Audit, Assurance and Compliance of Flight Centre Travel Group Limited

This report is an audit report of Flight Centre Travel Group Limited by Ernst & Young. It highlights the independence of auditors, remuneration, audit committee, key audit matters and more. The auditors have issued a clean report and have identified the true and fair view of the assets and liabilities shown in the books of account of the company.

HI6026 Audit,
Assurance and
Compliance

EXECUTIVE SUMMARY
Audit and assurance program is very much needed in this complex economic
condition. The report is made on the audit report of company named Flight Centre Travel
Group Limited. The auditors of the company are Ernst & Young. The auditors have issued a
clean report. The various components of the report are highlighted in the coming sections that
represent the efficiency with which the auditor has performed his duties. Explicit and clear
declarations have also been presented in the annual report. These auditors are indulged in
identify the true and fair view of the assets and liabilities shown in the books of account of
company.

Table of Contents
EXECUTIVE SUMMARY........................................................................................................2
INTRODUCTION......................................................................................................................5
CONTENTS...............................................................................................................................5
INDEPENDENCE OF THE AUDITORS AND NON-AUDIT SERVICES.........................5
REMUNERATION OF AUDITOR.......................................................................................6
AUDIT COMMITTEE AND AUDIT CHARTER................................................................8
STRUCTURE.....................................................................................................................8
FUNCTION AND RESPONSIBILITIES..........................................................................8
INDEPENDENT AUDITOR’S REPORT TO STAKEHOLDERS.......................................9
OPINION............................................................................................................................9
KEY AUDIT MATTERS...................................................................................................9
DIFFERENCE OF RESPONSIBILITY...............................................................................10
DIRECTOR’S RESPONSIBILITY..................................................................................10
AUDITOR’S RESPONSIBILITY....................................................................................11
MATERIAL SUBSEQUENT EVENTS..............................................................................11
CONCLUSION........................................................................................................................11
REFERENCES.........................................................................................................................12

INTRODUCTION
For any successful organisation it is nowadays important to maintain transparency regarding
everything that happens in the entity. All information is required to be transmitted to the
stakeholders through the annual reports. One such information is of the audit function. The
annual report needs to contain every detail regarding the auditors. The contents must include
in clearly stated words the declaration that the auditor gives about his independence, the
remuneration paid to the auditors, any kind of non-audit services if provided by him to the
entity, the formation of any audit committee along with the audit charter, the kind of opinion
that the auditor have expressed, and the key audit matters highlighted by him in the audit
report. All information needs to be expressly included with the management affirmation to
the same. This report will reflects the independence of the auditors and non-audit services,
auditing functioning, responsibilities and material details to bifurcate the key audit matters
and auditor responsibilities of Flight Centre Travel Group Limited. The key auditor matters
have highlighted the audit functions and undertaken audit activities of the auditors (Flight
Centre Travel Group Limited, 2018).
CONTENTS
INDEPENDENCE OF THE AUDITORS AND NON-AUDIT SERVICES
The auditors have expressly provided their independence declaration to the Flight Centre
Travel Group Limited’s management. It clearly states that the auditors have no intention and
have tried not to contravene the regulations laid on them by the Corporations Act 2001 and
the applicable codes of professional conduct as far as their independence is considered. This
declaration is given in their utmost belief and knowledge (Tepalagul, and Lin, 2015). The
auditor’s key functions have reflected the key compliance program which has been given in
the audit report of company. It is analyzed that audit committee appointed in Flight Centre
Travel Group Limited is done to evaluate and analysis the true and fair view of the assets and
libiliteis recorded in the books of accounts (Worth, 2009).
Further, it is mentioned explicitly in the annual report that the Flight Centre Travel Group
Limited has tried to exploit fully the potential that the auditors have. This is done by getting
professional aid from the auditors on certain non-audit matters also. For the concern of
auditor independence, it is believed to the satisfaction of the audit and risk committee that the

provision of such services had not left any impact on the independence of the auditor (Wu,
Hsu, and Haslam, 2016). The tax compliance program and audit functions are undertaken to
analysis how well auditors have performed to explicit the fairness of the recorded details. The
non-audit services are provided in compliance with the principles that the APES 110 Code of
Ethics for Professional Accountants have set in relation to auditor’s independence. However,
the list of non-audit services provided is set out below (O'Donnell, Arnold, and Sutton, 2010).
 Tax compliance, and
 Other services (Bell, Causholli, and Knechel, 2015).
Nature of the non-audit services
These non-audit services provide by the auditors are of revenue nature.
REMUNERATION OF AUDITOR
The remuneration that has been paid to the auditor comprises for the payments made to the
lead auditor that audited the consolidated entity, its related practices and the other audit firms
that are not related to the lead auditor (Choong, and Leung, 2015). The remuneration includes
the payments that the auditors have received, or shall receive for the audit services and the
non-audit services to Flight Centre Travel Group Limited (Yew Wong, 2015).
AMOUNTS RECEIVED OR
DUE AND RECEIVABLE
BY ERNST & YOUNG
FOR:
2018 ($) 2017 ($) % change
1. audit review of the
financials of the main FLT
group or any other entity in
the consolidated group
1365445 1201407 13.65%
2. tax compliance services 164181 323189 -49.20%
3. other services 89753 360315 -75.09%

Total 1619379 1884911 -14.09%
AMOUNTS RECEIVED OR
DUE AND RECEIVABLE
BY RELATED
PRACTICES OF ERNST &
YOUNG FOR:
2018 ($) 2017 ($) % change
1. audit review of the
financials of the main FLT
group or any other entity in
the consolidated group (Flight
Centre Travel Group Limited,
2018).
1386642 1459041 -4.96%
2. tax compliance services 195187 226128 -13.68%
3. Special audit by regulators 39147 20050 95.25%
4. other services 66035 20308 225.17%
Total 1687011 1725527 -2.23%
AMOUNTS RECEIVED OR
DUE AND RECEIVABLE
BY NON LEAD AUDIT
FIRMS
2018 ($) 2017 ($) % change

1. audit review of the
financials of the main FLT
group or any other entity in
the consolidated group (Flight
Centre Travel Group Limited,
2018).
27126 25419 6.72%
2. other services 5075 5133 -1.13%
Total 32201 30552 5.40%
AUDIT COMMITTEE AND AUDIT CHARTER
The company has formulated and audit and risk committee. All the members of the
committee are non-executive members of the management. The Flight Centre Travel Group
Limited has formulated an audit committee charter which shows that all the audit committee
and charters are engaged in analysing the risk involved in the financial statements (Yew
Wong, 2015). These all audit committee work as audit charter and analysis whether company
has made default in complying with the applicable accounting standards and laws. It will
assist in mitigating the chances of the insider trading and also allow company to keep its
business more sustainable (Vangelisti, 2016).
STRUCTURE
The structure of the audit is determined on the basis of the non-executive and executive
auditors in organization. The members of audit committee consist of Gary Smith, who is non-
executive chairman; John Eales, Robert Baker, and Colette Garnsey, who are the non-
executive directors of Flight Centre Travel Group Limited. These all auditors are engaged in
analysing the annual report and how well company has set up proper harmonization between
the international and domestic accounting standards (Stueart, Robert 2008).

FUNCTION AND RESPONSIBILITIES
 To review and provide recommendations in order to make the corporate reporting of the
entity acceptable by the applicable framework.
 To analysis whether the directors and key managerial persons are providing proper
managerial representation letters in its books of accounts.
 To recommend, appoint and remove the independent auditors from the undertaken work and
audit program (Bradbury, 2017).
 To analysis the fairness of booked assets and liabilities
 To identify and evaluate the carrying value of the values.
 To review the financial statements of the entity to gather an understanding of whether the
requirement of compliance with the true and fair view is reflected in them (He, et. al 2017).
 Reviewing the appropriateness of the various accounting judgements, estimates and policies
used by the entity in preparation of the financial statements (He, Pittman, Rui, and Wu,
(2017).
 To recommend and decide on the appointment, remuneration, and removal of the external
and independent auditor (Flight Centre Travel Group Limited, 2018).
 To manage the internal audit function by deciding the head of the same and assessing his
capabilities to lead the internal audit team.
 To look into the efficiency with which the appraisal of the financial statements is being
carried out by the external auditor.
 To bring into knowledge of the entity the relevant updates brought in the financial reporting
requirements and help in complying with the recent and important changes taken place in the
field of it.
 To assess whether the external auditors are complying with the requirement of the
independence expected out of them and the ways in which they are dealing with the provision
of non-audit services (Novitaningrum, and Amboningtyas, 2017).
 To act as fiduciary person for the stakeholders so that they could give transprent details of the
financial statement of company.
 Auditors are also providing non-audit services such as insurance coverage details,
computation and analysis of the accounts and assisting accountants to comply with the
international and domestic financial reporting standards.

INDEPENDENT AUDITOR’S REPORT TO STAKEHOLDERS
OPINION
The auditors of the entity have expressed an unmodified opinion or a clean opinion on the
financial statements of Flight Centre Travel Group Limited. In their opinion and according to
the audit procedures performed by them, the financial statements are made in compliance
with the provisions of the Corporations Act 2001. The regulations provided by the Australian
Accounting Standards and the Corporations Regulations 2001 are also being followed. There
are no visible material misstatements that came to the knowledge of the auditor from the
procedures that he has performed. Further, the auditors have stated that they have completely
embraced the independence requirement expected out of them throughout the audit.
Moreover, they have mentioned in the audit report itself that the ethical requirements laid by
the APES 110 Code of Ethics for Professional Accountants have also been complied with.
The auditor’s opinion reflects that Flight Centre Travel Group Limited has complied all the
applicable rules and made complete disclosure in its financial statement (Flight Centre Travel
Group Limited, 2018). It is further analysed that non-qualified audit report given by auditors
helps stakeholders to determine that all the information shown by the Flight Centre Travel
Group Limited in its financial report reflects eh true and fair view of the assets and liabilities.
This audit opinion given by the auditors is very much required for the stakeholders to take
their financial investment decision. It will assist in boosting their confidence on the annual
report and financial statements shared by the auditors (Flight Centre Travel Group Limited,
2018).
KEY AUDIT MATTERS
The key audit matters do not cast any modification on the financial statements of the entity.
They are just the areas which concern the auditors as professionals and they wish to further
inform the stakeholders regarding the same (Cordoş, and Fülöp, 2015). From the annual
report of the entity, the following key audit matters can be identified which helps in analysing
the key performance of the auditors and fairness of the financial statement shared by the
company.
IMPAIRMENT TESTING OF GOODWILL AND OTHER INTANGIBLE ASSETS

This is a key audit matter in the judgement of auditor because of the huge balance of the
impairment amount in relation to the total assets. Further lot estimation is also involved in the
same
 AUDIT PROCEDURE: The requirements of AASB 136, Impairment of Assets are
considered. Valuation specialist is being called to determine the accuracy of the valuation and
the cash flow statement is also assessed to determine the level of accuracy with which the
forecasts and the assumptions are being made.
o The audit procedure followed can be brought in the category of the test of control.
BUSINESS ACQUISITIONS
The huge number of the business acquisitions and the combinations entered into by the entity
has made this a key audit matter (Flight Centre Travel Group Limited, 2018).
 AUDIT PROCEDURE: the audit procedure included the assessment of the procedure that the
entity has followed along with the compliance of the applicable accounting standard. The
adequacy of valuation is also checked (Flight Centre Travel Group Limited, 2018).
o This audit procedure can be called as the test of control.
o The test control has been undertaken to determine the fair value of the recorded assets and
liabilities in the books of accounts.
o The impairment test is also assessed by the auditors to help accountant to determine the true
and fair view of the assets and liabilities in the books of accounts (Flight Centre Travel Group
Limited, 2018).
RECOVERABILTIY OF OVERRIDE RECEIVABLE
Certain factors related to this account that are beyond the control of the Flight Centre Travel
Group Limited have made it a matter of key concern.
 AUDIT PROCEDURE: This included verification of the receipts in this account, sampling
technique to examine certain override contracts, and observation of the calculation
methodology of override receivable amounts.
o These audit procedures fall under the purview of test of control and substantive test of details.
However, impairment test and assertion test have been implemented by organization to
determine the carrying value of its recorded assets in the books of accounts.

DIFFERENCE OF RESPONSIBILITY BETWEEN THE DIRECTORS AND
AUDITORS
DIRECTOR’S RESPONSIBILITY
The preparation of the financial statements and following the requirements of the
corporation’s act 2001 and the accounting standards in such preparation is the duty of the
directors. Further they are the responsible party for assessing the ability of the consolidated
group as a going concern (Shaukat, Qiu, and Trojanowski , 2016). The director’s
responsibilities show the extent to which they will be liable if in case company fails to
comply with the applicable laws and accounting standards (Mock, Ragothaman, and
Srivastava, 2018).
AUDITOR’S RESPONSIBILITY
The auditor’s responsibility is limited to do an appraisal of the financials prepared by the
entity and the internal controls existing in the entity to provide a reasonable assurance on the
same. The assurance relates to the presentation of financials in accordance with the applicable
standards and regulations. Nonetheless, if in case they will to identify the discrepancies and
issues in the financial statement shared with them then they will be held liable for the same.
Until and unless, auditors are given management representation letter with then only they will
have to analysis financial details by documenting and doing the personal visit with the
company. It will assists in confirming the right value of the recorded assets and liabilities in
the books of accounts of company. it includes any kind of non-audit services if provided by
auditors to the entity, the formation of any audit committee along with the audit charter, the
kind of opinion that the auditor have expressed, and the key audit matters highlighted by him
in the audit report (Flight Centre Travel Group Limited, 2018).
MATERIAL SUBSEQUENT EVENTS
The material subsequent events include the dividend declaration and the acquisitions made
subsequent to year end. They have been treated as per the regulations and comply well with
the requirements (Knechel, and Salterio, 2016). It has also increased the transparency of the
details recorded in the books of account of Flight Centre Travel Group Limited. The main
material details reflects how well company has complied with the applicable rules and

accounting standards while formulating the financial statements (Flight Centre Travel Group
Limited, 2018).
CONCLUSION
From the study made of the annual report and its components, the auditor’s appraisal
seems perfect. No information seems missing or unrecognised. All the required information is
well presented by the auditor in his report. There stand no questions which are required to be
asked to the auditor. The crux of this auditor’s independence report is based on the
independence of the auditors and their opinion on the annual report given by Flight Centre
Travel Group Limited. Company has kept transparency in its financial statement and
reflected true and fair view of the assets. It is considered that satisfaction of the audit and risk
committee that the provision of such services had not left any impact on the independence of
the auditor and shown better auditing compliance in organization. it is stated that auditors
needs to undertake their responsibilities in effective manner to increase he overall outcomes
and efficiency by complying with the audit program.

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Flight Centre Travel Group Limited, 2018 retrieved, Available at
http://www.fctgl.com/investors/annual-reports/., Accessed on 12th June 2018