Universal Registration Document 2021

Chapter 6. 2021 Consolidated financial statements

Provisions for risks and litigation & uncertainty over income tax treatments

(Notes 1.3 « Provisions », 9 « Income tax » and 21 « Provisions for risks and litigation » to the consolidated financial statements)

 

Risk identified

Publicis Groupe operates in more than 100 countries and is therefore subject to varying, complex and constantly changing laws and regulations (including tax legislation).

Furthermore, within the framework course of its activity, Publicis Groupe, its subsidiaries or its clients may face, on its own or jointly with other parties, legal actions brought by third parties, by competitors of its clients, by an administrative or regulatory authority or by a consumer association.

Management’s evaluation of the associated risks has led Publicis Groupe to recognize provisions for risks and litigation in the amount of euro 254 million as at December 31, 2021, and to recognize some uncertain income tax liability in the amount of euro 205 million as at December 31, 2021.

In view of the materiality of these provisions, the uncertainty regarding the outcome of the proceedings initiated and the high degree of judgment used by the management to estimate the risks and the amounts recognized, we consider the risks and litigations and the understatement of the corresponding provisions to be a key audit matter.
Our response
  • We assessed the procedures implemented by the management in order to identify and list all the risks related to lawsuits or to commercial, regulatory or tax disputes.
  • We obtained an understanding of the internal reports on the disputes prepared by the local teams and compiled by the legal department.
  • We assessed the estimate of costs related to these risks:
  • by considering the risk analysis performed by Publicis Groupe and by discussing each significant dispute, whether at the litigation or pre-litigation stage, with the legal department and, when applicable, the tax department of the Company and its subsidiaries;
  • by inquiring the external advisers of Publicis Groupe or by obtaining legal advice on the most significant disputes.
  • We have assessed the appropriateness of the information provided in the notes to the consolidated financial statements concerning the risks related to a lawsuit or a commercial, regulatory or tax dispute.

 

IV. Specific verifications

We have also performed, in accordance with professional standards applicable in France, the specific verifications required by laws and regulations of the information relating to the Group given in the management report.

We have no matters to report as to their fair presentation and their consistency with the consolidated financial statements.

We attest that the consolidated non-financial statement required by Article L. 225-102-1 of the French Commercial Code (Code de commerce) is included in the information relating to the Group given in the management report, it being specified that, in accordance with Article L. 823-10 of said Code, we have verified neither the fair presentation nor the consistency with the consolidated financial statements of the information contained therein. This information should be reported on by an independent third party.