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ISX vs ASX, page-1838

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Dannys7

301 Posts.

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05/03/24

11:37

Post #: 72748559
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Originally posted by naomhan: ↑

Just to jump in here, what you're describing is actually illegal. It's part of the ASIC investigation.

Do you remember the stuff about the certificates of practical completion? ISX recognised huge revenue before June 30 which resulted in $300m of bonus shares, and there were questions about whether it was actually completed or not. Under the relevant accounting standards, if you haven't completed the work, you can't just recognise the revenue early. You have to defer it and then call it revenue after you finish. The same applies to expenses.

JK provided certificates of practical completion, all dated just before that June 30 cutoff, to suggest that yes, that work was completed, and yes, ISX had earned that revenue (and therefore performance shares were due). But the certificates of practical completion had problems. Ones not signed, or signed by someone who wasn't with the company any more. Then there was the invoicing. The work was subcontracted out to other companies. But those other companies submitted progress invoices in July and August, which would suggest that the work wasn't finished in June, despite certificates stating otherwise.

Government departments do this regularly, but it's less common in business. But you can buy extra stuff early. Buy laptops and stock up on stationery and stuff like that. That's all pretty fair game. But if you payout work that's not completed, especially if it's a material contract, you cross the line into illegal behaviour. This as a defence wouldn't help JK.

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Practical completion’ means when the building works are complete except for minor omissions and defects that do not prevent the building works from being reasonably capable of being used for their usual purpose.

SP1 Price at posting: $1.07 Sentiment: Hold Disclosure: Held
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