Lol I'm not downramping or offering a view either way.. in my mind it's a coin flip and I wouldn't be surprised if ASX are overreaching in this instance (for reasons I'll go through below) or if ISX do in fact have issues.. it's just an interesting story to follow and see how it all pans out..
Grant Thornton will of course stand by their audit, as all auditors do. However it's important to note that every single audit is carried out in accordance with it's scope. Not all transactions are tested or independently verified, in fact very few are. If an auditor is presented with a purported invoice, bank statements showing incoming cash, and closing cash reconciles, then they aren't going to dig any further. Auditors only audit what they are provided, and place a significant level of reliance on management rep letters provided etc. Every single audit firm of a failed corporate group will stand by the audit that they conducted.. the firms cross their fingers and hope it's not their name that comes up the next time there is a large scandal
from where I am it seems as though the ASX fundamentally has issue with the terms of the performance shares and lack of definition around revenue.. at one extreme, ISX could simply have bought $Xm of off the shelf products and immediately resold them, simply to trigger the satisfaction of the hurdle.. I'm not saying that's what ISX have done, but whether the criteria was met is the crux of the issue they're looking into (hence they are trying to introduce the concept of ordinary business revenue etc). if the simple resale scenario would work (and it could well do if the contract was poorly worded / simplistic) then I expect future revenue based performance rights issued by listed companies will need to be better explained / structured..
the issue around the validity of the dealing is more complex and if there is any wrong doing would bring ASIC into the mix also.. as I note above, the audit opinion isn't a silver bullet for ISX.. but on ISX's side it could well be that the ASX simply struggles to understand the business model..
I'll continue to disagree on the "know your client" aspect.. having worked in a number of large multinational groups it is a fundamental area of governance processes and controls
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