German discount supermarket Aldi may be in breach of disclosure requirements, an expert says.
Jeffrey Knapp, a lecturer in accounting at the UNSW, said Aldi's failure to do consolidated accounts was an important regulatory issue that was being overlooked.
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Consolidated accounts show assets, liabilities, revenues and expenses line by line. By contrast, Aldi's accounts show its Australian business as just a one-line investment asset with no detail on sales, gross profit or profit.
"They [Aldi] say in their accounting policy that they comply with all the recognition and measurement requirements in accounting standards," Mr Knapp said. "But it doesn't look like they're doing what they say they've done.
"Aldi and its auditor, KPMG, should simply accept that the company has to be accountable and transparent about its Australian business and produce consolidated accounts."
Aldi is one of Australia's biggest retailers, with an estimated 10 per cent market share of Australia's $90 billion-odd grocery market. It declined to comment.
Unusually, Aldi has registered its Australian business as a limited partnership, one of just 3800 limited partnerships registered as at mid-August.
Limited partnerships are not required to be audited nor to disclose their accounts to the corporate regulator, the Australian Securities and Investments Commission (if they had to, their accounts could be viewed by the public and competitors). Instead, limited partnerships are registered with the states and territories.
![Aldi is one of Australia's biggest retailers, with an estimated 10 per cent market share of Australia's $90 billion-odd ...](/web/20161004080547im_/http://www.smh.com.au/content/dam/images/g/r/t/3/v/a/image.related.articleLeadwide.620x349.gro1lv.png/1475432907976.jpg)
But there are two Australian companies filing accounts to ASIC: Aldi Pty Ltd and Aldi Foods. They are both owned by Hofer (KG) Austria.
As a head entity, Aldi Foods has consolidated the tax obligations of Aldi's entire operations in Australia.
While Aldi Foods gives the Australian Taxation Office consolidated financial information, there is a different story in the accounts lodged with ASIC. Aldi Foods' audited accounts, signed off by KPMG, are not consolidated.
Aldi Foods' accounts, lodged with ASIC for the 2015 calendar year, state it has a 20 per cent interest in the net profit of the limited partnership and describe Aldi Foods as a "small proprietary company that is controlled by a foreign company".
Under accounting standards, an "investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee".
But Mr Knapp said Aldi Foods "seems to tick the boxes for control – power over the investee, exposure or rights to variable returns from its involvement with the investee, and the ability of use its power over the investee to affect the amount of the investor's returns.
"Aldi Foods seems to tick all the boxes for control and prima facie should prepare consolidated financial statements that include the partnership," he said.
If Aldi Foods did file consolidated accounts, they would reveal details about the limited partnership that have hitherto been kept secret through its unusual structure, such as cost of sales, inventories and assets.
Aldi, through public relations firm Creation, declined to respond as to why it did not prepare consolidated financial statements or whether it was true or fair not to do so.
Aldi also declined to reveal the fees it paid to KPMG, despite accounting standards stating that "an entity shall disclose fees to each auditor or reviewer, including any network firm, separately for: (a) the audit or review of the financial statements; and (b) all other services performed during the reporting period".
Aldi generated nearly $5 billion in income in 2014, resulting in a taxable income of $272 million and income tax of $81.6 million, figures released by the Tax Office showed.
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