Role of Auditors

This report brings out the information and analysis that how auditor plays an important role while maintaining trust and confidence in the company named suncorp group limited among its stakeholders. This report has detailed discussion of most related topics that coonects to role of auditor, how they work, non-audit services, discussion of remuneration, and functions. Auditor’s Independence Declaration marks the freedom of auditors at the workplace. Audit services are the not only services provided by auditors. An auditor skilfully performs Non-Audit services and get a reasonable amount of payment from the company.

Suncorp group limited is the publically listed company whose share capital is limited by shares. Suncorp group limited is one of Australia’s medium size banks and the group umbrellas some of Australia and New Zealand’s general, life insurance; banking. We provide customers solutions to their financial issues and concern and help those taking steps to ameliorate their financial stabilities. We have been serving people across New Zealand and Australia since 1902 (Suncorp, 2018b). Along with the vast community we serve, we are constantly being working on the environment being provided to the employees so as they can take advantage of our vast portfolio of brands and which could help excel them in their fields and so that they can better understand their responsibilities. The goal is to be a reliable group and provide a solution, which not only helps the people but also our shareholders and stakeholders. We are operating with the brand names of Suncorp, AAMI, Bingle, Apia, Shannon in Australia (Suncorp, 2018a).

The Act leads the provisions of Auditor`s independent declaration under the section 307C of the corporation Act, 2001. The auditors have accepted that there was no contraventions in the auditor`s independence requirements that are set out in Corporation Act in context to audit.  Auditors have admitted that there are no such contraventions in any professional conduct of applicable code to audit. Moreover, while conducting the audit of Suncorp group limited, the auditors complied with all the independent requirements of corporation Act 2001 (CPA Australia Ltd, 2018a). The independence policy also has the details of the procedure they follow. The procedure includes recruiting, reviewing, appointing the members of the internal audit committee (Stafford, Deitz, & Li, 2018). A per the independent policy, auditors are prohibited to avail the services of independence that do not hamper and threaten the independence through compliance role and several conflicts. Australian auditing standards stated the role of auditor in evaluating and reviewing the company’s financial reports. It reveals the right of independence of auditors. Auditors evaluate and maintain the professional attitudes when providing both audit services and non-audit services to the company (Leuz, & Wysocki, 2016). 

Non-Audit Services

As per the opinion of auditors of the company, it has accompanied financial report of the company with Corporation Act 2001 that includes true view of company`s financial position for the fiscal year. The auditor has ensured that the company complied with AACR (Australian Accounting Standards and Corporations Regulations) in 2001 (Wang, Li, & Li, 2015). The opinion of auditors were based on the Australian Auditing Standards (Louwers, Ramsay, Sinason, Strawser, & Thibodeau, 2015). The stakeholder believes that audit evidence should be obtained in sufficient and appropriate manner. The auditor reports that they have their independent Group according to Corporation Act, 2001. A separate ethical requirement of Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants is related to the audit of financial report of Australia (Ball, Grubnic, & Birchall, 2014). The auditors are able to fulfil their ethical responsibilities as per the code of conduct. The independent Auditor`s report is enables the transparency of Suncorp Group Limited to the shareholders. As per shareholder`s interest, the financial report should consists of fair consolidated statement of income, statement of change in equity and fair view of estimated cash flows statement for the year ended (Amaliah, laafar, & Atan, 2015).

In the fiscal year, auditor of the company named as KPMG performed services audit services, as well as non-audit services and keep reviewing the financial report. The director board of the company has realised that all non-audit services delegated between the fiscal year have received proper confirmation from the Audit committee. The board strives to make sure that auditors do not compromise the compatibility and compromise the provisions and obligations to perform non-audit services (Raudla, Taro, Agu, & Douglas, 2016). The auditor`s independence report requirements of Corporations Act for some reasons such as-

All the non-audit services are subject to be accompanied as per the corporate governance procedures of the company. Then, Audit committee ensures that the committee do not affect the integrity and objective of reviewing the financial reporting (Kim, Shi, & Zhou, 2014). The non-audit services that are provided by the auditors do not undermine or damage the general principles which relates to auditor independence described in APES 110 (Code of Ethics for professional Accountants) because the code of conduct do not involve reviewing and auditing their own work (Chan, and Vasarhelyi, 2018). An auditor has the capacity of managing decision-making for the company. As an advocate, an auditor plays an important role for jointly sharing risks and rewards of the company (CPA Australia Ltd, 2018a). There are many non-audit services provided by the auditors such as Tax compliance, wealth maximisation strategy, advice for expansion and non-audit services includes remuneration of around $285000 in 2017 and $39000 in 2016 (Suncorp, 2018a).     

Remuneration and Functions

Director and management is responsible for preparing the financial report that reflects a fair view according to Australian Accounting Standards and Corporation Act 2001 with 300A section. Director is responsible for implementing the necessary internal auditor control team that assist in preparation of financial reports (CPA Australia Ltd, 2018a). The director is responsible for assessing the ability of the Suncorp group limited to continue the company as a going concern. Various accounting principles are disclosed only when the company is a going concern (Suncorp, 2018a).

The objective is to obtain reasonable assurance of whether the financial statements are free from material misstatements. It is the responsibility of the Auditor to establish an analysis report of the company. They should ensure that considered material in individual method could reasonably influence the economic basis of financial report (CPA Australia Ltd, 2018a).   

The remuneration report follow sec 300A of the corporation Act, 2001. Mostly, the non-executive members of the company gets the professional fee at the base level. It is found that the experiences of these auditors is relatively excelled in various areas such as finance market, audit services, tax compliances, and experienced in various industries (Pelger, 2016). The whole committee gets a sum of money fees to distribute it to all the members of the committee. Undoubtedly, the fees and remuneration is paid highest to the chairperson and attracts the maximum fess of the committee according to his knowledge and experience in the concerned industry (Suncorp, 2018b). Moreover, the company also pays the auditors for their non-audit services provided to the company. Both audit and non-audit executive members follow the board’s advice of remuneration committee (Suncorp group limited, 2015).

To determine and calculate the change in remuneration paid of the non-executive members and auditors from year 2012 to 2018, 2017 is taken as a base to see the estimated change in payment of remuneration (Suncorp, 2018b). As a result of change evaluated, it is found that the combination of superannuation and cash fees of S machell has seen the highest change from year 2017 to 2018. The company was able to reduce the cost of remuneration fees. Moreover, the fess of Dr Z Switkowski AO and A Exel AO has not changed. The estimated fees of E Kulk, C McLoughlin, and Dr D McTaggart has not noticed much change in payment of fees from 2017 to 2018 (Suncorp group limited, 2017).   

Auditor’s Independence Declaration

The auditor is a representative that reveals that fair accounts are revealed to the stakeholders. Auditor identifies and mitigates the risk association with the misstatements that financial report may have whether due to fraud.

Auditor obtains an understanding of internal control audit system so that they can design some relevant audit procedures, which can work in a particular environment. The aim of appointing an auditor is to win the confidence among the shareholders (Dooren, Bouckaert, & Halligan, 2015). Moreover, it also provides a sense of confidence among the directors ad management of the company.

An auditor checks that how far the accounting principles and disclosures of accounting estimates have been applied to the financial statements.   

The auditor communicates and concludes the appropriateness of the owners’ decision and the working of the management. Use of going concern concepts of accounting is based on the evidences provided by the auditor. An auditor evaluates the overall presentation of financial reporting that includes disclosures that will judge the financial reports presenting the underlying transactions and programmes in such a manner that targets fair presentation. 

The main function of Auditors is to establish an Audit and risk management committee by the board. Auditors assist the directors to fulfil and reflect the true and fair financial reports to safe the interest of the shareholders, customer, employees, and shareholders. Apart from these functions, it protects the community by fraud and untruthfulness that can occur on the part of company by identifying effective assessment, monitoring, and risk of management (Buckless, Krawczyk, and Showalter, 2014). The auditors make sure that information delegated to the company for its stakeholders in regards to financial reporting complying them with ASX guidelines issued to protect the interest of the shareholders. Shareholders also gets the right to raise questions if they do not understand the terms in the Annual report of the company (suncorp group limited, 2017).

The management hierarchy of the organisation has both executive and non-executive members. The non-executive members of the organisation if from the nomination committee. The remuneration committee operates under the charter of its own and reports to the board of directors. The chairperson of the audit committee is Douglas F McTaggart, who is an expertise knowledge and experience in the field of business as well as governance. HEis also the director of the company and a member of remuneration committee (Suncorp, 2018a). The other four members addressed as William Bartlett, Ewoud Kulk, Dr Douglas McTaggart, and an Ex officio member named asDr Zygmunt Switkowski AO. The members of the remuneration committee have experience as independent non-executive director of the company and include the chairperson of Audit committee and chairperson of Risk committee. Dr Z E Switkowski AO, M A Cameron, W J Bartlett, S Herman, G T Ricketts CNZM (Suncorp group limited, 2017).Ms Herman is the director the company since 2015. She is the member of Audit and risk committee and has an experience in the field of retail, manufacturing, financial services, and property sectors.

Evaluation of Financial Reports

Auditors reviewed and brought out some key audit matters. Estimation the amount of outstanding liabilities and assets that includes reinsurance assets, it is a key audit matter. It involves high degree of uncertainty that is estimated as the future payment for the assets and liabilities for outstanding claim is incurred (Suncorp group limited, 2015).    

Critical analysis of estimating the payment arises when claims are incurred in the reporting date but not have reported to group because it take many years to finalise and calculate the cost of the claim and final cost may be effected by the factors unknown after the preparation of financial reports. Auditors requires deep understanding of the challenging estimation process of industry (Suncorp group limited, 2017).

The company involved actuarial specialists to perform audit procedures. The matter of challenging estimation process found that appropriateness of group`s actuarial methods and assumptions for CTP. The auditors challenged the actuarial method. Moreover, it challenges the accuracy of previous estimations (Auditing and Assurance Standards Board, 2013).    

Impairment provisions is another important key audit matter that consider the significance of both short-term and long-term loans. Some specific impairment provisions are based on Group`s analysis and estimation (Guimaraes, Grzeszczuk, Bisset III, & Donnelly, 2018). There exist high level of complexity applied by the group in finding out provisions and judgement requirements while using and challenges these estimations. The Audit process associated with loans and advances test key control system over customer loan rating, credit risk model, and credit risk reviews. Auditors perform credit assessments for a sample of business loans that requires loan strategy papers and provisions estimation are prepared by credit risk officers (Auditing and Assurance Standards Board, 2013).        

Conclusion

In context to financial report of Suncorp group limited, it is required to conclude that there exist a material misstatement of other information that are found prior to date of when Auditor’s report was realised. After the preparation of Auditor’s report, there is nothing to report. Moreover from the above report, it came to my knowledge that there are any more services provided by the auditor except the statutory compliance. An auditor provides the services that are partially audit services. The independent report of auditors is evaluated that how far they work in a free environment. A financial report once approved by the auditors have more confidence than a financial report prepared by the management (Ismail, Kiennert, Leneutre, & Chen, 2016).

Case Study of Suncorp Group Limited

References

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