Auditor Statement

As the lead auditor of Equestrian SA Incorporated I have been requested to provide information for distribution to members in respect of our qualified audit report issued for the year ended 30 June 2014.

Specifically the qualification read as follows – “The reconciled bank cheque account balance of $77,499 reported at 30 June 2014 includes $48,959 recorded as being unreconciled amounts yet to be deposited into the account. The management of the association was unable to provide adequate evidence to support the nature of these items as at the date of this report, and it was not practical for us to conduct alternative testing to otherwise prove validity of individual items making up that balance. We are therefore unable to form an opinion as to the accuracy of that reconciled account balance.”

This qualification arose due to a lack of evidence to confirm that the monies shown as outstanding undeposited funds in the year end bank reconciliation were indeed amounts due for deposit into the account. It was not a statement that the monies existed and had not been deposited. There was no evidence to suggest any legitimate funds were missing or had not been properly appropriated, and we have not ever formed that opinion. The qualification would not have been required had there been sufficient time prior to the 2014 AGM for ESA management and office staff to conduct a more detailed review of processed transactions. Due to the non-negotiable statutory requirement to lay an audited set of financial statements before the annual meeting, we deemed that the uncertainty of the matter required identification by us in our report.

We can confirm as part of our current 2015 audit review that the matter was investigated by ESA subsequent to the 2014 AGM. That review, and our own analysis, has identified the cause of the unreconciled variance to be an accounting error only. The amounts referred to in our 2014 audit report qualification and shown as undeposited funds had in fact been incorrectly double counted as income amounts during June and July 2013. The physical monies had been correctly deposited and were never missing. An adjustment has been included in the general ledger subsequent to 30 June 2014 to reflect a correction of the double counting error, and presuming our recommendation is followed it will also be highlighted and explained within the yet to be finalised 2015 financial statements.

Any representation made by any person that we as auditors ever believed this matter involved misappropriation or deliberate conduct is incorrect. In our opinion it comes under the classification of ‘human error’ in the record keeping processes of the association. We further note that we believe the errors were processed by a staff member who is no longer employed by the association.

Craig Stevens

Director

Post Script

I understand that ex-staff members may have concerns over the comment that we believe that the ledger errors leading to the qualification in 2014 were processed during their tenure. We are unequivocally not casting aspersions on anyone involved in ESA, either past or present. As we noted, it was an error only, nothing deliberate, but the fact that it was processed by someone no longer involved with the association in our opinion goes some way to explaining why it was more difficult to resolve.

Craig Stevens

Director