ECONOMY

Profits fall after firms’ results are adjusted

The Athens Stock Exchange has just started publishing modified results and own capital of listed companies in a move which shows an entirely different picture of the firms. The changes are in line with requirements set out by both the bourse and the Capital Market Commission. About a fifth of the listed companies have forwarded to the ASE their amended financial results and own capital for the financial years 2000 to 2002, which included observations made by their auditors. The notes were also included in their annual reports in accordance with circular 10 of the Capital Market Commission. The amended balance sheets of all listed companies are due to be made public in the coming weeks. Already, some of the companies have sounded a truculent note, asserting that their balance sheets reflect their real economic situation and thus there is no need to modify them. From the modified results published to date, the general conclusion is that almost none of the listed companies showed their actual financial status in their balance sheets. There are even extreme cases where loss-making companies reported profits while other firms which faced huge capital adequacy problems presented financial data which showed a different, better picture. A preliminary calculation suggests that profits are lower by an average of 40 to 50 percent for listed companies. Auditors who audit balance sheets are usually very analytical in their observations, especially regarding irregularities which accountants have resorted to in order to prettify the picture. But usually, the methods used to cook the books are all legal and based on labyrinthine legislation, loopholes and the absence of credible accounting principles. On the other hand, supervision and checks of the contents of balance sheets is inadequate, even non-existent. Of course, the Development Ministry is the supervisory authority. It does not, however, have the requisite monitoring body or the grounding to deal with the situation.