Auditing and Assurance: A Report on AMP Limited's Financial Practices

This report provides a comprehensive analysis of AMP Limited, a financial services provider in Australia and New Zealand, focusing on its auditing and financial performance. It examines the company's profitability, particularly the surge in profits in 2017, and evaluates its performance based on factors like common good, stewardship, sustainability, and social responsibility. The report delves into the ethical performance of accountants within AMP's insurance and financial planning arms, highlighting the findings of the Royal Commission regarding misleading practices and fraudulent transactions. It also explores the purpose of auditing and the role of the audit function in promoting socially responsible outcomes, discussing the responsibilities of auditors in ensuring ethical conduct and accurate financial reporting. The report concludes by emphasizing the importance of effective auditing for maintaining the image of both organizations and audit firms, and the need for auditors and companies to understand their respective roles.

Auditing and Assurance

Table of Contents
INTRODUCTION...........................................................................................................................1
1 a) Evaluation of AMP Limited's Performance....................................................................1
2. b) Assessment of Ethical Performance of Accountants in AMP's Insurance and Financial
Planning Arms........................................................................................................................2
3. c) Purpose of Auditing and role of audit function in promoting socially responsible
outcomes.................................................................................................................................3
CONCLUSION ...............................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
Auditing has been a very crucial financial service that relates to giving advisory to
companies and businesses after making a inspection of books of accounts in an effective way.
The current report is based on AMP Limited which is a financial services provider within
Australia as well as New Zealand. The company has been facing serious allegations of mis-
selling of services to customers as well as issues related to fraudulent transactions within the
book. The role of auditor in the whole issue will be discussed in detail within the current report
in an effective way (Arena and Jeppesen, 2016).
1 a) Evaluation of AMP Limited's Performance
AMP Limited has seen a overall rise in the profits in the year 2017, The company's
profits has seen a surge of around 114% in the year 2017. Primarily because of healthy rise in
Australian wealth protection. A reduction can be seen in the controllable cost in the range of 3%,
which is yet another benefit for the organisation over the longer run and will hopefully give the
company a competitive edge over the other players within the market. The company is having
divisions also known as AMP Capital and AMP Bank which has performed fairly well in the
year 2017. The company's position in the year has been fairly good except some of the
allegations that the Royal commission has made on the organisation which has tarnished the over
all image of the organisation. The performance of the organisation on the basis of various factors
are laid down as follows: Common Good: The company's CEO has continuously stated that the organisation
believes in delivering efficient services to its customers. In 2017, More than 47,000
people had an AMP Home Loan. A insurance payments of around 1.1 billion $ was
made which further helped clients for a better and secured life. Among the most,
payment of 2.4 billion $ was made in Australian Payments. The company believes in
adhering to government Standards and investing in social infrastructure. The company's
investment in ESG research has been regarded as an example within the industry in an
effective way. Stewardship: Due to the issues faced by the company with regards to the allegations
made by royal commission, the rating of the organisation has been reduced by the rating
agency. The reason behind downgrade was that its branding has been trashed and the
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overall long term strategy of the organisation is now vague and not clear (Davidson,
Desai and Gerard, 2013). Sustainability: The company has taken various steps for the purpose of attaining
sustainability. The company has been carbon neutral since 2013, it has been following a
waste, energy as well as emission reduction policies which has made a reputation of the
organisation in this regard. The greenhouse gases reduction of 25% has been seen, since
2013. A 2% year on year reduction in AMP's green house gas emissions has been seen.
 Social Responsibility: The company has been taking various steps with regards to social
responsibility actions, around 5.2 million $ has been distributed to the general
community by AMP foundation. Around 211 non-profit organisations were supported
through AMP Foundation with the help of partnership funding, donations etc. Since
1992, The company has distributed around 85.7 Million$ in community from 2017. The
company's Employees has been contributing in charity, around $8,29,000 was raised
and donated by the employees of the firm in an effective way (Gomez, 2012).
2. b) Assessment of Ethical Performance of Accountants in AMP's Insurance and Financial
Planning Arms.
The Royal commission, which is responsible for managing the level of ethics within the
banking system has laid down that AMP was misleading corporate regulator and thus criminal
prosecution must be arranged against the firm. The company has been misleading the ASIC by
showing amount that has been revived in the form of services, but no such services were
provided and customers were charged for the same unethically, A good scheme of concealing the
money was framed to hide the transactions from auditors and thus auditors have not able to
comment on the same, which further deteriorated the situation for the organisation. The
company's wealth management division has indicated a cash outflow of $873 Million.
The customer were betrayed as they were being charged for services which was not
provided to them, the ultimate aim was to make money from thin air without keeling in mind the
trust and loyalty of customers towards the clients. The accountants were unethically posting
entries in the accounts for fake services that are being provided or not even provided to match
the financial statements (Louwers, and et. al., 2015). The internal control of the firm was very
weak, which has further helped the company in concealing these unethical transactions. The
company's insurance and financial planning arms were majorly dealing in the fraudulent
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transactions to meet the needs of its owners and to show higher level of profitability within the
organisation over period of time. The role of auditor is also under scanner, within the current
issue because it has not been able to detect the scam that was going on and the charges that were
recovered from customers were not properly inspected and thus company is able to run away
from the same for longer period of time (Hardy, 2014).
3. c) Purpose of Auditing and role of audit function in promoting socially responsible outcomes.
The purpose of an audit is merely an expression on the books of accounts of the
organisation. Due to the facts that the overall control on the books of accounts as well as
transaction is y the management of the organisation and the primary responsibility to detect and
fraud or error rest with the company and not auditors. Auditors is merely responsible for giving
an opinion that whether the accounts that are presented to them are free from any material
misstatement or not, Having said that the external parties like shareholders, customers and
general people relies too much on an auditor for the purpose of gaining knowledge about the
financial health as well as position of the firm in longer run. Thus, the responsibilities of Price
Water house copper was also quite high to reflect a true view whether the account was properly
maintained or not (Carcello, Hermanson and Ye, 2011). The auditor should have made sure that
the internal control was good enough to maintain a ethical environment in managing the financial
records. The Auditor have not commented on the internal control system of AMP Limited which
can be said to be a negligence on the part of auditors. Auditors are responsible to make sure that
their clients are framing accounts correctly and are following the proper norms that will benefit
community as well as organisation in the longer run. The auditor has said in its report that
company has been following various programs for the community development, which created a
positive image of the organisation among the people and hence, it made it easier for the
organisation to charge higher amount from clients. Thus, The role of auditor is quite big in
making sure that organisation conduct business ethically (Marques, Santos and Santos, 2012).
CONCLUSION
The above discussion can be summed up by saying that it is necessary to audit the
functioning of an organisation in an effective way. Otherwise various outcomes can come up
which can not only tarnish the image of the organisation but also of audit firms. Both shall know
their role and accordingly work to manage the same in the longer run.
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REFERENCES
Books and Journals
Arena, M. and Jeppesen, K. K., 2016. Practice variation in public sector internal auditing: an
institutional analysis. European Accounting Review. 25(2). pp.319-345.
Davidson, B. I., Desai, N. K. and Gerard, G. J., 2013. The effect of continuous auditing on the
relationship between internal audit sourcing and the external auditor's reliance on the
internal audit function. Journal of Information Systems. 27(1). pp.41-59.
Gomez, C., 2012. Auditing and assurance: Theory and practice. PHI Learning Pvt. Ltd..
Hardy, C .A., 2014. The messy matters of continuous assurance: Findings from exploratory
research in Australia. Journal of Information Systems. 28(2). pp.357-377.
Louwers, T.J., and et. al., 2015. Auditing & assurance services. McGraw-Hill Education.
Marques, R. P., Santos, H. and Santos, C., 2012. A solution for real time monitoring and auditing
of organizational transactions. Procedia Technology. 5. pp.190-198.
Carcello, J. V., Hermanson, D. R. and Ye, Z., 2011. Corporate governance research in
accounting and auditing: Insights, practice implications, and future research directions.
Auditing: A Journal of Practice & Theory. 30(3). pp.1-31.
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