The Australian Securities and Investment Commission has demanded explanations from the high tech sector about their financial reports.
Fifty three dot-coms, that won't be identified until they have complied with ASIC's demands, have been slapped with the "please explain" notices.
ASIC's action follows the downturn of dot-com stocks in April 2000, which prompted the surveillance of 140 firms' financial reports and cash flow statements, as of June 2000.
In some cases, quarterly cash flow statements appeared inaccurate and did not tie up quarter-to-quarter. Others did not correspond to the figures in the annual financial statements.
ASIC is concerned that in some instances there was an apparent premature recognition of revenue, a lack of notes and inadequate disclosure.
"We have identified a variety of issues requiring additional explanation by more than one-third of the companies that were the subject of our recent surveillance", ASIC's chairman, David Knott, said.
Particularly in the spotlight are the companies' accounting for acquisition of businesses, the accuracy of quarterly cash flow statements, reporting and amortising of intangibles and the recognition of revenue.
"We have written to each of the 53 companies identifying our concerns about their financial reporting and providing them with an opportunity to explain or otherwise address those concerns," Knott said.
The companies in question must comply by February 2.
"If satisfactory explanations or corrective actions are not forthcoming we will initiate additional regulatory action, including enforcement where appropriate," Knott said.
they should be taken to the cleaners