For a man who may soon find himself the target of yet another class action, KPMG auditor Adam Twemlow displayed a generally unflappable demeanour yesterday during several hours in a Federal Court witness box.
The Partner In Charge of KPMG Enterprise, Metro Region in Brisbane was the last examinee for 2023 as part of public examinations brought by dentist investors burned in the collapse of the All Smiles chain, which was placed into administration in November 2020.
Barrister Vicki Bell began her interrogation of Twemlow by asking about his level of involvement in the preparation of financial information All Smiles management planned to use as the basis for future capital raisings.
Twemlow said he was involved in reviewing historical financial information of the All Smiles group for incorporation into a prospectus ahead of a planned initial public offering (IPO).
When Bell tried to steer the questioning towards his possible involvement in the prospectus forecasts Twemlow would steer it back his key message, which was that his primary role was to review the Group’s “historical financial information”. He uttered that phrase at lest as often as the ubiquitous “don’t recall”.
Bell’s clients are likely hoping to extract a settlement from KPMG or Twemlow’s PI insurer and if the information being gathered stacks up it could allow them to commence a class action, not that it would be the first for Twemlow, who is also named in the class action Banton Group is pursuing against KPMG on behalf of CuDeco shareholders.
At one point yesterday Bell’s questioning zeroed in on valuations for goodwill.
In the Smiles Inclusive Pty Ltd consolidated balance sheet as at 31 December 2018 intangibles were estimated at $66.424 million. Yet in a report to clients issued by Morgans in March 2019 the broker said Inclusives’ market capitalisation was $7 million.
The broker’s report came just weeks after the audit team headed by Twemlow had concluded that there was a material uncertainty as to whether the All Smiles Group could continue as a going concern.
Yet the Group’s auditors chose not to write down the goodwill estimate at that time. The examinations are expected to continue in 2024.
Further reading:
Examinations raise questions about All Smiles DIRRI
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