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“Please use Accounting terminology”

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Leonie Wood
Published: May 12, 2011 – 12:02AM
THE manager in charge of Centro’s accounting department, Paul
Belcher, has told a court that he now has no idea which version of
the property group’s financial statements was available for directors
to peruse at head office in September 2007, just days before the
board approved the accounts.
The issue is important because a Centro non-executive director, Jim
Hall, told the Federal Court in Melbourne this week that the version
he read in the Centro ”documents room” on September 2 and 3,
2007, just four days before the 2006-07 accounts were signed, did
not include a line item referring to a $1.1 billion short-term bank
debt.
Justice John Middleton has heard that on August 31, Mr Hall, a
member of Centro’s audit committee, received by email a copy of the
audit committee papers, including a Centro group consolidated
balance sheet and income statement.
On September 4, Mr Hall received via email a copy of the final version of the accounts which were to be considered at the
board meeting on September 6. Both emails contained the $1.1 billion debt item.
But Mr Hall told the court he did not read the emailed versions because on September 2 and 3, 2007, he examined what he
believed was the final version of the accounts, which had been laid out on a table at Centro’s head office.
The Australian Securities and Investments Commission is suing eight Centro directors and officers for allegedly breaching
their fiduciary duties because they approved the 2006-07 accounts which failed to disclose billions of dollars of short-term
debt.
Five fellow Centro non-executive directors and the former chief executive, Andrew Scott, have told the court that they did
not notice the final version of Centro’s 2006-07 accounts included the $1.1 billion liability that had to be repaid within
months.
They have also told the court that they expected management or the auditors, PricewaterhouseCoopers, would have alerted
the board to any significant changes or errors.

ASIC’s counsel, Mark Derham, QC, told the court that after speaking with Mr Belcher on Tuesday evening, the Centro
accounting manager could say that ”a version” of the full financial statements was in the documents room and ”the version
in the room would have been updated progressively”.
”Mr Belcher cannot say what version was, or versions were, in that room [on September 2 and 3],” Mr Derham said.
On Monday, Mr Hall said the short-term bank debt was ”absolutely not” in the version he read, and he was sure of that
because he analysed financial statements by comparing year-on-year differences in each item and highlighting big changes.
Separately, Nicholas Hullah, an auditing consultant commissioned by the non-executive directors, told the court that he
would expect a director who was ”aware” that debts would fall due within 12 months would raise questions if the debt did
not appear in the accounts.
But in a written report submitted for the defence, Mr Hullah argued it would not be reasonable to expect Centro’s
non-executive directors to engage in ”micro-management” of the group’s statements.
Mr Hullah also said it was ”appropriate” for directors to rely on management and auditors and not appropriate ”to
second-guess or ignore that expertise or advice” of management and auditors.
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This story was found at: http://www.smh.com.au/business/centro-accountant-tells-of-discrepancies-in-statements-20110511-1eix7.html
Print Article: Centro accountant tells of discrepancies in statements http://www.smh.com.au/action/printArticle?id=2357323

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