One-third of computer retailers in South Australia were unable to produce financial statements when requested by the Australian Securities and Investments Commission (ASIC). And further investigations are believed to be going on in relation to the legitimacy of several SA resellers.
This follows the recent inspection program of companies engaged in the local retail computer industry by the South Australian Regional Office of ASIC.
ASIC's South Australian regional commissioner, Karen Axford, said that the overall results of the inspection were disappointing. She did add, though, that it was impossible to make comparisons between the performance of SA retailers or the local IT channel and other businesses as it was a pilot program for ASIC and the dynamics of the computer retailing business are different to other industry sectors.
"These results highlight the need for directors to take their responsibilities seriously and to ensure that they maintain proper books and records. It's interesting to note that retailers specialising in business software are not always using it effectively in their own businesses," Axford said.
She added that ASIC's Small Business Program will further consult with the Computer Industry Association of South Australia (CIASA) in relation to the outcome of the inspection.
CIASA president Steve Wemyss said that he was not surprised by the results of the ASIC program, and that he was concerned by the lack of professional practices that it uncovered in the industry. "This further re-inforces the need for an industry body," he added. ASIC found that, of the companies inspected, the state of the records ranged from extremely good to very poor.
The directors of one company maintained records which enabled them to determine the level of profitability on a weekly basis. By contrast, further information has been sought from two industry participants who were unableto provide ASIC with their accounts for the 1998 or 1999 financial years.
Another company will be the subject of an enquiry by ASIC, while a group of companies which were to be inspected by ASIC are the subject of a continuing investigation by the Australian Federal Police and the Australian Taxation Office.