Company asked to explain 'fudge this' blooper

A herd of NZFSU's South American cows.

A NZ farming company has been asked by the stock exchange to explain why the words "fudge this" appeared in its set of corporate accounts sent out yesterday.

The embarrassing blooper slipped into the NZ Farming Systems Uruguay (NZFSU) annual financial statement sent to the stock exchange yesterday.

The offending line read: "Depreciation - fudge this to equal depn in FA note 11$ 2391 ..."

A letter sent to the company by the NZX head of market supervision Caroline Young says the comment "has caused NZX, and the market, concern that the Financial Statements may not be accurate".

"What exactly is meant by the comment and why is it included?"
The letter also asks the company to confirm if the depreciation figure included in the accounts was true and whether the rest of the accounts gave "a true and fair view of the financial performance" of the company.

In the company's response to the NZX, company secretary Julian Daly said the 'fudge this' 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.

It has not been included in the statements reviewed and approved by the company's board 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.

Daly goes on to say that the depreciation figure included in the statements was "true and accurate in all material respects."

"While the inclusion of the comment in the Financial Statements is regrettable and disappointing given the rigorous and thorough process that has been adopted in their preparation, we would assure NZX and the market that the comment should not be a cause for concern regarding the accuracy of the Financial Statements."

"As soon as the issue came to our attention, steps were taken to immediately correct the oversight and rerelease the corrected Financial Statements to NZX. We have also reviewed our internal processes to establish how the issue arose. It would be our preference that NZX remove the Financial Statements originally posted on NZX.

At the end of the letter, Daly apologises for any inconvenience the company may have caused.

Company chief financial officer Andrew Clark yesterday said the line had no material bearing on the result and was simply a file note overlooked in the final read.

"I wouldn't blow it out of proportion. It is a rounding difference when you're trying to get a balance sheet to tie to all the notes. The differences are the ones and twos."

NZFSU, which owns dairy farms in South America, posted a full-year loss of US$45.9 million after writing down the value of livestock and farms amid falling dairy prices.

- NZ HERALD STAFF