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Life sciences company NuSep pulled up over audit report

by:Rebecca Urban
From:The Australian
December 14, 201212:00AM

STRUGGLING life sciences company NuSep has come under increasing pressure to prove it is on a sound financial footing, after falling foul of a second independent auditor in less than a year.

The Australian Securities Exchange has asked NuSep to justify its financial position, after its auditor took the unusual step of declining to express an opinion on its 2012 annual report.

Lawler Partners was appointed NuSep's auditor in June, having taken over from RSM Bird Cameron, which attached a similar disclaimer to the company's preceding interim report.

RSM Bird Cameron, which had audited NuSep's accounts since 2007 and was removed at the instigation of an unidentified company director, has previously reported it to the Australian Securities & Investments Commission alleging several breaches of the Corporations Act. While both ASIC and NuSep declined to comment on the matter, The Australian understands that the regulator's inquiries are continuing.

NuSep, which develops products for the therapeutic plasma and IVF (in vitro fertilisation) markets, reported a loss of $6.3 million last year and had current liabilities of about $3.5m.

According to Lawler Partners, the ability of the company to continue as a going concern was dependent on a research and development tax incentive, the recovery of debts that had already been fully impaired and raising further capital.

"These conditions . . . indicate the existence of a material uncertainty, which casts significant doubt on the group's ability to continue as a going concern," audit partner Clayton Hickey said in his October 31 report.

"Because of the significance of the matters . . . we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion on the financial report."

Following a query from the ASX last week, NuSep yesterday assured the market that its annual report complied with the accounting standards and gave a true and fair view of the financial performance of the company.

It said it was working closely with the auditor to ensure all future financial reports contained unqualified audit opinions.

NuSep executive chairman John Manusu denied the company had a problem with auditors and said the recent issues were largely a result of operating in the biotechnology sector.

"It's not like you're making nuts and bolts. You're working with intellectual property and that's much harder for auditors to get their head around."

NuSep shares closed unchanged at 6.6c.