@ The Ernst & Young Building 321 Kent Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001 ariel Fax DX 61 2 9248 5555 61 2 9262 6565 Sydney Stock Exchange 10172 INDEPENDENT AUDIT REPORT  To members of Harvey Norman Holdings Limited  The financial report and directors’ responsibility  The financial report comprises the statement of financial position, statement of financial performance, statement of  cash flows, accompanying notes to the financial statements, and the directors’ declaration for Harvey Norman  Holdings Limited (the company) and the consolidated entity, for the year ended 30 June 2003. The consolidated  entity comprises both the company and the entities it controlled during that year.  Scope  The directors of the company are responsible for preparing a financial report that gives a true and fair view of the  financial position and performance of the company and the consolidated entity, and that complies with Accounting  Standards in Australia, in accordance with the  Corporations Act 2001 . This includes responsibility for the maintenance  of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for  the accounting policies and accounting estimates inherent in the financial report. We conducted an independent audit of the financial report in order to express an opinion on it to the members of the  company. Our audit was conducted in accordance with Australian Auditing Standards in order to provide reasonable  assurance as to whether the financial report is free of material misstatement. The nature of an audit is influenced by  factors such as the use of professional judgement, selective testing, the inherent limitations of internal control, and the  availability of persuasive rather than conclusive evidence. Therefore, an audit cannot guarantee that all material  misstatements have been detected. We performed procedures to assess whether in all material respects the financial report presents fairly, in accordance  with the  Corporations Act 2001 , including compliance with Accounting Standards in Australia, and other mandatory  financial reporting requirements in Australia, a view which is consistent with our understanding of the company’s and  the consolidated entity’s financial position, and of their performance as represented by the results of their operations  and cash flows. We formed our audit opinion on the basis of these procedures, which included: While we considered the effectiveness of management’s internal controls over financial reporting when determining  the nature and extent of our procedures, our audit was not designed to provide assurance on internal controls.  We performed procedures to assess whether the substance of business transactions was accurately reflected in the  financial report. These and our other procedures did not include consideration or judgement of the appropriateness or  reasonableness of the business plans or strategies adopted by the directors and management of the company.  We are independent of the company, and have met the independence requirements of Australian professional ethical  pronouncements and the  Corporations Act 2001 . In addition to our audit of the financial report, we were engaged to  undertake the services disclosed in Note 31 to the financial statements. The provision of these services has not  impaired our independence.  Independence  Audit approach  •  examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the  financial report, and  •  assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of  significant accounting estimates made by the directors.  90 Liability limited by the Accountants Scheme, approved  under the Professional Standards Act 1994 (NSW). =!/ FRNST & YOUNG