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Who Said Creative Accounting Is Dead?

Barry Ritholz reports:

It appears that NZ Farming (NZX) ran into a little trouble with the regulators when they accidentally included the suggestion of “fudging depreciation” in their account statement:

Note: The Company responds here:
NZ Farming Systems Uruguay Ltd – Annual Financial Statement

http://www.nzx.com/markets/NZSX/NZS/announcements/2806777/NZ-Farming-Systems-Uruguay-Ltd-Annual-Financial-Statement

The comment was a personal file note included in an earlier working draft of the notes to the Financial Statements. The file note was made as a prompt to reconcile a minor rounding difference between the cash-flow reconciliation note 3 and the fixed assets note 11 in respect of depreciation expense for the period. Importantly the comment was not in the Financial Statements reviewed and approved by the Board of Directors of NZS or its auditors.

While the comment was deleted from the final version of the Financial Statements tabled for approval by the Board of Directors; it was inadvertently retained in the results released to NZX, notwithstanding that the reconciliation had been completed. This was purely an administrative oversight. While the words in the comment were not well chosen, they were merely a prompt for the author of the Financial Statements to reconfirm the rounding difference expressed in an early draft of the Financial Statements where there was a minor rounding discrepancy. This reconciliation issue was resolved in the final checking of the Financial Statements against the supporting notes.

Posted August 31, 2009
Related Topics: accounting, audit, filing, financial statement, oops