Auditors query result

Press, 7 August 1985, Page 34

Auditors query result

PA Wellington Directors of the toy manufacturer and distributor, Fortuna Corporation, Ltd, are at odds with the group’s auditors over the inclusion of a $151,000 sale in the group’s results for the year to March 31. The auditors, Deloitte, Haskins and Sells, say in their report accompanying the accounts that a transaction dated March 29, 1985, in their opinion, should not be in the results for the last year. “Had this transaction been excluded, the effect on the

group financial statements would have been to decrease net profit before taxation, taxpaid profit and retained earnings by $151,000,” the auditors say. But the chairman Mr Bob Gunn, says in the annual report that the directors are “not in accord” with the auditors’ qualifications. “It is the considered opinion of the directors that the transaction referred to is properly placed in the year under review and this opinion has been confirmed by independent professional advice,” Mr Gunn says.

“The payment for this sale has been received in full since balance date.” Mr Gunn says that profits for the year to March 31 exceeded those projected in the prospectus. But trading profit was disappointing and higher than budgeted interest affected profitability. Profit from all sources was $765,832. Trading profit amounted to $278,309 after writing off preliminary expenses of $243,358 and a further $425,716 was realised from capital gains. Equity profits from Commodore Computers (NZ) Ltd, in which Fortuna holds a 39 per cent stake, were $61,807. Mr Gunn says the transfer of operations from Wellington to Auckland, although completed smoothly, involved a larger than budgeted expense. Sales lost through disruption added to the cost, but the directors were confident the benefits of the move would show in the years ahead. Fortuna has not disclosed sales, figures in its accounts as the directors believed this would not be in the company’s interests. The auditors say this was a departure from the New Zealand Society of Accountants’ Statement of Standard Accounting Practice No. 9.