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Deloitte under fire for Axa accounting blunder

By Duncan Bridgeman

Friday 22nd August 2003

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An accounting blunder that overstated Axa New Zealand's Superannuation Master Trust accounts by $18.4 million carried auditor Deloitte Touche Tohmatsu's seal of approval, it was revealed today.

The summary of accounts, released to Axa's superannuation members with the Deloitte stamp of approval, incorrectly added $9.2 million of inves tment earnings rather than subtracting the figure, which was shown as a loss.

That meant the Master Trust's pre-tax net surplus was calculated at $82.6 million instead of $63.9 million ­ the previous year's was $77.3 million.

The mistake initially appeared on a hard copy sent out to Master Trust members in March, although Axa has since corrected the figures on the company's website and apparently informed its members "two to three" weeks ago.

Deloitte chairman John Hagen said his firm did not authorise the auditor's report on the summary of accounts because that "subset" was not actually audited. "There was nothing wrong with the underlying accounts ... [Axa] made a mistake in the summary, which was wrongly extracted from the audited data."

He said Deloitte did not issue a certificate on the incorrect accounts but the stamp was there because of a printing error. "We're going to have to work that through with Axa, which is something we are doing at the moment."

Axa superannuation product manager David Hair confirmed there was an error in the final proof sent out to members and it had since been corrected. A formatting error in the printing caused the Deloitte audit report to be included in the summary accounts, he said.

Mr Hair said the company issued a new copy when it discovered the error, which was sent out to all members with a covering letter explaining what the error was.

But one Axa client, who asked not to be named, said he hadn't received notification of the mistake.

Institute of Chartered Accountants communications manager Geordie Cassin said, "Best practice would be to flag the fact that there had been a change."

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