponding development properties, instead of being presented as short-term liabilities. Fur- thermore, contrary to the requirements of IAS 1 revenue ("operating income") was not disclosed in the statement of comprehensive income.
These errors resulted in the under- (+) or overstatement (-) of the following amounts in the 2011 IFRS annual financial statements:
| Period or balance sheet date (31.12.) | 2011 | 2010 | ||
| in CHF mn | in % | in CHF mn | in % | |
| Result for the year | +6 | +4 | -6.5 | -6 |
| Result from the segment "Projects and Development" | +6 | +16 | -6.5 | -16 |
| Development property | +29 | +6 | +65 | +14 |
| Short-term liabilities | +22 | +1 | +64 | +5 |
In addition to the payment of CHF 25,000 to the IFRS Foundation, Allreal Holding Ltd will disclose andcorrect the errors in its 2012 IFRS interim and annual financial statements.The investigation of Allreal Holding Ltd is concluded with an agreement being reached as this course of action results in a more timely public disclosure than would have been the case with a duly completedsanction procedure.
Agreements to date in connection with financial reporting can be found at:
http://www.six-exchange- regulation.com/enforcement/media_releases/agreements/financial_reporting_en.html
Appendix regarding the accounting standards
Periodic financial reporting is part of the information required under the Stock Exchange Act and the Listing Rules to ensure a functioning market. As part of this process, issuers must comply with the applicable accounting standards.
Information on financial reporting can be found at:
http://www.six-exchange-regulation.com/obligations/financial_reporting_en.html
The following accounting standards were relevant in assessing the case in question
IAS 18p19 requires that revenues and expenses – and therefore also the resulting profits or losses – that relate to the same transaction are recognised simultaneously.
Under IAS 1p32, assets and liabilities may be offset only, if required or permitted by an IFRS. The offset of advance payments against the book value of development properties is neither required nor permitted under IAS 2 or any other standard.
IAS 1p82 requires that as a minimum revenue is disclosed in the statement of comprehensive income.This line item has to include all revenues recorded under IAS 18 during the period.
