AMP Ltd Audit Report: Financial Risks, Controls, & Compliance

This report provides an executive summary of the audit conducted on AMP Ltd, a financial services company involved in capital management, wealth management, and life insurance. It identifies key factors influencing the company, including compliance with the Corporations Act 2001, upholding privacy, maintaining integrity and ethics, and corporate governance practices. The report highlights major business risks such as cyber security threats, employee misconduct, organizational changes, and customer environment challenges. It also addresses accounts exposed to material misstatements, including sales promotion costs, cash balance, accounts receivable, creditor accounts, revenue, and receipts. The report further examines weaknesses in internal control measures revealed by the Royal Commission. This document is available on Desklib, where students can find a variety of solved assignments and study resources.

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Auditing

AMP Ltd
Executive summary
The effectiveness of a company should be assessed before the audit of the same is taken up as
it helps in delivering a better performance. To ensure this, both the external, as well as
internal factors need to be taken into consideration. In the present report, AMP Ltd is
considered and various activities have been dealt with so that a better understanding can be
attained. The report starts with the introduction followed by the legislation that influences the
company. Further, report sheds light on the material risks that affects the company.
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Contents
Introduction...........................................................................................................................................3
Segments where the company has undertaken the affairs......................................................................3
Four major factors that have influenced the company...........................................................................4
Major business risks that have influenced the audit processes of the organization................................5
Accounts that are exposed to the material risk of misstatements...........................................................6
The weakness of internal control measures that have been reflected by the Royal Commission...........7
Conclusion.............................................................................................................................................9
References...........................................................................................................................................10
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Introduction
The major business that is carried out by AMP Limited is in relation to the financial services
like Capital Management, Wealth Management, life insurances, etc. It has also been observed
that the inefficiency of the organization in the maintenance of the internal control system has
read it too face various legal issues. The goodwill and reputation of the company have fallen
down because of the errors and frauds made by the executives of the organization (AMP Ltd.,
2017). Hence, in this report, it has been suggested that how can the company undertake an
audit process in order to protect itself from any kind of fraud in the future.
Segments where the company has undertaken the affairs
There are various Financial Services that are needed to be conducted by the company in
Australia and New Zealand for conducting its business operations:
Banking- the organization has been involved in providing financial aid to the public for
investment and residential motives. The organization also helps different businesses in
making decisions by giving them proper advice (AMP Ltd, 2017).
Management of wealth- the organization also helps the company in order to take decisions on
the superannuation funds and using them in a proper manner so that benefits can be acquired
using them. It also helps the general public to make investment decisions and create a path
for their better future.
Management of capital- AMP Limited also conducts the business of providing Capital
Management techniques to its customer so that optimum utilization of its multi-asset
resources and equity management structure can be established by the customer.
Life Insurance services- incapability insurances are being offered by the company to its
customers as life insurances. There are various other insurance services that are conducted by
the company (AMP Ltd, 2017).
Others- there are many various other financial services that are provided by the organization
to the customers. The organization is said to help the customers in relation to any kind of
insurance policies and superannuation funds for making a better investment for future
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Four major factors that have influenced the company
The company AMP Limited spread worldwide because of which it faces various jurisdictions
and functions. The company is regulated by the Corporation Act 2001. In relation to the
financial legislation aspects of the organization, many rules were implemented by the
company:
Upholding privacy in dealings
A system has been constructed by the organization in order to follow the rules and
regulations of maintaining the privacy of all its customers. There should be secrecy with
every transaction that has been disclosed by the organization in order to get help for financial
decisions (AMP Ltd, 2017). If any type of underutilization of internal information of the
organization takes place, strict actions were to be taken. Hence, the organization has been
bound with confidentiality agreement with the customer so that all the data in relation to the
shareholders can be kept preserved and safeguarded (Gay & Simnet, 2015).
Performing with proper integrity and ethics:
It has been noticed that the organization has been continuously trying to work under the rules
and regulations so that a code of conduct can be maintained in the management (AMP Ltd,
2017). The main reason behind this code of conduct is to when the customers trust so that the
business can be increased. It is also important for the customers to provide every piece of
information whether it is hiding of commissions or any types of errors so that this
information can be used by the organization to make propriety decisions in relation to the
finances (Geoffrey et. al, 2016). If any individual is found to break the trust of the customer,
then he must be penalized according to the rules and regulations of the confidentiality
agreement.
• It is very important for the organization to utilize all its resources in an effective manner
which can help it to earn a profit after incurring all the expenses.
• The organization should try and not make any false or misleading decisions for the
company to show that dignity can be maintained in the working structure.
• The company also looks after the fact that there is no act of bribery or any other behaviour
affecting the business that may affect the reports of the company.
Corporate Governance
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Various corporate governance affairs and practices have been concentrated upon by the
organization in order to fulfil the following segments:
• Corporate sustainability
• Governance of life board
• Risk cultures
• Customer advocate
• Diversity and inclusion
• ESG reporting
Safe and effective workplace
Various methods have been used by the company in order to make the environment healthy
and safe place so that maximum concentration and effectiveness can be achieved in the work.
The company has also tried to make sure that no unethical practices like harassment,
discrimination, and other malpractices are present between the employees of the organization.
By conducting these control management systems, the organization has fulfilled its task of
creating a healthy and safe environment for the employees (AMP Ltd, 2017).
Major business risks that have influenced the audit processes of the organization
There are many material disclosures of risk that have to influence the audit services of the
company:
Threats in relation to cyber security: it is very important for the organization to maintain
cyber security because exploitation of the customer’s data can be made using the unethical
measures used by hackers. This may for the lead to degradation of the company's reputation
and disintegration processes as well. Hence, it is very important for the organization to use
the best possible Technologies for protecting its customer’s information and maintaining the
confidentiality of the relationship.
The conduct of business partners and the employees: there is always a risk in the organization
if the organizational staffs are not working in a proper manner. If there is any misconduct of
the organizational staff, then all the regulators, customers and associated parties will be
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affected (Hoffelder, 2012). Therefore, it has been tried that all the employees work in an
effective manner so that the reputation and Goodwill of the company can be prioritized.
Organisational variations: it should always be kept in mind by the organization that the main
objective of the companies should be to address the requirements of each and every employee
so that it can survive in the competitive and complicated environment of the industry. Also,
the need of employees in order to work effectively can be very important for the completion
of the business objective as they help to balance the management and customers at the same
time (Hoffelder, 2012). Hence proper remuneration to should be provided to the Employees
so that we can gain trust in the organization's management structure and thus help it to
become more efficient in nature. If one of the major employees of the organization resigns
the company, then a huge loophole is created at the top level management structure of the
organization (Kaplan, 2011). Risk management system should also be taken into
consideration so that no leakage of data to the Rival companies is being made as all the key
policies and approaches will be spoiled.
Customer and competitive environment: one of the major risks that are foreseen by the
organization is that the customer base can be exploited. all the tasks of the organization are
based on the acceptance of customers and reviewing their income, age, working review,
preferences, etc. in order to provide them with financial decisions. Fulfilling the requirements
of a single customer will not be of any concern is the organizational goals are not being met
with. Hence, the company shall keep on trying to implement new methods which can help to
improve its policies and plans for clients and satisfy them in the best possible way. These
policies will help the organization to divert the customers towards it. There are also exist
major financial planning issues that are needed to be dealt with by the customers. For
example, if any kind of medical emergency arises in the customer’s family, then he will have
a need to withdraw his funds for investments and invest it into the treatment of is this medical
emergency.
Accounts that are exposed to the material risk of misstatements
It has been observed that the risks faced by the company may have given rise to a material
misstatement in the financial statements of the organization. Thence, there may be some
financial documents which may be mistreated because of the heir relevancy of the business
risks:
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Cost of sales promotion: it has been noticed that a total cost of promotion and advertisement
that have been conducted by the organization may be materially misstated. The management
system of the organization has been pressured in order to gain the crust of the customers as
soon as possible in order to survive in the competitive market (Lapsley, 2012). Hence, it is
very important for the organization to use different tools which can be helpful in the
determination of such costs. This also clearly states that the organization may have been
forced in order to spend extra on the promotion and advertisement of the organization so that
it can acquire the top level in the industry. Therefore, it should be made necessary for the
organization to determine targets and costs before conducting any activities (Livne, 2015).
There may be also an instance where the company staff may include the personal cost in the
sales promotion budget, which may have arose the risk of exploitation of organizational
resources.
Cash balance and accounts receivable: there may be a risk present in the organization in
relation to the accounts receivable and cash accounts of the organization. There can be
situations arising where an employee has resigned from the company but has already
exploited the organizational resources before leaving (Matthew, 2015). Hence there can be
mishandling and non-recording of petty expenses which can make the data of the
organization vulnerable. Therefore, it is one of the major factors for the organization to
determine the books of accounts in the most prominent manner so that determination of
frauds and errors can be made and further corrections can be done.
Accounts of the creditors: the information technology framework of the organization is not
very strong because of which exploitation of the financial information of the organization has
been made easy. It should be made sure that this information is only provided to the superiors
of the organization so that no further exploitation can take place. The organization has always
been exploited to the cyber threats which she was the importance of a good its system for the
proper functioning of a company.
Revenue and receipts: when there are intense market competitions present in the industry,
some employees may try to exploit the organizational resources by using unjust and unfair
means to enhance sales. These are just done in order to gain the incentive and bonuses that
are the company given by the company for completion of the target of sales (Merchant,
2012). This leads to a problem of exaggeration of the amount in the sales because of which
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the financial documents of the firm will be affected which may further lead to damage to the
company's reputation and goodwill.
The weakness of internal control measures that have been reflected by the Royal
Commission
It has been observed that the Royal Commission has presented various allegations in relation
to the inappropriate field of superannuation, banking, and a segment of financial services of
the company. The customers have also stated that not all services are being provided to them
by the organization in an appropriate manner (Cappelleto, 2010).
The internal control system of the organization is not up to date because of which
vulnerabilities have been present in the financial statement and a negative indicator of future
effectiveness was shown after a devastating value of fraud. The problems in the internal
control system may have arisen because of the fall in the company’s reputation and goodwill
(Niemie & Sundgren, 2012). All these problems in the internal control system can be clearly
identified by auditing the financial statements of the organization. Hence, it is very important
for the organization to conduct the audit process in an elaborated manner show that any kind
of misjudgement of the transactional data can be prevented (Church et. al, 2008).
Therefore, in relation to these issues, there may be many serious risks and misstatements that
can spoil the reputation and Goodwill of the organization as a whole and may further harm
the profit earned by the organization. All the model and affairs that have been taken up by the
employees of the organization have resulted in a material list of misstatements present in the
financial statements of the organization. The organization has been trying to cope up with this
misstatements buy compensating the customers which have brought it into the eyes of the
public. The Organisation was also used for the unethical and untrue measures adopted by it in
order to conduct business by many of its customers because of which it was prone to borne
all the losses incurred by them (Elder et. al, 2010).
Should audit be undertaken
Therefore, it can be clearly observed that the unethical means can provide small term profits
to the organization but will definitely poser threat to the reputation and Goodwill of the firm
which cannot be enhanced if is degraded once. The reports of the Royal Commission also
stated that the various risks and errors that have been present in the financial statements of the
company have been one of the major negative indicators for the future business of the
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organization. This shows the audacity or need of an audit statement in the organization so as
to determine the hidden issues and problems in the financial statements of the company.
Hence it is very important for each and every organization to carry out the audit processes in
the best possible manner so that true and efficient information can be provided to the
customers. Going by the
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Conclusion
It has been clearly mentioned in the previous analysis that the various types of material
misstatement and business risk that are present in the managerial framework of the
organization endanger the future business of an organization. It is very important for the
organization to consider all the audit risks before undertaking any kind of decisions using the
financial statements of the organization. The overall effectiveness of the financial statements
of the organization will decrease if no audit process will be conducted. The reports of the
Royal Commission have also stated that this material misstatement will make it hard for the
customers to analyse the accounts which will further raise the risk of imperfect investments to
be made by the customers. The best way that can be used by a customer to get the correct
information is to file a legal suit against the organization for providing incorrect income
statements. This will force the organization to provide true information towards customers
which can be further used to invest in the firm and make decisions regarding Investments.
However, if there are misconceptions created even in the auditing statement of the
organization, huge problems may arise for the auditor and the AMP Limited as a whole.
Therefore it can be concluded by saying that if the audit process is carried out effectively, the
company will be able to provide the customers with the best possible data.
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References
AMP Ltd. (2017) AMP Limited 2017 annual report & accounts. Available from:
http://www.annualreports.com/HostedData/AnnualReports/PDF/OTC_AMLTY_2017.pdf [Accessed
19 September 2018]
Cappelleto, G. (2010) Challenges Facing Accounting Education in Australia. AFAANZ,
Melbourne
Church, B., Davis, S & McCracken, S. (2008) The auditor’s reporting model: A literature
overview and research synthesis. Accounting Horizons. 22(1), 69-90. Doi:
https://doi.org/10.2308/acch.2008.22.1.69
Elder, J. R, Beasley S. M. and Arens A. A. (2010) Auditing and Assurance Services. Person
Education, New Jersey: USA
Gay, G. and Simnet, R. (2015) Auditing and Assurance Services. McGraw Hill
Geoffrey D. B, Joleen K, K. Kelli S. and David A. W. (2016) Attracting Applicants for In-House
and Outsourced Internal Audit Positions: Views from External Auditors. Accounting
Horizons. [online] 30(1), pp. 143-156. Doi: https://doi.org/10.2308/acch-51309 [Accessed
19 September 2018]
Hoffelder, K. (2012) New Audit Standard Encourages More Talking. Harvard Press.
Kaplan, R.S. (2011) Accounting scholarship that advances professional knowledge and
practice. The Accounting Review [online]. 86(2), pp. 367–383. Available from
https://doi.org/10.2308/accr.00000031
Lapsley, I. (2012) Commentary: Financial Accountability & Management. Qualitative
Research in Accounting & Management. [online]. 9(3), pp. 291-292. Doi:
https://doi.org/10.1111/1468-0408.00081
Livne, G. (2015) Threats to Auditor Independence and Possible Remedies [online]. Available
from: http://www.financepractitioner.com/auditing-best-practice/threats-to-auditor-
independence-and-possible-remedies?full [Accessed 12 September 2018]
Matthew, S. E. (2015) Does Internal Audit Function Quality Deter Management Misconduct?.
The Accounting Review. [online]. 90(2), pp. 495-527. Available from
https://doi.org/10.2308/accr-50871 [Accessed 18 September 2018]
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