And over the past decade, governments and private businesses have been cooperating to create a more sustainable infrastructure for moving people and materials across our planet.įor example, every day in Australia millions of travelers choose light and heavy rail systems to get them where they need to go. The transportation sector is a major contributor to global greenhouse gases. It is alleged that earnings were overstated on Downer’s five-year, $600 million contract signed with Victorian energy network AusNet in July 2019 for several years and that Downer made “misleading or deceptive” representations regarding the profitability of the utilities contract and its financial performance.In fact, making smarter choices about how, when and where we travel is a critical component of achieving a better tomorrow. Its stock price slid another 24 per cent less than three months later when it issued a further profit warning and slashed its dividend, forcing the resignation of finance chief Michael Ferguson and the exit of chairman Mark Chellew. The disclosure that Downer would have to restate profits by tens of millions of dollars due to the misreporting of revenues and work-in-progress on a maintenance contract caused its share price to tumble 20 per cent in one day in December 2022, a month after it had reaffirmed its full-year earnings guidance. Mr Sheppard – who got to know former Downer chief executive Grant Fenn when both men worked for KPMG – left Spotless in mid-2017 after Downer secured a majority stake.ĭowner’s new chief financial officer, Malcolm Ashcroft, is also a former KPMG partner having spent 18 years at the firm.ĭowner filed its defence on Friday to class action proceedings after several lawsuits alleging that the company breached continous disclosure laws between July 2019 and February 2023 were consolidated. Spotless was previously audited by EY but KPMG was brought on by Spotless in 2017 to provide remuneration advice and other consulting services, and took over Spotless’ auditing from fiscal 2018. It was during this time that Spotless was acquired by Downer. KPMG’s current national chairman Martin Sheppard is familiar with Downer, having being hired by the then Spotless chairman Margaret Jackson (a former KPMG partner) to run the facilities management group between 20. Investors have not been given enough information about the circumstances of Downer’s accounting errors to judge where blame lies but one shareholder said auditors were responsible for identifying material misstatements while company executives should prevent them from happening. KPMG is among the big four accounting firms that have been criticised by parliamentary committees for accepting work that creates conflicts of interest. It will search for a new auditor for the current financial year.Īuditors need to be independent and must resign if they identify any conflicts with companies that are clients. We intend to vigorously defend the claims.”Īlong with its defence, Downer has pleaded a defensive third-party statement of claim and proportionate liability defence against KPMG, and said it expected the firm to stop being its auditor later this month. “Commencement of the proceedings leaves KPMG with no alternative but to seek to resign as auditor of Downer Group, and we will take appropriate steps to effect this. “We have been open in our engagement with the company throughout this matter and continue to have a high degree of confidence in the audit work performed,” a spokesman said on Monday. KPMG, which has been Downer’s auditor since 2014 when it replaced Deloitte, said it was disappointed by the decision to bring the firm into the lawsuit.ĭowner chief executive Peter Tompkins. Downer EDI has sought to blame KPMG for failing to detect accounting irregularities, the disclosure of which wiped some $500 million from the contractor’s valuation, forcing the professional services firm to resign as the company’s auditor.ĭowner told investors on Monday that it would bring a claim against auditor KPMG in the Victorian Supreme Court as part of a class-action lawsuit launched against the company by aggrieved shareholders after the 2022 disclosure that it would have to restate profits by tens of millions of dollars due to misreporting of revenues and work-in-progress.
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