JOHANNESBURG – Listed black-owned technology company AYO Technology Solutions (AYO) received a public censure from the Johannesburg Stock Exchange (JSE) along with a R6.5 million fine, according to a Stock Exchange News Service (SENS) announcement on Thursday.
AYO is one of several listed companies that have been slapped with a fine and a public censure by the JSE, however, in the tech firm’s case no fraud was perpetrated but simply because its results did not comply with the International Financial Reporting Standards (IFRS).
AYO said on Thursday that it acknowledged and respected the JSE’s findings that while no fraud was perpetrated, the results did not comply with IFRS, notwithstanding AYO being of the opinion that the relevant IFRS rules could be interpreted differently.
“AYO also concurs that at that time, it failed to observe the highest standards of care in the dissemination of the interim financial information into the marketplace due to a new financial management team and complex acquisition transactions.”
The JSE found that AYO was in breach of certain provisions of its listing requirements. These are:
⦁Paragraph 8.57(a) - previously published unaudited 2018 and 2019 interim results did not comply with the requirements of IFRS and were restated due to numerous adjustments and material errors contained therein;
⦁Paragraph 8.57(b) - the 2019 reviewed preliminary results did not comply with IFRS in terms of classification, measurement and presentation of specific items, and contained numerous material errors which had to be corrected; and
⦁General Principle (v) for failing to exercise the highest standards of care when disseminating financial information to the market.
The increased media publicity around the company raised uncertainty around its unaudited results and led to the JSE instructing AYO through its auditor, BDO Cape Incorporated, to conduct an Agreed-Upon Procedures engagement and subsequently an audit of AYO’s previously published unaudited interim financial statements for the six months to February 2018 and 2019. It also led to AYO bolstering its board and executive with the requisite experience and skills needed to improve reporting and governance.
An AYO spokesperson said since the appointment of new management in early 2019, significant remedial steps had been taken to prevent a recurrence of such errors in its financial reporting.
“The capability of the incumbent team has been tested and been proven through three subsequent and simultaneous unqualified audits, two of which were conducted on interim results, an unprecedented request by the JSE of any company listed on the bourse to date.
“AYO acknowledges that trust and respect are critical factors for businesses – whether listed or not. AYO’s new management team have thus worked hard to rebuild its relationship with the JSE, working with it and complying with all requests asked of AYO by the JSE, in order to resolve all issues and to prevent further questions or uncertainty arising in the future,” said the spokesperson.
She said this concluded the JSE’s process in respect of the Company as a juristic person. “AYO reaffirms that the accuracy and reliability of financial information published by companies is of critical importance in ensuring a fair, efficient and transparent market.
“The provisions of the listing requirements, which impose various important obligations on listed companies in respect of the disclosure of financial information, contribute to the integrity of the market and promotes investor confidence,”
The spokesperson said the tech firm and its directors reinforced their obligation to ensure that all financial information and reports that would be published would be, in all material aspects, accurate and correct, as investors rely on a company’s published financial information to make important investment decisions.