ACC3AUD Assignment: Detailed Audit and Assurance Report on AMP Limited

This report provides a comprehensive audit and assurance analysis of AMP Ltd, a financial services company operating in Australia and New Zealand, specializing in superannuation, investments, advisory, and banking services. The report examines AMP Ltd's areas of operation, key competitors like CommBank, Westpac, ANZ, and NAB, and relevant legal regulations such as the Competition and Consumer Act 2010, Corporations Amendment Act 2012, Anti-Money Laundering Act 2006, and ASIC Act 2001. It identifies key business risks, including environmental sustainability issues, ineffective internal controls, regulatory changes, and market risks. Furthermore, the report assesses account risks and key assertions for life insurance contract claims, investments in financial assets, intangible assets, and interest-bearing liabilities. Finally, it discusses corporate governance principles and the acceptance of the audit based on AMP Ltd's reporting framework and proactive approach to risk management. The report is based on the 2018 annual report of AMP Limited.

Running head: AUDIT AND ASSURANCE
Audit and Assurance
Name of the Student:
Name of the University:
Author’s Note

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Table of Contents
Executive Summary.........................................................................................................................2
Discussion........................................................................................................................................3
Areas of Operations.....................................................................................................................3
Competitors of the Business........................................................................................................3
Legal Regulations Applicable to the Company...........................................................................3
Business Risks of AMP ltd..........................................................................................................4
Account Risks and Key Assertions..............................................................................................5
Corporate Governance Principles and Recommendations..........................................................9
Acceptance of Audit....................................................................................................................9
Reference.......................................................................................................................................10

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Executive Summary
The focus of the assessment is to understand the operations of AMP ltd which is engaged
in providing financial services. The financial services which is provided by a business is of the
nature of superannuation products and investments products which contribute to the revenue
which is generated by the business. The assessment would be focusing on the primary activities
which assist the business to generate revenue and also the main competitors of the business in the
market. The assessment would also be showing the four accounts which are susceptible to risks
in a business and also the key assertions which are associated with the same. The analysis would
be further be showing all applicable laws and regulations which are applicable to the company
and whether the managers of the entity complies with the same or not.
Discussion
Areas of Operations
The business of AMP ltd is engaged in providing financial services to the clients of
Australia and New Zealand. The company specialises in providing products of superannuation
and investments. In addition to this, the business also provides advisory services and banking
services to the clients especially loans such as home loans and saving accounts. The business
operations of AMP ltd in Australia is the largest provider of life insurance and superannuation
(AMP Ltd 2020). As per the annual report for the business, the four major activities of AMP are
Advisory and Banking services, Insurance and Superannuation, Customer Solutions and AMP
Capital.
Competitors of the Business

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The level of competition in the market of financial products is comparatively high as
more and more finance-based companies are coming up providing the same products. The top
four competitors of AMP ltd which can be identified are CommBank, Westpac, ANZ and NAB.
All these banks operate in the market and is well recognised so naturally the level of competition
in the market is quite high.
Legal Regulations Applicable to the Company
The business of AMP ltd also needs to adhere to certain legal regulations so that the
business can operate in an efficient environment. The management of the company needs to
appropriately identify the relevant legislations which are applicable on the company and take
step so that the business does not attract any penalty or fines due to violation of regulations
(Mock and Fukukawa 2015). Some of the regulations which are applicable in the business of
AMP ltd are listed below in details:
 Competition and Consumer Act 2010: The competition and consumer Act of 2010 was
introduced by the parliament of Australia and it was earlier known as Trade Practices Act
1974. The regulation aimed to promote fair practices in competition and also ensure that
the interests of the consumers are well protected.
 Corporations Amendment (Future of Financial Advice) Act 2012: These are referred
to as an amendment which was made to Corporation Act 2001 which required financial
advisors to act in the best interests of the clients and even put forward the interest of the
clients ahead of his self-interests.
 Anti-Money Laundering and Counter-Terrorism Financing Act 2006: The main
purpose of this regulation is to prevent excessive laundering of money and also stop

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illegal financing of terrorism activities. The regulation puts an obligation on the financial
sector to take steps in this respect and stay proactive in the operations of the finances.
 ASIC Act 2001: This act enforces the ASIC to act as an regulator in the finance markets
and ensure that finance corporations acts in the best interests of the clients and ensure that
the operations of the business are ethically managed.
Business Risks of AMP ltd
The business risks are risk which states that the profitability of a business might be
affected due to such risks and therefore the management needs to take appropriate steps to
reduce such types of risks. In the case of AMP ltd, the business faces risks which has a direct
impact on the profits of the business. One of the risks which can be identified is of related to
environmental and sustainability risks for which the management of AMP ltd has taken active
steps so that the business can prevent emission of carbon and thereby protect the environment.
The company has been facing sustainability issues and the same is covered in the annual report
of the business.
Another business risk which can be identified which impacts the operations of AMP ltd is
the ineffective internal control of the management (Munteanu 2015). This is one of the primary
reason that the costs of the business are high and the same leaves the company also susceptible to
frauds which might be concealed easily. The management of the company needs to take
appropriate steps so that the risks can be managed in an effective manner.
One of the major business risks which has affected the company significantly risks is the
regulatory changes on the operations (ABC News. 2019). The senior executives of the company
have faced charges for a scandal which was committed by them. The scandal was that company

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has charged million of fees from clients for no services and therefore for such a scandal the
company has to face cases lodged by ASIC. This would affect the reputation of company in the
market and impact the revenue which is generated by the company and also impact the ability of
the business to attract more clients to the operations of the business.
One of the most common risks which impacts the operations of the business is the market
risk. The business of AMP ltd is engaged in financial operations and provides financial products
and services (Huang, Lin and Raghunandan 2015). It is therefore for this reason that the business
is most susceptible to market risks as there is change of fluctuations. The business of AMP ltd
has diversified operations and therefore the same is volatile in nature.
Account Risks and Key Assertions
Account Name Risk Key Assertion
Life Insurance Contract
Claims
The life insurance contract
claims for the business has
increased for 2018 which
needs to be reviewed as the
same can be misstated
affecting the profits of the
business. It is a known fact
that valuation of life
insurance contracts is a
complex process and thereby
the account is susceptible to
 The first assertion is the
valuation assertion for the
life insurance contracts
and whether the claims
are appropriate and
accurate or not.
 Another assertion which
can be identified is the
occurrence assertion
(Omer, Sharp and Wang
2018). The auditor need

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risks. to check if the life
insurance claim has
actually matured or not.
Investment in Financial assets The key risk which might
arise in this area is that the
value of the investment might
be overstated (Baldauf,
Steckel and Steller 2015).
This would affect the
financial position of the
business in a direct manner.
 The valuation
assertion is again the
key assertion in this
respect and the auditor
needs to ensure that
investments are
properly valued.
 In addition to this, the
auditor also needs to
check the fact that
whether the asset
actually exists in
reality or the same
have been cooked.
The assertion in this
case is assertion of
existence.
Intangible assets There is a high risk that the
intangible assets of a business
might be impacted in a severe
 The key assertion in
this respect is
assertion of valuation

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manner and the same can be
misstated. There is a risk that
the management has not
provided impairment charges
appropriately in this respect
which might make a big
difference.
which requires the
auditor to asses if the
value of intangible
assets which includes
goodwill are perfectly
presented.
 Another assertion in
this respect would be
assertion of
completeness which
requires the auditor to
check if complete
disclosures are
provided in the annual
reports and there is no
ambiguity (Byrnes et
al. 2015).
Interest Bearing Liabilities The auditor needs to check
the interest-bearing liabilities
which are shown in the
balance sheet and there is a
risk that the same might be
undervalued which would be
 The auditor of the
business would be
considering the
assertion of
completeness which
states that the amount

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affecting the financial
position of the business
(Todea, Joldos and Cioca
2013).
which is represented
in the balance sheet
should be appropriate
and accurate.
 Another assertions
which is related to
rights and obligations
of the interest-bearing
liabilities. The auditor
needs to check if the
business has proper
documentations for
the debts and
therefore the same
needs to be measured.
Corporate Governance Principles and Recommendations
The fourth principle of of the ASX Corporate Governance Council’s corporate
governance principles and recommendations states that the management of the company needs to
safeguard the integrity of the annual reports (Asx.com.au. 2020). The management of the
company needs to ensure that the information which is covered in the annual report is showing
accurate results for the business. The annual report of the business shows that the business has its

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own audit committee and risk management committee so that the reporting framework which is
followed by the business is appropriate.
Acceptance of Audit
The analysis of the annual report of AMP ltd for the year 2018 shows that the reporting
framework is as per the conceptual framework which is universally followed in a business. The
audit for the company would be accepted as the management of AMP ltd is trying to improve the
internal control and the management has been proactive in its approach for managing the
operations of the business.

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Reference
ABC News. (2019). AMP executives facing potential criminal charges. [online] Available at:
https://www.abc.net.au/news/2019-02-08/amp-executives-will-face-criminal-charges/10793402
[Accessed 6 Jan. 2020].
Annualreports.com. (2020). AMP Ltd. - AnnualReports.com. [online] Available at:
http://www.annualreports.com/Company/amp-ltd [Accessed 6 Jan. 2020].
Asx.com.au. (2020). [online] Available at: https://www.asx.com.au/documents/regulation/cgc-
principles-and-recommendations-fourth-edn.pdf [Accessed 6 Jan. 2020].
Baldauf, J., Steckel, R. and Steller, M., 2015. The Influence of Audit Risk and Materiality
Guidelines on Auditor’s Planning Materiality Assessment. Accounting and Finance
Research, 4(4), pp.97-114.
Byrnes, P., Brennan, G., Vasarhelyi, M., Moon, D. and Ghosh, S., 2015. Managing risk and the
audit process in a world of instantaneous change. Audit Analaytics and Continuous Audit:
Looking Toward The Future, pp.129-143.
Huang, H.W., Lin, S. and Raghunandan, K., 2015. The volatility of other comprehensive income
and audit fees. Accounting Horizons, 30(2), pp.195-210.
Mock, T.J. and Fukukawa, H., 2015. Auditors' risk assessments: The effects of elicitation
approach and assertion framing. Behavioral Research in A
Munteanu, C.C., 2015. Audit Risk Assessment in the Light of Current European
Regulations. Acta Universitatis Danubius. Œconomica, 11(3), pp.94-105.

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Omer, T.C., Sharp, N.Y. and Wang, D., 2018. The impact of religion on the going concern
reporting decisions of local audit offices. Journal of Business Ethics, 149(4), pp.811-831.
Todea, N., Joldos, A.M. and Cioca, I.C., 2013. Considerations Regarding Materiality Calculation
and Audit Risk in the Context of the Guidelines for Audit Quality. Anale. Seria Stiinte
Economice. Timisoara, 19, p.728.