Retail giant Harvey Norman is having its accounts reviewed by the Australian Securities and Investments Commission (ASIC) as part of its financial reporting surveillance program.
In an statement made to the Australian Stock Exchange, Harvey Norman disclosed that they were having their accounts reviewed by the corporate regulator.
The announcement was made after the Australian Financial Review (AFR) reported on Monday that ASIC was investigating how Harvey Norman reports its exposure to franchisee losses and the $1.15 billion in loans it has made to some of its franchisees in financial difficulty.
When Harvey Norman was asked to respond to the claims made in the article, Harvey Norman responded by saying the claims were false.
“The AFR article makes false statements and assumptions and then proceeds to make assertions and draw conclusions, which are also false, based upon those false statements and assumptions.”
In a later letter to the ASX, Harvey Norman revealed that, while not under investigation, their accounts were under review by ASIC.
“HVN discloses that ASIC is undertaking a routine review of HVN’s financial report for the financial year ended 30 June 2016 as part of its financial reporting surveillance program,” the statement read.
Harvey Norman has defended its actions, claiming that everything they’ve done financially has been within the legal framework.
“It remains the view of the Company that the financial report of HVN for the year ended 30 June 2016 and the financial report for the half year ended 31 December 2016, each lodged with ASIC and ASX, are in accordance with the law,” asserted the company’s statement.
Despite these reassurances, Harvey Norman’s share price has dropped my more than 1% today, reaching a low of $4.28.
The share price has dropped more than 8% this week, on the back of the AFR article. It is not yet known when the review by ASIC will be completed.