JSE censures Jasco over false audit claims - TechCentral

JSE censures Jasco over false audit claims

Jasco has found itself in serious trouble with the JSE, with the Johannesburg bourse imposing a public censure on the technology company after various breaches of the listing rules, including stating that its published results were audited when, in fact, they were not.

In a notice, published on the stock exchange news service (Sens) on Monday, Jasco set out the timeline of events that led to the extraordinary public censure by the JSE:

  • On 27 September 2018, the company published provisional results for the financial year ended 30 June 2018 in which it stated that the results were audited when, at the time of release, the audit was still taking place.
  • On 1 October 2018, Jasco published a Sens announcement to inform the market that it “erroneously referred to the results being ‘audited’ in the announcement”. It said at the time that although it believed that the updated, final annual financial statements would not reflect any changes to the profits and earnings, the board had decided to “act prudently” and retract those results. On the same day, Jasco applied to the JSE for a voluntary suspension of the listing of its securities until the updated results were republished.
  • On 5 November 2018, Jasco published its audited full-year results, which contained adjustments to the retracted provisional results resulting in material changes to profits and earnings, an emphasis of matter and prior-period errors that had to be restated.
  • The correction of the prior-period errors decreased the 2017 basic and diluted earnings per share by 580%, from 3.6c to a loss of 17.3c/share. The headline loss per share decreased by 292% from 2.5c to a loss of 4.8c/share.
  • The announcement of the 2018 audited results did not contain details of the nature of the modification to the auditors’ report. To correct this, Jasco published a supplementary announcement on 8 November 2018, including detail of the emphasis of matter.
  • Jasco failed to publish a trading statement in respect of the changes to EPS and Heps in the 2018 audited results, which differed by 191% and 160% respectively from the previous corresponding period of 2017.

The JSE found that Jasco was in breach of various provisions of its listing requirements:

  • For previously published annual financial statements (2017) not being in compliance with International Financial Reporting Standards.
  • For omitting details about the emphasis of matter contained in the auditor’s report in the 2018 audited results released on 5 November 2019.
  • For not issuing a trading statement when it had a reasonable degree of certainty that the financial results for the period to be reported on next (2018) would differ by at least 20% from the previous corresponding period (2017).

In addition, the JSE said Jasco failed to exercise the highest standards of care when disseminating information into the marketplace for:

  • Initially publishing and referring to results that were not audited at the time as having been audited.
  • Incorrectly advising the market in a Sens announcement that the 2018 audited results would not reflect changes to profits and earnings, whereas they contained adjustments and reflected material changes.

“The accuracy and reliability of financial information published by companies are of critical importance in ensuring a fair, efficient and transparent market and the investing public relies on a company’s published financial information to make important investment decisions,” Jasco said.

“The provisions of the listing requirements, which impose various important obligations on listed companies in respect of the disclosure of financial information, contributes to the integrity of the market, and for these reasons and with reference to the JSE’s findings of breach, the JSE has decided to impose this public censure against Jasco.”

Jasco said it accepts the decision of the JSE. – © 2020 NewsCentral Media

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