By Stefania Spezzati and Tommy Reggiori Wilkes
LONDON (Reuters) – UBS’s auditors have expressed an “adverse opinion” on the bank’s internal controls over its financial reporting for 2024, after it failed to resolve issues related to misstatements inherited from Credit Suisse, the Swiss lender said on Monday.
An adverse opinion is generally understood to be a warning to investors that indicates that a company’s financial statements could be misrepresented, misstated, and do not accurately reflect its financial performance and health.
UBS has been working to resolve issues in Credit Suisse’s internal controls and said last year it was still reviewing potential misstatements, after acquiring the lender in a government-orchestrated rescue in 2023.
In its annual report published on Monday, UBS said that following the merger of UBS and Credit Suisse last year, it could no longer exclude Credit Suisse from its assessment and that it needed more time to resolve the problem.
“As of 31 December 2024, UBS’s internal control over financial reporting was not effective because of the material weakness” related to the Credit Suisse business, the Zurich-based bank said.
“The management has concluded that there is a material weakness in internal control over financial reporting as of 31 December 2024.”
Ernst & Young, re-elected as UBS’s auditor last year, said in its assessment on Monday that because of the effect of the material weakness, it had concluded that UBS had “not maintained effective internal control over financial reporting” as of end-2024.
Before its rescue, Credit Suisse and U.S. authorities had engaged in a months-long debate over the severity of the bank’s reporting deficiencies.
UBS said on Monday it had concluded there was a material weakness due to “the increased complexity of the internal accounting and control environment”, as well as its ongoing migration efforts and the limited time to show its post-merger integrated control environment was working as it should.
(Editing by Kirsten Donovan)
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