Sloppy Joe's dodgy "audit"

Peter Martin October 11, 2010 The Age

Shadow treasurer Joe Hockey was not telling the truth when he claimed days before the election that the Coalition's costings had been "audited" by a big accountancy firm.

His claim that "we have the fifth-biggest accounting firm in Australia auditing our books and certifying in law that our numbers are accurate" helped shield the Coalition from criticism about its decision not to submit costings to Treasury.

Documents seen by The Age show the federal directors of both the Liberal and National parties would have known the claim to be untrue.

Brian Loughnane and Brad Henderson signed a letter on the day the costings were released addressed to the Perth accountancy firm WHK Horwath confirming that its work for the Coalition was primarily "not of an audit nature".

Mr Loughnane also countersigned a letter from two of the firm's principals that reminded the Coalition their work would "not constitute an audit in accordance with Australian auditing standards or a review in accordance with Australian auditing standards". Within hours of the work's release Mr Hockey inflated it to a legally watertight endorsement, telling ABC TV "they have certified our numbers based on all the information we have provided them; they have legal obligations and legal risks".

Challenged as to whether the Coalition's numbers made sense, he told ABC radio, "if the fifth-biggest accounting firm in Australia signs off on our numbers it is a brave person to start saying there are accounting tricks. I tell you it is audited. This is an audited statement.''

Opposition finance spokesman Andrew Robb backed up Mr Hockey, saying if Horwath made a mistake with the auditing of accounts for companies "they are at risk of being punished and going to jail".

The letter from Horwath principals Geoff Kidd and Cyrus Patell dated July 13 and countersigned by Mr Loughnane makes clear that the work was little more than a spreadsheet to "review the arithmetic accuracy of the Liberal Party of Australia's costing estimates".