Credit Suisse found “major defects” in the financial reporting process

It is reported that Credit Suisse Group said that it found “major defects” in its reporting procedures in the 2022 and 2021 fiscal years and is taking remedial measures. “The Group’s internal control over financial reporting has not worked” in the past two years, Credit Suisse said in its annual report released on Tuesday. “The management also decided that our disclosure controls and procedures were invalid.” After the last minute inquiry from the US regulatory authorities, the bank was forced to postpone the release of its annual report last week. Credit Suisse did not specify whether these issues have been resolved. The bank said that the major defects it found were related to the failure to design and maintain effective risk assessment in the financial statements. “PwC has issued a negative opinion on the effectiveness of the Group’s internal control over the financial reporting process as of December 31, 2022,” Credit Suisse said. (Golden Ten)

Interpretation of this information:

Credit Suisse Group announced that it had discovered “major defects” in its reporting procedures for the fiscal years 2021 and 2022. According to the bank’s annual report, the internal control over financial reporting did not function correctly and there were issues with disclosure controls and procedures. The bank did not disclose whether it had resolved these issues or not. PwC, the bank’s external auditor, also issued a negative opinion on the effectiveness of the internal control over the financial reporting process. The issues are related to the bank’s failure to design and maintain effective risk assessment within the financial statements. Credit Suisse has taken remedial measures to address these concerns.

Interpretation

The announcement by Credit Suisse Group reveals that the bank has failed to maintain effective risk assessments in its financial statements for the past two years. These major defects in reporting procedures have led to invalid disclosure controls and procedures. The bank failed to design and maintain effective risk assessment, leading to issues with its internal control over financial reporting. Even external auditors have raised concerns, with PwC issuing a negative opinion on the effectiveness of the bank’s internal control over the financial reporting process.

This is a significant development for Credit Suisse Group, as the issues will likely undermine the credibility of the bank’s financial statements. The bank is also facing regulatory scrutiny after it was forced to delay its annual report due to an inquiry from US regulatory authorities. The lack of clarity on whether these issues have been resolved could lead to further inquiries and affect the bank’s reputation.