Kelly Group entitled to silence

2012-03-17 09:58

The South African Institute of Chartered Accountants (Saica) this week vindicated recruitment firm Kelly Group’s decision not to publish in its financial statements that it had been facing court battles.

This comes after Themba Mahlangu, the director of Ndaba Ekude – Kelly Group’s BEE partner – accused Kelly of breaching accounting standards by failing to disclose the legal disputes in its financial results.

Kelly Group has been involved in court battles with its BEE partners to liquidate the JSE-listed company’s subsidiaries.

Mahlangu argued that as a JSE-listed entity, Kelly should have disclosed information on the court case in its financial statements.

“Disclosing this information would make Kelly’s shareholders and potential shareholders aware of the financial risks the company was facing,” he said.

City Press last week revealed that Kelly faced court battles against Ndaba Ekude and Solly Tshiki and Associates regarding labour-broking contracts at the South African Post Office worth R372 million.

Solly Tshiki owned 51% in Workforce Management – which is currently under liquidation – and Ndaba Ekude owned 51% of Marula Staffing. Kelly owned 49% in Marula Staffing and Workforce Management.

In a recent interview, Kelly chief operating officer Ferdie Pieterse said it was not necessary to write in its financial report nor to issue a SENS notification about the court battles.

“You don’t need to declare. Why do you need to?” asked Pieterse.

Saica’s project director of financial reporting Sue Ludolph, said a company is only required to disclose and estimate in its financial statement the losses it would suffer from a court case if the action was still taking place.

“Usually we would expect a company to recognise a liability provision in its statement of financial position for the consequences of such lawsuit,” said Ludolph.

“The amount would be estimated and recognised.

“Instead, disclosure of the possible liability might be required in the notes only i.e. there is no recognition of an amount in the statement of financial position – it is then called a contingent liability,” she said.


» Tell us what you think: Leave your comment below or comment on our Facebook page or on Twitter @City_Press
» Did you know? City Press has an iPad app. Find us in the app store

Join the conversation!

24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions.

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Comments have been closed for this article.

Inside News24

 
/News

Book flights

Compare, Book, Fly

Traffic Alerts
There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.




Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.