Thursday, May 12, 2011

Coalition's "auditors" still under investigation

Ahead of tonight’s Budget in Reply speech the Institute of Chartered Accountants has revealed that the two Perth accountants who advised Tony Abbott on the $50 billion of savings he put forward in the last election remain under investigation.

Geoff Kidd and Cyrus Patell of WHK Horwath signed a statement endorsing the Coalition’s costings released two days before the 2010 election despite promising the Coalition in a separate letter to make no inquires about “the reasonableness of otherwise of the assumptions used”.

A later examination by Treasury found up to $11 billion of errors in the costings including double-counting and purporting to spend money from funds already allocated.

Institute chief executive Graham Meyer told the Herald the pair were still under investigation eight months after the Institute received a complaint, saying the process had taken longer than expected.

The Institute began investigating Mr Kidd and Mr Patell in August after Sydney University accountancy professor Bob Walker alleged they had breached both auditing and ethical standards by allowing their work to be described as an audit when it was not...

Shadow Treasurer Hockey repeatedly described the work as an audit in the lead up to the election, saying later he had used the word "as would be understood in laymen's terms".

Mr Meyer was unable to say how much longer the investigation might take saying such things depended on “the complexity, the availability of material, the availability of witnesses, the availability of tribunal members, a whole range of factors”.

Mr Kidd is a former Western Australian chairman of the Institute.

Published in today's SMH

Statement from the Institute of Chartered Accountants in Australia

26 August 2010

The Institute of Chartered Accountants in Australia (the Institute) has received a complaint about a matter that involves publicly raised allegations regarding the conduct of two members with accountancy firm, WHK Horwath, Perth.

The Institute has commenced an investigation which involves an opportunity for the members to respond to the allegations.

Professional Conduct Process

As a professional organisation, membership of the Institute is based on meeting the highest standards of professional conduct and performance. The Institute treats matters that bring the profession into disrepute very seriously.

Issues arising from members’ conduct are investigated under the Institute’s By-laws and relevant cases are referred to the Professional Conduct Tribunal for determination.

Based on legal advice, specific commentary cannot be provided while matters are considered for investigation or for the duration of any subsequent Tribunal hearings. All information relating to complaints lodged with the Institute and produced during the investigation process is confidential.

To ensure the privilege of professional membership is upheld the Professional Conduct Tribunal has the power to impose sanctions on individual members who act inappropriately.

The ultimate sanction that can be imposed is exclusion from membership and withdrawal of the right to use the Chartered Accountants designation. Other sanctions include suspension, reprimand, fines or the requirement to undertake additional professional training.

For further information about the Institute's disciplinary process please visit

Auditing Standard 804

Section .02: In an engagement to audit prospective financial information, the auditor should obtain sufficient appropriate audit evidence as to whether:

. management's best-estimate assumptions on which the prospective financial information is based are reasonable for the preparation of the prospective financial information;

. the prospective financial information is properly prepared on the basis of the assumptions;

. the prospective financial information is properly presented and all material assumptions are adequately disclosed, including a clear indication as to whether they are best-estimate assumptions or hypothetical assumptions; and

. the prospective financial information is prepared on a consistent basis with historical financial reports, using appropriate accounting principles.

APES 110 Code of Ethics for Professional Accountants

Section 130.6: Where appropriate, a Member should make Clients, employers or other users of their services aware of limitations inherent in the services to avoid the misinterpretation of an expression of opinion as an assertion of fact.

Coaltiion Costings Document August 18 2010

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