Software company Enprise Group slapped with warning by Financial Markets Authority

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The Financial Markets Authority has issued a warning against listed software company Enprise Group, for failing to keep proper accounting records.

The Authority (FMA) said Enprise did not provide it with sufficient evidence to support disclosures and assumptions made relating to the value of its Australian subsidiary, Kilimanjaro Consulting, and certain tax-related assets.

The warning related to the financial year ended June 2022.

It said in October of that year, the FMA was advised by the auditors for Enprise about a disclaimer for the 2022 financial statements. The FMA said the disclaimer indicated the auditors could not gather “sufficient evidence to support certain matters”.

The FMA said enquiries with Enprise found that it did not comply with the Financial Markets Conduct Act.

Responding to the warning, Enprise told the share market it accepted the warning and was “disappointed and remorseful”.

The company said the issue related to a dispute over a decision by accounting software provider MYOB to reduce margins in 2022, which affected Kilimanjaro Consulting.

Kilimanjaro implements MYOB’s enterprise software, MYOB Advanced and MYOB Exo.

“The judgements Enprise’s board needed to make when finalising Enprise’s 2022 group financial statements were challenging, as subsequent to [the] balance date, Kilimanjaro had disputed MYOB’s unilateral attempt to retrospectively reduce margins that Kilimanjaro receives on existing sales of MYOB Exo software,” Enprise told the share market.

“Enprise had signalled these difficulties in an announcement to NZX on 29 September 2022 before it finalised the group financial statements on 6 October 2022,” it said.

Kilimanjaro filed legal proceedings against MYOB in December 2022, and was this week granted an injunction against MYOB with the margins restored, pending a full trial scheduled for 2024.

Enprise said it had taken up the FMA’s offer to discuss how it can improve its practices.