It was claimed in early November that its treatment of the milk supplier support program in its accounts was wrong.
This in turn has led to dairy farmers doubting whether they’ll get repaid, according to The Sydney Morning Herald. Not helping the situation is the company’s decision to write off part of the advance.
Forensic accounting company, Morris Forensic, says Murray Goulburn’s pretax profit of more than $57 million should have been a loss of just over $92 million.
Morris Forensic believes that Murray Goulburn treating the advance as an ‘asset’ is not correct because there is no right to recover the advance from farmers. “In my opinion, Murray Goulburn’s financial statements should have been prepared on the basis that the amounts paid or payable to suppliers for milk purchased during the year were inventory purchases,” Morris Forensic argues in its report.
Murray Goulburn has confirmed to the SMH that farmers do not have to repay the advance and that the company has already written off part of the advance.
“In my opinion, the manner in which Murray Goulburn recognised the MSSP assets of $183.334 million in its 2016 financial report resulted in Murray Goulburn increasing its reported profit before income tax by approximately $150 million,” Morris Forensic said in its report.
Murray Goulburn is the subject of a class action and of ASIC inquiries due to allegations that it misrepresented certain aspects in its prospectus when it raised capital from investors last year.
Source: Manmonthly
Link: http://www.manmonthly.com.au/news/murray-goulburn-overstate-earnings/
