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Audit concerns raised over WA companies

AN Australian Securities and Investments Commission accounting surveillance project shows 47 Western Australian listed companies have issues regarding whether they can continue as a going concern.

The study of more than 1,000 listed companies with balance dates between June 30 and July 31, looking at the risk areas of capitalised and deferred expenses; recognition of revenue; and recognition of controlled entities and assets.

Those areas were seen to be significant in producing misleading financial reporting in the failures of Enron and other high profile companies in the US.

Five of the 10 companies that ASIC found did not lodge financial reports were also from Western Australia.

Only one WA company – Diamond Rose NL – was noted as a business with an audit qualification relating to continuation as a going concern.

However, of the 160 companies listed with "an emphasis of matter" statement relating to significant uncertainty about their continuation as a going concern – more than one quarter were from WA.

The names include some standouts, including Anaconda Nickel Limited, which now trades as Minara Resources and ERG Limited.

Western Metals, which is now in administration and having its assets sold off, is also mentioned.

Chrome Global is also cited. That company has now become Key 2.

In the case of those that failed to report, a couple of those names have been newspaper fodder – New Tel and Precious Metals Australia.

The ASIC report does make the point that New Tel is in administration.

Another listed on the failed to report list was Tuart Resources Limited which failed last year. It was to be rebranded as Extract Resources but there is no listing on the ASX of any such company.

The release of the report was one of the final acts for former ASIC chairman David Knott.

Mr Knott said the review confirmed ASIC’s belief that there was no reason to believe that the type of accounting abuses identified in the US posed a material risk in Australia.

"During this review it was noted that there is a reasonably high incidence of auditors either qualifying company accounts or highlighting risks through ‘emphasis of matter’ commentary relating to going concern," he said.

"This suggests that there is a reasonably high level of transparency in financial reporting on this significant matter."

 

            

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