Analysis of Assurance and Forensic Accounting in Financial Reports

This report provides an analysis of assurance and forensic accounting practices, focusing on key audit matters (KAMs) and their impact on financial reporting. The report examines alterations in financial statements made by AMP, Commonwealth Bank, and Bank of Queensland, comparing 2018 and 2017 annual reports. It discusses the optional inclusion of findings in audit reports as per ASA701 and highlights risks identified by the Royal Commission, emphasizing the importance of auditor communication and addressing material misstatements. The report further explores audit procedures, including inquiry, observation, evidence checking, re-performance, and CAAT, and examines the role of organizational culture audits. It concludes by summarizing the key findings and implications of the Haynes Royal Commission on financial services, reflecting the threats from the results of the royal banking commission and its impact on financial reporting and auditing practices.

Running head: ASSURANCE AND FORENSIC ACCOUNTING
Assurance and forensic accounting
Name of the university:
Name of the student:
Authors note:

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Table of Contents
PART A:.....................................................................................................................................2
Answer to question 1..................................................................................................................2
Answer to question 2..................................................................................................................4
Answer to question 3:.................................................................................................................4
PART B:.....................................................................................................................................5
Answer to question 1..................................................................................................................5
Answer to question 2:.................................................................................................................5
PART C:.....................................................................................................................................5
Conclusion:................................................................................................................................5
Reference:..................................................................................................................................5

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PART A:
Answer to question 1.
Certain alternation are made in the financial report of 2018 as compared to annual
report of 2017:
AMP: As per the provisions of ASA701 with respect to key audit matters company made
certain alternations for financial year of 2018 as compared to financial year of 2017 that has
been included in annual report (Afterman 2016).
 Financial instruments earlier arranged as loans and receivables are presently arranged
as amortized cost.
 Equity instruments which were earlier arranged and known to me available for sale
are presently arranged as fair value with the help of other comprehensive income
(FVOCI).Since there is consistency maintained for treatment of sale of equity
instruments which are available, movement in terms of value for equity instruments
are known as FVOCI and are known as per fair value reserve included in the
statement of equity change. Gains as well as losses for equity securities are
measurable at FVOCI are not at all rearranged into profit or loss (Appelbaum, Kogan
and Vasarhelyi 2017).
 Debt instruments that were held by the AMP Bank were earlier arranged as maturity
to be held and for measurement at amortized cost .AMP has rearranged the financial
instruments as FVOCI to be known as debt instruments in order to meet all cash flow
characteristics as per contractual basis that will help to collect cash flows as well as
help to manage liquidity needs (Bédard, Gonthier-Besacier and Schatt 2014).


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Commonwealth bank:
The common wealth bank is one of the biggest multinational banks throughout the world.
Generally the bank conducts its operations across the whole of United Kingdom, Asia and
New Zealand. Various different types of financial services along with banking institution and
retail business services are provided by the bank. As per the provisions of ASA701 with
respect to Key audit matters (KAM’s) company has made several alterations for the financial
year 2018. Making comparison to the financial year 2017 that has been shown in company’s
annual report (Bédard, Gonthier-Besacie and Schatt 2015).
 More weightage on financial as well as quantitative measure in STVR.
 Being 50% of STVR withheld into equity.
 A long period of STVR withheld period for two years.
 Introducing some new LTVR measures for performance.
 To allocate reward rights with respect to LTVR as per face value basis.
 Enhancement for risk as well as governance of remuneration as well as frameworks
(Motahary and Emami 2016).
Bank of Queensland:
As per provisions followed under SA701 with respect to Key audit matters (KAM’s) the
company could make some alterations for the financial year 2018. As per comparison in the
financial year 2017 that has disclosure in annual report of the company (Gimbar, Hansen and
Ozlanski 2016).
 Changes in terms of remuneration in the financial year 2018 and for the financial year
2019. Changes in terms of remuneration framework do cover specific management
personnel that were made for FY 18 in order to meet the needs for executive

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remuneration. As per BEAR Legislation and for alignment in terms of expectations of
community (Kholvadia 2016).
 On 10th May 2018 specific changes for Group Executive to management personnel
were announced. Restructure had the purpose for providing and consolidation of
operations as per COO in order to improve the support for front line employee.
Answer to question 2.
As per ASA701, in the audit report there is an inclusion called Findings which is said
to be optional and is as per the discretion of auditor. This can include Materiality as well as
Scoping in terms of audit report which cannot be contemplated as per ASA701. The above
topics are uniquely adopted in between the audit firms. Table below highlights the statistics
by the company for April to June 2017 for the year end. PwC is seen for including
materiality, scope as well as findings in terms of instance and on the other hand EY cannot
include in any of the reports. KPMG, DE Lottie makes the report as per some instances and
makes the disclosures for being not significant in case of each audit (Ege 2014).

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Answer to question 3:
There are certain risk which is highlighted by the commission along with the banks
consumers, also there are certain high risk or hazards which are identified as per ISA 315.
The basic level of honesty has been sacrificed for the generation of short term profit, this was
in the report submitted by the commission. In order to identify and assess risks for material
misstatement as per the understanding of Entity and for its environment individual judgments
of an auditor with respect to areas in financial statements are involved with the critical
decision of management inclusion of accounting estimates and also the effect of audit in case
of events or transactions occurred. Description of essential audit matter in terms of auditor’s
report would include: The reason for matter being considered for being one of the important
in audit and for determination of KMA.
1.) The matter has been addressed by the audit report is,
The auditors are significantly trying to ensure communication which is useful in the group
engagement: (Lanis and Richardson 2015)
 Communication should be free between the auditors and the group engagement as
per the audit policy.
 The governance of the group on a time basis is carried by the auditor and are
communicated to the people. (Bowlin, Hobson and Piercey 2015).

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PART B:
Answer to question 1.
The audit matter generally tries to show the risk relating to the corporation of finance
followed from the year 2017 and 2018. A report on the high level of misconduct was
provided by the royal banking commission which was in respect to super annulation and
banking. The final report has to be looked upon with the interim report to get a clear idea of
the requirement of observation. (Cordoş and Fülöp 2015). It has well been documented as per
Commission received for 10000 submissions of public and for holding of 68 days for
hearings.
Final Report includes financial services that are already examined and identified with issues,
causes as well as responses which can also include recommendations as well. The Australian
Securities and Investments Commission as well as Australian Prudential Regulation
Association Commission has brought about 24 instances (Afterman 2016). The basic level of
honesty has been sacrificed for the generation of short term profit, this was in the report
submitted by the commission. (Sirois, Bédard and Bera 2018).
In commission there are 4 observation:
 There can be link between reward as well as conduct.
 In conflict there can be effect between interest as well as duty
 There can be a holding account of an organization.
Answer to question 2:

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Organizational culture can be audited for external auditor as there can be agreement
between Board and either Audit Committee in order to proceed for audit or for review of
culture or internal audit departments that take several methods for auditing culture:
 Incorporation of element of culture for each and every risk-based audit for tailor
testing programmer
 For performing of standalone culture audit
 There can be Thematic analysis for internal audit work
Several internal audit functions can implement one and others can implement other
procedures (Chambers and Odar 2015).
Specific audit procedure can be used by auditors in order to determine quality of financial
information which can be provided by the clients.
Inquiry: As an auditor has the purpose of auditing the financial statements of a companies
and verify that it is showing true and fair value with transparency. Thus an auditor can clear
any of its doubt by taking to the relevance authority of the same.
Observation: when certain activities of a company a carried out without any proper
documentation. The auditor can verify the same by visually observing the events relating to
the activity this method is carried and preferable when no proper documentation is available.
(Brasel et al. 2016).
Checking of evidences: The auditor cannot blindly rely on the available documents, without
conforming the genuinely of those documents. Thus, the auditor has to develop means to
inspect and verify the evidences provided to him. If any of the evidences fail to be true the
auditor should carry out extensive inspection of evidence.

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Re performances: when all the above methods fail to provide satisfaction to the auditor, the
auditor himself needs to re-perform the calculation to check whether they are correct or not.
This is done when all the above methods fail to provide satisfactory result to the auditor.
CAAT: This method is used when the volume of data is large and each and every transaction
needs to be analysts. A special software is needed to perform the same.
KAM are known to be matter for auditor’s professional judgment which are of most
importance in terms of audit for financial statements of current period. The matters known to
be important are further communicated to TCWG by the auditors on either quarterly or six
month basis as per audit committee meetings during the reviews that are limited. Most of the
important matter arise to get out of audit report formats those are uninteresting. KAM can
further make audit reports to be more and more interesting, transparent as well as those will
capture attention for readers of financial statements for matters that are important for
professional judgment of the company. KAM becomes applicable in case of certain situations
for statutory auditor decisions in case of professional judgment in order to communicate
KAM in terms of audit report of other company which does not fulfill the conditions that are
mentioned above. It becomes significant to note down KAM that is not applicable for report
having limited review by the statutory auditor on either quarterly or six month outcomes
(Bowlin, Hobson and Piercey 2015).
PART C:
Conclusion:
It can be concluded that the Followed the provisions under ASA701 relating to key
audit matters (KAM’s) the company made some relieved alteration in the financial year 2018
Comparing the fiscal year 2017, which are disclosed in the company’s annual report and the
description of the Key audit matter differ between audits undertaken by Ernst & Young, KPMG

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and PWC of those companies as well as key audit matters are communicated. Critical risks and
audit procedures to the users of audited statements. Finally, the findings of the Haynes Royal
commission in to the financial services and reflected the threats from the results of the royal
banking commission.

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