Diligent Board Member Services [NZX: DIL], the governance software developer, has discovered another accounting hiccup, misclassifying a note receivable from a related entity and will have to further tweak its books.
The New York-based and NZX-listed company recognised a US$6.8 million receivable from a promissory note from Services Share Holding as an asset, when it should have deducted it from stockholders' equity while the note was outstanding, Diligent said in a statement.
The note was repaid with cash and shares and retired in 2012, and arose when Services Share Holding, the predecessor entity, transferred the Diligent assets into the current holding company. It was to let Services Share Holding satisfy outstanding liabilities it held that came from developing the business.
Diligent will fix the mistake, which is in its financial statements from 2007 through to 2012, by reducing the asset on its balance sheet and stockholders' equity by the amount outstanding at the end of each period, it said. The changes are non-cash adjustments and won't affect cash-flow or revenue.
"It is not currently anticipated that the accounting corrections required in connection with the reclassification of the note receivable will impact the company's timing to complete its previously announcement restatement," it said.
Diligent has had to restate its accounts after incorrectly recognising revenue too early under US GAAP accounting rules. The company has until the end of February to restate its books to avoid having trading in its NZX-listed shares suspended by the stock market operator.
The shares slipped 0.2 percent to $4.39 in trading today, and have slumped 45 percent since June last year when it announced the revenue-recognition mistake.