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Releases accounting watch results

ASIC has released the second stage results of the accounting surveillance project begun in July 2002.

The project reviewed the audited full-year financial reports of more than 1,000 listed companies with balance dates between June 30 and July 31, with particular attention to capitalised and deferred expenses, recognition of revenue, and recognition of controlled entities and assets.

Initial results, released December 18 last year, identified 31 companies for further follow-up.

ASIC says it is continuing enquiries with 16 of these companies.

Companies which have implemented changes in their December 31 2002 half-yearly financial reports, following ASIC concerns, include:

• Harvey World Travel and Futuris Corporation Limited (now reporting net revenues only from agency transactions rather than the gross value of customer transactions)

• Astro Mining (asset write-down)

• King Minerals NL (asset reclassification)

• Tele2000 Limited, now Entertainment Media and Telecoms Corporation Ltd (use of fair value of shares, rather than a notional value, for acquisition and the restatement of goodwill)

• Wilson Investments Taurine Fund Limited (asset revaluations now recorded against a reserve rather than in profit).

In a third stage of the account surveillance project, ASIC has commenced a review of the full-year financial reports of approximately 180 listed public companies with balance dates between August 31 and December 31.

Issues new class order exemption

ASIC has issued a new Class Order exemption, [CO 03/0237], relating to the requirement under s1012J of the Corporations Act 2001 that the information in a Product Disclosure Statement must be up to date.

CO 03/0237 has been issued in response to industry concerns about the possible need to regularly prepare supplementary Product Disclosure Statements to update a PDS where there have not been material adverse developments.

The relief does not affect the existing obligation to prepare and give a SPDS where the information in a PDS becomes misleading or deceptive, or the absence of information could be materially adverse to investors.

Warns on fake providers

Those who do their banking or make electronic payments via the internet are at risk of being targeted by fraudsters who establish fake websites, mimicing official sites, ASIC warns.

These fraudsters send out fake emails, pretending to be the service provider, in an attempt to gather private account details.

ASIC said Commonwealth Bank and AMP Banking customers have been targeted recently.

Tips and safety checks are available from www.fido.asic.gov.au.

Accepts enforceable undertaking

ASIC has accepted an enforceable undertaking from Citibank Pty Ltd, in relation to the promotion of its Premium Deposit Account.

Citibank has undertaken that all future advertising for its Premium Deposit Account will clearly and fully disclose the foreign exchange risks of the product.

The undertaking follows an investigation by ASIC which found that aspects of Citibank’s advertisements and other promotional materials for the Premium Deposit Account may have been misleading.

As part of the enforceable undertaking, Citibank will place corrective advertising on its website.

In addition, Citibank has undertaken not to use the phrase ‘term deposit’ to describe products which carry a foreign exchange risk.

Citibank will also ensure that in future promotional materials, it will fully disclose the risks associated with the Premium Deposit Account, and will ensure that the use of past interest rates takes into account foreign exchange fluctuations.

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