SIX Exchange Regulation has reached an agreement with Myriad Group Ltd. in relation to the breach of International Financial Reporting Standards (IFRS) in the 2010 annual financial statements. The error identified relates to the incorrect presentation of expenses in the income statement. Under the agreement, the company pays CHF 25,000 to the IFRS Foundation.
Myriad Group Ltd. presents its expenses in the income statement using a classification based on their function within the entity (e.g. cost of sales or administrative expenses). However, in its annual financial statements 2010 the company failed to allocate 38% of its expenses to the different functions within the entity and thereby violated the requirements of IAS 1 "Presentation of Financial Statements".
As a result the expenses for amortizing intangible assets as well as for restructuring and integration were excluded from their respective functions. Even though the error had no impact on revenue and loss from operations, it lead to an understatement of cost of sales by USD 23 million (70%) and an understatement of general and administrative expenses by USD 7 million (40%) for the financial year 2010.
SIX Exchange Regulation does not have reason to belief that the error was made intentionally. In addition to making a payment of CHF 25,000 to the IFRS Foundation, Myriad Group Ltd. will correct and disclose the error in its 2011 annual financial statements as well as in its 2012 interim financial statements.
The investigation of Myriad Group Ltd. is concluded with the agreement being reached as this course of action results in a more timely public disclosure than would have been the case with a duly completed sanction procedure. Agreements have to be published in accordance with the Rules of Procedure.
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