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Joe Hockey's 'independently verified' campaign costings found to have breached professionial accounting standards -

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ELEANOR HALL: While the Prime Minister is talking up the Coalition's chances of winning the next election, a shadow is now being cast over his election win of two years ago.

A disciplinary tribunal hearing launched by Australia's peak accounting organisation has found that the review of the Coalition's costings breached auditing standards.

Nick Grimm has more.

NICK GRIMM: It was an assurance provided to voters on the second last day of the 2013 federal election campaign.

The words falling from the mouth of the treasurer-in-waiting, Joe Hockey.

JOE HOCKEY: So, all of our policies are fiscally responsible and independently verified.

NICK GRIMM: That "independent verification" cited by the then shadow treasurer had come from the coalition's three wise men - an independent review panel comprising the former head of Access Economics, Geoff Carmbody; a former head of the Prime Minister's Department, Peter Shergold, and a former Queensland auditor-general, Len Scanlan.

Their review of the Coalition's policy commitments and expected savings resulted in a five sentence letter to the Liberal party's federal director, Brian Loughnane which stated in part:

LETTER TO BRIAN LOUGHNANE FROM INDEPENDENT REVIEW PANEL: We are of the opinion that the final policy costings provided by the Coalition in the attached tables are based on reasonable assumptions and calculations and, as such, represent a fair estimate of the net financial impact of those policies on the federal budget.

NICK GRIMM: At the time, Joe Hockey cited that as proof the Coalition was a safe bet for voters.

JOE HOCKEY: I want to emphasise the process that we have been through. We have been through one of the most comprehensive fiscal policy development programs in Australian politics.

It's not an overnight program. We haven't made it up as we've gone along, as Labor has. What we've done is have an eight-month long process overlaid on the three year term in opposition.

We've focused on having sensible, internal policy processes. We've taken those policies to the Parliamentary Budget Office and we've set up an independent panel to verify it.

Importantly all the numbers that are presented today, and they show that we are living within our means.

NICK GRIMM: The independent panel concluded the Coalition's program would have improved rather than worsening the 2014-15 budget deficit.

But it was the accounting standards applied by the independent review that was a concern for husband-and-wife number crunchers, economist Betty Con Walker and Emeritus Professor of Accounting Bob Walker, who lodged a formal complaint with CPA (Certified Practising Accountants) Australia.

BOB WALKER: Well, forecasts are necessarily going to be estimates and it's appropriate I think that whoever prepares them should indicate the basis of the preparation, what assumptions they've made, who provided those assumptions and what work they've undertaken.

Not simply that chat to a few people over a coffee and say that sounds alright.

BETTY CON WALKER: Well, their assurances were not based on the kind of standards that need to be made before they can get credibility.

Their assessments need to go through a certain process in order to be described as credible.

NICK GRIMM: Two years after the election of the Coalition Government, the complaint lodged by the Walkers has been upheld by the disciplinary panel of the professional accounting body.

Its findings apply only to one member of the team who conducted the Coalition's review - Len Shergold - who at the time was the only accredited accountant involved.

Since then, he's ended his membership of CPA Australia.

ALEX MALLEY: I can confirm there was an independent process conducted and that the panel passed an adverse finding in respect to Mr Scanlan.

NICK GRIMM: The findings raise concerns about transparency in politics and what weight should be given to the independent verification seal of approval.

Alex Malley is the CEO of CPA Australia.

ALEX MALLEY: I think there's always a challenge leading up to an election as to the access to costing information an incumbent government has over an opposition.

I think more importantly, we need to know what the strategic vision of the government and the opposition is, and we need to understand how that's going to be executed.

In the end, costings will come down to having the access to information at the right time to be able to make the right decisions, but we already know our country is continuing to grow in its debt capacity. We've seen the devaluation of our dollar, the interest rates are likely to be going up in the US which is only going to cause more difficulty from investment in Australia.

And, while we might argue that we have a dysfunctional senate and no one would disagree with that, part of the reason it makes it easy for a dysfunctional senate is that we don't have clarity of message in government right now, and right now the Coalitions in government.

NICK GRIMM: This is not the first time the coalition has been caught out in similar circumstances.

In 2010 a complaint to the Institute of Chartered Accountants resulted in fines for two Perth accountants for breaching professional standards in their work for the Coalition.

Shadow finance minister Tony Burke.

TONY BURKE: This is a serious humiliation for Joe Hockey. It's the second time it's happened.

We already knew there were problems with their costings because within a few months of coming to office, they'd doubled the deficit.

Between their first budget and their second budget, they'd doubled the deficit. And, all the claims of what they would do with debt and deficit, the exact opposite has been the case.

Here we see that, when Joe Hockey was claiming that there'd been this full auditing process and we could trust the documents that he was releasing, that was yet another occasion where they misled the Australian people in the days leading to the last election.

ELEANOR HALL: That's Labor's finance spokesman, Tony Burke, ending that report from Nick Grimm.

And we sought comment on that story from Treasurer Joe Hockey and Assistant Treasurer Josh Freudenberg, but neither has yet responded.