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Credit Suisse ‘significant weaknesses’ in internal control of financial reporting – annual report

swiss bankCredit Suisse Group AG said on Thursday it would adopt a new plan to remedy “substantial weaknesses” in its financial reporting and control procedures over the past two years. The bank was reviewing its financial reports after a complaint from the U.S. Securities and Exchange Commission (SEC) last week.

In its annual report released on the 14th, the bank explained that in both 2021 and 2022, “the group’s internal controls over financial reporting were ineffective.” “This led to the conclusion that the disclosure controls and procedures were also ineffective.” The significant weaknesses identified relate to deficiencies in the design and maintenance of effective risk assessments in financial reports.

In addition, PricewaterhouseCoopers (PwC), which “audited the financial statements for the fiscal year ended December 31, 2010,” said, “We objected to the effectiveness of the Group’s internal controls on financial reporting as of I have expressed my opinion.” However, the bank said its financial statements for both 2021 and 2022 “represented correctly” its financial position.

Credit Suisse was due to release its annual report last week but postponed it after the SEC made last minute inquiries about its cash flow reports for 2019 and 2020. The bank said talks on the matter have been completed.

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Credit Suisse reveals ‘significant weaknesses’ in financial reporting and control procedures over the past two years

Source: Bloomberg

Chief Executive Officer Ulrich Kellner is embarking on a complex restructuring process to restore profitability, but the sell-off in financial stocks following the collapse of Silicon Valley Bank (SVB) is likely to make matters worse.

Credit Suisse’s announcement added to worries about stress in the banking sector, and two-year US Treasury yields temporarily fell 15 basis points (bp, 0.01%) to 3.82%. On the 14th, it rose to 4.19% at one point.

Credit Suisse shares fell sharply on the Zurich market on Thursday.

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