The Australian Securities and Investments Commissions has dropped its investigation into Harvey Norman's accounts.
The electronics retailer admitted earlier this year that the corporate watchdog was looking into how the company accounted for its franchises, in particular, whether the accounts of franchise stores should be consolidated.
Last night, ASIC wrote to Harvey Norman, saying it does not intend to make further enquiries into the matter. However, ASIC senior executive leader Doug Niven warned that it may yet review subsequent financial reports as part of its ongoing financial reporting surveillance program.
"This letter should not be construed as providing assurance that the financial report complies with the accounting standards and other financial reporting requirements of the Corporations Act 2001. Nor does this letter limit our ability to raise further concerns with Harvey Norman regarding the financial report or any of its subsequent financial reports," Niven said.
In response, Harvey Norman reiterated that its financial report complies with the requirements of the Corporations Act 2001.
ASIC began questioning Harvey Norman about how it accounts for loans to its franchisees after after they fell from $943 million to $535 million in the 2016 financial year. The following financial report changed how these loans were treated.
Harvey Norman's share price has fallen by more than $1 since the ASIC investigation was revealed, falling from $5 per share in March this year to $3.78 at the end of trading on Tuesday. However, the company's shares have rallied back after the latest announcement from ASIC, climbing 27 cents to reach $4.06 each at the time of writing.