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Diligent censured over late reporting

Monday 8th September 2014

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Diligent Board Member Services, which was beset with administrative mis-steps last year, has been censured for failing to file earnings with the stock market operator, its second public telling off after breaching listing rules last year.

The New York-based, NZX-listed company reached a settlement with NZ Markets Disciplinary Tribunal, and will pay $100,000 to the discipline fund and costs to the stock market watchdog, as well as being publicly censured, according to a statement to the stock exchange. Diligent failed to file three earnings reports on time as a result of its incorrect revenue recognition, which prompted the firm to restate accounts for the 2010 through 2013 financial years.

"The tribunal considers DIL's failure to meet three successive reporting requirements to be very serious," the tribunal said. "This failure was as a direct consequence of an accounting error made by DIL. The error was significant, effectively taking DIL six months to rectify."

The censure was Diligent's second in the past 12 months, after the software developer reached a settlement with the watchdog, and paid $15,000 over a series of listing rule breaches by failing to file required information, failing to seek authorisation for director payments and incorrectly issuing shares and options to employees. At the time, the tribunal said some of the breaches were minor, but taken as a whole indicated substandard internal controls and processes.

In reaching the latest settlement, the tribunal said mitigating factors included Diligent contacting NZX before failing to meet relevant filing deadlines, keeping the market informed about the reasons for the delays and agreeing to release quarterly operating metrics in place of financial information.

Aggravating factors were the failure to comply with three reporting requirements, the length of the delay, its repeated failure to meet guidance, the earlier censure, and its size and prominence as a company.

Shares of Diligent were unchanged at $4.49, and have gained 18 percent this year.


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