CFO Tatenda Bundo says AYO has learned a lot from the agreed-upon procedures engagement.
The Johannesburg Stock Exchange (JSE) announced on 27 August that it has imposed a public censure of Ayo Technology Solutions along with a fine of R6.5 million.
The JSE said that it found AYO in breach of certain provisions of the JSE Listing Requirements, including:
- 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 that they contained,
- the 2019 reviewed preliminary results did not comply with IFRS in terms of the classification, measurement and presentation of specific items, and contained numerous material errors which had to be corrected, and
- for failing to exercise the highest standards of care when disseminating financial information to the market.
AYO later said that it acknowledges and respects the JSE’s findings that, while no fraud was perpetrated, the results did not comply with IFRS. The company also agreed 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.
AYO CFO Tatenda Bundo said that AYO was in agreement with the JSE to ensure that the highest standards of care need to be taken in the dissemination of the financial information into the marketplace. “AYO’s different interpretation of the IFRS rules due to complex acquisitions and other transactions, at the time, led to the JSE requesting three simultaneous audits, which is unprecedented in South Africa. Two of these audits were on our interim results. The outcome of the audits, which were unqualified, led to the group restating its financials.”
The increased media publicity around the company raised uncertainty around its unaudited results and led to the JSE instructing AYO to conduct an agreed-upon procedures engagement and subsequently an audit of the company’s previously published unaudited interim financial statements for the six months ended 28 February 2018 and 2019.
Tatenda said that AYO has learned a lot from the process, and strengthened its systems and governance as a result. “The process is also standing us in good stead to focus on ensuring compliance, growing our asset base and delivering greater value to our stakeholders going forwards.”
Since the appointment of new management in early 2019, AYO has taken significant remedial steps to prevent such errors in its financial reporting to happen again. According to a statement by the company, the capability of the incumbent team has been tested and proven through three simultaneous unqualified audits.
“The new management team has worked hard to rebuild its relationship with the JSE, working with the exchange and complying with all requests in order to resolve all issues and to prevent further questions or uncertainty arising in the future,” the statement read.
