Ann: Third Quarter Cashflow Report-APG.AX, page-14

Hey Fergus
You are right – this “overstating” of Quarterly Cash held by APG, has been going on for many years. Here are some figures showing the recent differences between Cash shown in APG Quarterly Reports , and Cash the Auditor says is really there in the Half & Full Year Reports , and the size of the overstatement.

Date APG Quarterly KPMG Audited Cash Overstatement
31/12/15 $326,000 $51,554 $274,446
30/09/15 $201,000
30/06/15 $415,000 $204,012 $210,988
31/03/15 $266,000
31/12/14 $170,000 $52,115 $117,885
30/09/14 $208,000
30/06/14 $196,000 $89,098 $106,902
31/03/14 $497,000
31/12/13 $1,188,000 $715,909 $472,091

APG Quarterly Reports continually show a much higher Cash position. Every 6 months the Audited reports show a much lower Cash position at the same Balance Date.
As you can see – this is ongoing and involves substantial sums. In the last Quarterly (31/12/15) there was an amazing 84% drop in Cash when the Audited report came out.

Thanks to the recent query to APG (which only got answered because it went through the ASX, and the ASX required an answer) we now know the reason for the overstatement.
In the Quarterly Reports, APG is counting Receivables (money owed but not received) as Cash. There is no external check/audit and the Quarterly reports are signed off by the secretary, Nick Gaston.

In the Half Yearly Report (KPMG does a review), and in the Annual Report (KPMG does a full Audit), the Auditor is correctly refusing to accept Receivables ( money owed but not received) can be counted as Cash. The amount that APG has overstated is reclassified from the Cash account to Trade & Other Recieveables account.
In the Half & Full Year reports the KPMG Auditor, and APG Managing Director – Mike Turbot, and the Chairman - Terry Cuthbertson all sign off that the reports are correct and comply with Australian Accounting Standards.

I have done some research over the weekend – and it reaffirms my understanding of what qualifies as Cash. I think most people who read the APG Quarterly Report, Appendix 5B, would expect that Cash meets the Australian Accounting Standard definition – which basically says:
Cash = Notes & Coins held + Deposits at Call with Financial Institutions + Highly liquid Investments, with short periods to maturity, which are readily convertible to cash at the investors option, and are subject to insignificant risk of changes in value.
The Australian Accounting Standard says specifically that Cash CANNOT include Recievables.

The idea that APG has some “different criteria” it can apply to the Quarterly Report, Appendix 5B Cash accounting that allows it to classify Recievables into the Cash account – is ludicrous.

When I rang APG last week on this matter, the only question I asked Nick Gaston was – “ how can Recievables be classified as Cash in the APG Quarterly Reports ?”. Nick would not give an explanation, except to point me to the recent ASX query, and it was a short conversation.

Fergus (or any other APG shareholder), if you think it’s worth the question - can you talk to Nick Gaston and find out the reporting standard that allows him to claim Recievables as Cash in the Quarterly reports, Appendix 5B.
If there really is legitimate “criteria” - then this matter can be quickly concluded and I will be happy (openness & transparency remember) to issue a complete retraction and apology to APG management. Hope we see answer soon.

But, in the absence of any other explanation, what other conclusion can you come to ?
Definitely looks like “creative accounting” to me.

Wilcox

PS
False9 – hope and possibilities may be fine for a lot of people, a lot of the time - but this issue needs to be resolved with some facts.
You tell me, you are an accountant, you tell me you have discussed this issue with APG management, you say you have full understanding of what is going on here. If everything is above board, can you quote the Accounting Standard or explain the methodology that allows APG to claim Recievables in the Quarterly Cash accounts, Appendix 5 ?