Bendigo accountants in Banksia spotlight

BENDIGO accounting firm Richmond Sinnott and Delahunty (RSD) has been put on notice over its audit of Banksia. 

RSD gave Banksia a clean bill of financial health for the 2011-12 financial year, less than four weeks before it collapsed. 

Its audit, signed off by partner Warren Sinnott, found the company had net assets of $24 million and found “no significant changes in the state of affairs of the company” during the year. 

Liquidator Tony McGrath said there were concerns over the audit and said RSD was an “obvious” target of legal action. “There is an obvious issue around the role played by the auditor,” he said. 

He said while the report found Banksia was in surplus, it was about $200 to $300 million in deficit. 

Mr McGrath said there had been problems embedded in Banksia for some time that had probably begun with the Global Financial Crisis. 

He said the company had failed to change its lending practices to suit the market. 

Strathfieldsaye resident Jim Stein, who had $130,000 invested with Banksia, attended an information session with liquidators yesterday and said the collapse was worse than first thought.

“The meeting was very informative,” he said. “It gives us a better idea, but it’s a lot worse than what we thought in the sense they’ve been insolvent for a lot longer than we believed.

“It looks like they were trading while insolvent for a few months.”

Mr Stein said about a dozen people – who had collectively invested $1 million in Banksia – were keen to join a class action group. 

Another Bendigo resident, who wanted to be known only as Jack, had a six-figure sum invested with Banksia. He said the Kyabram meeting had been “very emotional”. 

“It was very disappointing,” he said. “The directors and auditors have a fair bit to answer for, in my opinion. People were misled about where their money was.” 

Mr McGrath said it could take up to three years for the liquidation to be complete. The process has already cost more than $1.5 million.

RSD did not return calls before the Bendigo Advertiser went to press.

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