from Crikey .....

Does WHK Horwath tell third parties they should seek independent advice on reports?

Canberra correspondent Bernard Keane writes:

BERNARD KEANE ON THE FEDERAL ELECTION 2010, COALITION, COSTINGS, FEDERAL ELECTION 2010, HUNG PARLIAMENT, PARLIAMENTARY COSTINGS, TREASURY

WHK Horwath, which Andrew Robb this morning declared was "as good as Treasury" routinely warns third parties not to rely on its reports provided to clients and recommends they obtain independent advice, according to sources associated with the firm.

The firm provided a report on the Coalition's costings, declaring that it was "satisfied based on the assumptions provided, costed commitments and savings have been accurately prepared in all material respects." The Coalition released its costings, and Horwath's report, 48 hours before the election.

Shadow Treasurer Joe Hockey has repeatedly referred to the WHK Horwath report as an "audit" of the Coalition's costings, despite the firm making clear it examined the Coalition's commitments without testing any of the assumptions built into them. As Peter Martin has reported, the firm faces scrutiny from the Institute of Chartered Accountants over the matter.

Tony Abbott until this morning refused to provide the Coalition's election commitments to Treasury for independent costing, despite the three independents calling for a Treasury assessment of the costs and savings each side took to the election. Abbott initially said this was because the Public Service "couldn't understand" the Coalition's policies, but has since said it was because there was a leaker in Treasury. The Coalition benefited from extensive leaking by a Treasury official prior to the Godwin Grech affair blowing up in 2009.

Instead, Abbott had proposed that the Coalition's shadow ministers, assisted by WHK Horwath, explain the Coalition's policies and their costs to the independents.

However, a short time ago at a press conference the Prime Minister appeared to confirm that the Coalition would provide its commitments for costings to Treasury on the basis that the Government did not see them, and they were not released publicly, when they were provided to the independents.

WHK Horwath, one of the country's biggest accounting firms outside the big four, tightly guards the confidentiality of its reports to clients, and declined to discuss the matter with Crikey, referring us instead to the Liberal Party. However, sources linked to the firm told Crikey that it has a routine disclaimer about the basis for, and use of, its reports to clients.

The disclaimer explicitly warns that its reports are not to be used for purposes other than those for which they were commissioned and should not be relied on by parties other than clients. Third parties are explicitly warned to seek independent advice on the contents of reports affecting them, and the firm disclaims any liability for third parties relying on their reports.

If the same disclaimer was used for the Coalition's costings, it would appear to be a strong basis for the independents seeking external scrutiny of the Coalition's costings.

A Liberal Party spokesman told Crikey that while there a disclaimer from WHK Horwath in its letter to the Liberal Party indicating that its report should not be used by other parties without the firm's authorisation, "Howarths have authorised the use of their report in the way it has been used (i.e. publicly appended to the Coalition's costings document) and this is the same process adopted by Labor in successive state elections (in particular the 2002 Vic State election) and a far more exhaustive process than that adopted by federal Labor at the 2007 and 2010 elections. In addition, the company has also availed itself to discuss the Coalition's costings with the Independents, including the assumptions behind them."