Those who have not yet had the pleasure of an acquaintance with Compass Resources have missed something very special: a shareholder train wreck of almost unrivalled proportions which, gobsmackingly, remains uninvestigated.

That story is for another day. Suffice to say that shareholders were obliterated in the most questionable of circumstances. Adding insult to annihilation, or shall we coin a new word – shareholdericide – Compass slid through its half-year financial report on Tuesday under cover of Melbourne Cup darkness.

The Compass “half-year” report boasts that Neil Guest, its chief financial officer, has 30 years of accounting experience. But has he learnt how to count up to six months yet?

You see, the Compass “half-year” covers only the 42 days from May 20, 2011 to June 30, and ignores the 139 days from January 1 to May 1.

Section 323D of the Corporations Act might have assisted Guest with the arithmetic as it states, “a half-year is the first 6 months of a financial year”.

But wait! The iconoclastic Richard Swann and Grant Thornton – respectively Compass’s sole director and auditor – say the six months of a half-year is not six months if you garner an accounting exemption order from the Australian Securities and Investments Commission.

The Compass “half-year” report also does not disclose any comparative financial information, and again this is all because of ASIC apparently. Note 1 states: “To comply with [ASIC’s] order Compass is required to only prepare financial statements for the period May 20, 2011 to June 30, 2011.”

The Compass half-year report for 2011 is also a must-read for students of the law because the company and its auditors provide a unique insight into how one complies with the law:

‘The financial statements and notes … are in accordance with the Corporations Act including: (1) Not complying with Accounting Standard AASB 134 Interim Financial Reporting”. To paraphrase – we have complied by not complying.

Not satisfied with the creativity of linking ASIC’s exemption order to a 42-day financial report with no comparatives, the auditors go even further by explaining that: “Due to [ASIC’s] order we were unable to obtain sufficient appropriate audit evidence to satisfy ourselves as to the opening balances as at May 19, 2011 and the impact, if any, on the result for the period ended”.

But surely some financial reporting must be better than none. Compass shareholders should be grateful for their 42-day disclosure. This is the first financial report they have seen since Ferrier Hodgson took over in January 2009.

For reasons unknown, Ferrier Hodgson never prepared the Compass financials for the year ending December 31, 2008 and the half-year ending June 30, 2009, and ASIC doesn’t seem to care that these are missing from its public database.

Instead, the regulator elected to celebrate the missing Compass accounts on February 8, 2010 by giving Ferrier Hodgson an accounting exemption order not to produce financial reports again until June 2011. That was about the same time ASIC was purging instruments of accounting relief from its database so the public could no longer see them.

A Herald investigation has tracked down this exemption order for Compass, notwithstanding ASIC’s treating these orders as state secrets. The Compass order does not include any words to the effect that Compass financial reports can ignore all days up till and including May 19, 2011. As far as we know, this is the only order, although it would not be out of character for there to be another one lurking in the bottom of a drawer at ASIC.

The review of the ASIC exemption order also brought to mind another exemption order for Evans & Tate. As with Compass, the Evans & Tate order was given to Ferrier Hodgson.

Evans & Tate, as reported in these pages previously, sold a winery to the former ASIC chairman Tony D’Aloisio, shortly after the issue of its ASIC accounting exemption order. The winery sale by a financially-distressed company being regulated by ASIC to the chairman of ASIC was approved by the Treasurer as consistent with the maintenance of the high standards of ethical behaviour expected from public servants.