AMP Ltd Misconduct Case: An Analysis of Ethics, Audit & Compliance

This case study delves into the ethical misconduct of AMP Limited, an Australian financial institution, as revealed during the Royal Commission hearings. It highlights the company's unlawful deduction of service fees, inappropriate financial advice, misrepresentations to ASIC, and interference with independent reports. The analysis contrasts AMP's actions with ethical codes like APES 230 and APES 110, emphasizing the importance of independence, integrity, and professional competence in financial planning and accounting. The case study also examines the role of auditors and their failure to identify systematic errors, ultimately holding the company's management and auditors accountable for their respective failures in upholding ethical standards and regulatory compliance. Desklib offers a variety of solved assignments and past papers for students.

Audit Assignment

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By student name
Professor
University
Date: 2nd Sep 2018.
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Executive Summary
In this assignment the case with relation to AMP limited has been discussed and focus in on the
ethical aspect of the activity that the company has indulged into for its own benefits. The ethical
codes that the auditors needs to follow while conducting their financial statements have also been
discussed and highlighted.
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Contents
Introduction.................................................................................................................................................3
Analysis........................................................................................................................................................5
Conclusion...................................................................................................................................................7
References.................................................................................................................................................10
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Introduction
AMP Bank Limited is a financial institution that is based in Australia and have been operating
from there. The company offered all kind of banking services that included giving out loans, residential
mortgages, management of superannuation funds, and all other kind of services to companies and
individuals. It is one of the largest corporate superannuation fund providers and runs the largest
business in Australia in this regard. There were some issues with the systematic misconduct of the
company that was revealed during the Royal Commission hearing. The company was charged with
misconduct, falsification of accounts, and inappropriate financial planning for the customers.
Analysis
1.The main aim of the business is to provide financial planning services to its clients and help them
in management of their super annuation funds, but the charges that have come through in the royal
commission was charges against many grounds that includes:
 Unlawfully deducting charges from the customers since 2009.
 The company also provided inappropriate financial planning advices to the customers.
 The company also made unlawful and misleading and inappropriate representation in front of
corporate regulator ASIC.
 The company also breached the corporations Act, and interfered with the independent report
for ASIC.
All these shows how the company has failed by performing unlawful acts in various grounds which
includes common good, stewardship, sustainability and social responsibility. The aim of the company
was to provide the best financial services to the customers but the company failed on that regard which
includes inappropriate guidance that would lead to the benefit of the company. On grounds of
stewardship the company has failed by making unlawful and misleading and inappropriate
representation in front of the compliance regulators (Sithole, et al., 2017). Stewardship means taking
care of someone else property and giving them the best advice, and the company has failed in that
regards very badly. The business works on the ground of social responsibility and sustainability and the
main aim of the business is to provide the best services to the customers and AMP has failed on that
regards and has failed to provide the best services because sustainability and social development and
has indulged in malpractices (Werner, 2017).
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The five year financial summary of the company has been stated above and it shows that the major
revenue for the company came in the form of fees and premium and the largest liability elements were
in the form of life insurance contract liabilities, investment contract liabilities etc.
2. The APES 230 and APES 110 deals with codes of ethics in financial planning and accounting
professions and mentions why it is important for professionals to abide by it. The APES 230 sets the
standard for the members to follow in terms of financial planning and abiding by it to make sure that
when they are discharging their responsibilities they generate the best results. The APES 110 states the
importance of ethics in case of accountancy (Kim, et al., 2017). It mentions that as individuals while
performing accounting functions it is important that the accountants should be free from any kind of
biasness and personal interest should not be involved and based on that they should provide the best
services to the people (Trieu, 2017). Ethics are the fundamental and the code principles that companies
need to abide with. It is important to work in such a manner that will help in improving the public trust.
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The five codes of ethics are independence and objectivity, integrity, confidentiality, professional
competence and professional behavior all these should be followed by the accountants. However, in the
given case we see that the employees of AMP failed terribly and did not conduct their duties on ethical
grounds. They provide wrong guidance to the public with respect to their work. They also told them to
invest in funds that were not profitable and on the back end made money from those companies. They
also wrongly charged fees from the customers which they were not supposed to. The AMP employees
also did not follow the standards that have been set by APES 230 with regards to financial planning and
making appropriate advices to the customers. They also made false claims that the external auditors
have stated that there were no systematic errors made by the company (Alexander, 2016).
3. Audit is the examination of the books of the company to find whether they have been prepared
following the relevant accounting standards and there is no mismanagement in that. The purpose of
auditing is to make sure that the users can depend on those audited financial statements and take
important decisions with regards to the company and its operations. Audit planning is very important as
it provides the auditor a way which they can follow to make sure that the overall auditing is done in the
best way. The role of auditors is very important and they have all the knowledge about all the important
information related to the companies they work with and thus maintaining an ethical stand while
discharging their duties is very important (Arnott, et al., 2017). They should be unbiased and provide the
client the best advice during financial planning, they should make sure they have no personal interest
involved with respect to the advice that they are providing to the company. The auditors of AMP stated
that the company had no systematic error in their records and this was a gross negligence on part of
them based on all the claims that were later made in front of the Royal Commission, and the users of
the financial reports depends on the auditors to take important decisions whether to take services from
the company or not (Kim, et al., 2017). So thus we see this was a failure on part of the auditors of the
company, as they failed to promote socially responsible outcomes, common good and stewardship and
thus that again highlights the importance of audit planning and audit function and maintaining a proper
code of ethics is also very crucial for the success of any auditor. The aim of the auditor should be to
provide quality services to the society that is dependent on it (Belton, 2017).
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Conclusion
Based on the above analysis it can be said that the company had failed on many ground in
conducting an ethical professional services relationship with its clients and there were many
instances were there have done statutory wrong and thus the management of the company should
be held liable for this. Also the auditors of the company have failed in conducting and doing their
duties to the best of their abilities and hence they should also be held responsible if the company
is failing.
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References
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Alexander, F., 2016. The Changing Face of Accountability. The Journal of Higher Education, 71(4), pp.
411-431.
Arnott, D., Lizama, F. & Song, Y., 2017. Patterns of business intelligence systems use in organizations.
Decision Support Systems, Volume 97, pp. 58-68.
Belton, P., 2017. Competitive Strategy: Creating and Sustaining Superior Performance. London: Macat
International ltd.
Kim, M., Schmidgall, R. & Damitio, J., 2017. Key Managerial Accounting Skills for Lodging Industry
Managers: The Third Phase of a Repeated Cross-Sectional Study. International Journal of Hospitality &
Tourism Administration, , 18(1), pp. 23-40.
Sithole, S., Chandler, P., Abeysekera, I. & Paas, F., 2017. Benefits of guided self-management of attention
on learning accounting. Journal of Educational Psychology, 109(2), p. 220.
Trieu, V., 2017. Getting value from Business Intelligence systems: A review and research agenda.
Decision Support Systems, Volume 93, pp. 111-124.
Werner, M., 2017. Financial process mining - Accounting data structure dependent control flow
inference. International Journal of Accounting Information Systems, Volume 25, pp. 57-80.
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