Analyzing Audit, Assurance, and Compliance at Oz Minerals

This report provides a comprehensive analysis of the audit, assurance, and compliance practices of Oz Minerals, based on its 2017 annual report. It examines the auditor's independence, non-audit services provided by KPMG, and auditor remuneration. The report delves into key audit matters, such as the carrying value of PPE at Prominent Hill and the valuation of low-grade gold ore stockpiles, detailing the procedures used by KPMG to assess these areas. Furthermore, the analysis covers the role of the Audit Committee, the auditor's opinion, and a comparison of management and auditor responsibilities. The report also addresses material subsequent events and the auditor's handling of material information. Overall, the study offers insights into the effectiveness of auditors in ensuring the quality and reliability of financial reporting at Oz Minerals.

Running head A D ASS RA C A D C M A C: U IT, U N E N O PLI N E
Audit Assurance and Compliance,
ame of the StudentN
ame of the niversityN U
Author s ote’ N

1A D ASS RA C A D C M A CU IT, U N E N O PLI N E
Executive Summary
he main aim of the report is the analysis of the roles and responsibilities of the auditorsT
in the process to enhance the audit report quality More specifically this report takes attempt for. ,
the analysis and inspection of the auditor s report of one of the major companies of Australia’ , Oz
Minerals he report puts emphasis on some of the major aspects like the independence of the. T
auditors materiality assessment of the auditors and others his report also takes into account, . T
the analysis of the remuneration of the auditors of z Minerals for the year and MostO 2017 2016.
importantly the report takes into account the assessment of the key audit matters of z, O
Minerals by the auditors hus this report can be considered as a major study for analyzing the. T ,
effectiveness of auditors in enhancing the audit report.

2A D ASS RA C A D C M A CU IT, U N E N O PLI N E
Table of Contents
ntroductionI .......................................................................................................................................3
Auditors ndependence Requirement’ I ............................................................................................3
on Audit ServicesN - ..........................................................................................................................4
Auditor s Remuneration’ ....................................................................................................................4
ey Audit MattersK ...............................................................................................................................6
Audit Committee................................................................................................................................8
Audit pinionO ...................................................................................................................................8
Difference between Responsibilities....................................................................................................9
Material Subsequent ventsE ............................................................................................................9
Analysis of the Material nformation by the AuditorsI .......................................................................9
Material nformation MissingI ..........................................................................................................10
ollow up uestionsF - Q ........................................................................................................................10
Conclusion......................................................................................................................................11
References.....................................................................................................................................12

3A D ASS RA C A D C M A CU IT, U N E N O PLI N E
Introduction
otential investors and the other users of the fi nancial statements consider the report ofP
the auditors as a major tool for judging the truthfulness as well as fairness of various fi nancial
reports as the auditors provide their analytical judgments on the fact that whether there is any
material misstatements in the fi nancial statements of the audit clients or not ( arkerP , 2013 he). T
quality of the audit reports largely depends on the consideration of the material issues in the
fi
nancial statements of the companies by the auditors or this reason the quality of the audit. F ,
reports has become a major issue to the audit regulations setters t can be seen that there have. I
been major initiative taken in the recent years for the enhancement of the quality of the audit
reports ( erguson innuck SkinnerF , P & , 2016 hese initiatives have increased the responsibility of). T
both the companies and the auditors as it has become necessary for the companies and the
auditors to report about the major key audit matters in the auditor s report so that the investors’
and other users can know about them An e tra responsibility for the auditors is to take into. x
consideration all the relevant material issue at the ti me to assess the fi nancial statements he. T
report aims at the analysis of the role and responsibility of the auditors from the annual2017
report of z MineralsO .
Auditors’ Independence Requirement
aking into consideration all the requirements of auditor s responsibility is a primeT ’
success factor in the audit profession he annual report of z Minerals states that M. T 2017 O KP G,
the audit partner of z Minerals for the year has followed the standards ofO 2017, Section 307C
of the Corporations Act 2001 in order to maintain auditor s independence’ (ozminerals com. ,

4A D ASS RA C A D C M A CU IT, U N E N O PLI N E
2018 he auditors of the company have not mentioned about any contravention of auditor s). T ’
independence requirements as they have maintained the professional code of conducts of the
profession (ozminerals com. , 2018).
Non-Audit Services
he annual report of z Minerals shows the received non audit services by zT 2017 O - O
Minerals from M and they areKP G; Tax Compliance and Other Tax Advisory Services and Other
Non-audit Services he payment for the ta ation related non audit services to M is. T x - KP G
and in the year and respectively the payment for other non audit$180,000 $160,124 2017 2016 ; -
services to M is and for the years and respectivelyKP G $44,328 $5,125 2017 2016
(ozminerals com. , 2018 he analysis of the Audit Committee in the organizations did not found). T
any material impact on the integrity and objectivity of the e ternal auditors for providing nonx -
audit services t needs to be mentioned that M has complied with. I KP G Corporations Act 2001 for
not compromising the auditor s independence while providing the non audit services’ -
(ozminerals com. , 2018).
Auditor’s Remuneration
he following table shows the remuneration of the auditors in z Minerals for the yearT O
and and the change in percentage in the remuneration2017 2016; :
Particulars 2017 ($) 2016 ($) % ChangeAudit Services
M AustraliaKP G 425,000 439,722 -3.35%
M irms verseasKP G F O 23,549 34,990 -32.70%

5A D ASS RA C A D C M A CU IT, U N E N O PLI N E
otal ees of M s Audit ServicesT F KP G' 448,549 474,712 -5.51%
ther Assurance ServicesO 50,000 71,900 -30.46%
Total Fees for Audit and Assurance 498,549 546,612 -8.79%
a Compliance and a Advisory ServicesT x T x 180,000 160,124 12.41%
ther ServicesO 44,328 5,125 764.94%
Total Fees for Non-Audit Services 224,328 165,249 35.75%
Total Fees 722,877 711,861 1.55%
As per the above table the payment to M related to the audit and assurance related, KP G
services has decreased in the year from by he main reason that contributed2017 2016 8.79%. T
towards the decrease in this payment is the decrease in the payment for all the services under
audit and assurance services by and his can be considered as a3.35%, 32.70%, 5.51% 30.46%. T
positive aspect for z Minerals as the company has been able in reducing the e penses forO x
remuneration (ozminerals com. , 2018).
he above table also indicates towards the fact that z Minerals had to increase theT O
payment to M for receiving the non audit services by he main reason for theKP G - 35.75%. T
increase in this overall payment is the increase in the payment for the non audit services by-
and t indicates that the company has increased the proportion of non audit12.41% 764.94%. I -
services from MKP G ( odne et alH ., 2013).
t can also be seen from the above table that z Minerals had to make an increasedI O
payment in the overall audit fees by ncrease in the payment for the items for non audit1.55%. I -

6A D ASS RA C A D C M A CU IT, U N E N O PLI N E
services can be held responsible for this increase in the audit payment to MKP G
(ozminerals com. , 2018).
Key Audit Matters
he key audit matters assessed by the auditors of M in z Minerals are discussedT KP G O
below:
Key Audit Matter 1: PPE’s carrying Value of Prominent Hill
ne major key audit factor in z Minerals can be seen in the carrying value of the ofO O PPE
rominent ill and the main reason for considering it as a key audit matter is that the auditorsP H
had to put major effort in the assessment of the fact that there is not any impairment of the PPE
of rominent illP H (ozminerals com. , 2018 his situation involves some crucial factors n this). T . I
aspect the auditors have considered another aspect as crucial that is the presence of any,
impairment indicator that can lead to the analysis of the recoverable value of the ofPPE
rominent ill he historical sensitivity of the used model by z Minerals for the e ternal andP H . T O x
internal uses can be considered as another major reason for this or this reason M has. F , KP G
taken into consideration some relevant factors like capital and operating e penditures foreignx ,
e change rate and othersx (ozminerals com. , 2018).
he auditors have assessed this issue with the application of some substantive analyticalT
procedures n order to assess the impairment primary indicator the auditors have tested the. I ,
internal control of z Minerals in the areas of budget and operational plan for the ofO PPE
rominent illP H ( e et alH ., 2017 n addition the auditors have made the assessment of some). I ,

7A D ASS RA C A D C M A CU IT, U N E N O PLI N E
major factors related to the of rominent ill like historical cost operating cost level ofPPE P H , ,
production for metal and others Another major step by the auditor was the comparison.
between foreign e change rates and forecasted price of the commodity ence thesex . H ,
procedures can be classified as substantive tests of details and tests of control ( eung RichardsonL ,
aggi& J , 2014).
Key Audit Matter 2: Low Grade Gold Ore Stockpiles Valuation
After the above another key audit matter in the fi nancial operation of z Minerals is the low, O
grade gold valuation and the main reason for considering this as a key audit matter is that there is
a presence of major judgment while evaluating the valuation process At the ti me of the valuation of.
this low grade gold ore z Minerals uses a certain estimate related to the future revenue and, O
the company is e pected to get the revenue in future from the low grade gold ore n order tox . I
assess this risk the auditors have taken into consideration the factors like level of production, ,
future processing cost and others (ozminerals com. , 2018).
M has addressed this issue with the application of the substantive audit proceduresKP G .
est of control can be considered as one of them in which the auditors have tested z MineralsT O ’
valuation process for the low grade gold ore ( rasel et alB ., 2016 After that the auditors have). ,
done the assessment of the selected methodology in order to determine the value of low grade
gold ore After this process the auditors were involved in the e amination of the used assumptions. , x
for the valuation of low grade gold ore such as commodity price operating cost and others hus, . T ,
these processes can be considered as the substantive test of control ( illison eecherH & P , 2017).

8A D ASS RA C A D C M A CU IT, U N E N O PLI N E
Audit Committee
he management of z Minerals has established anT O Audit Committee with the aim to
assist the board of directors of the company to discharge their roles and responsibilities in the
process of fi nancial reporting ne non e ecutive director of z Minerals eter asow will be the. O - x O , P W ,
chairman of this committee ( adolato Donelson geB , & E , 2014).
Apart from this audit committee z Minerals has an, O Audit Committee Charter with
certain responsibilities he aim of governance and risk policy is to ensure the presence of ethics. T
in the business processes (Contessotto Moroney& 2014 he aim of Market Dividend olicy is to). T P
ensure fair trading of the company s securities he aim of inance and Accounting olicies is to’ . T F P
ensure effective fi nancial compliance he aim of Securities rading olicies is to set necessary. T T P
policies for the staffs employees and director of z Minerals, O (ozminerals com. , 2018).
Audit Opinion
he provide opinion of M on the analysis of the fi nancial statements of z MineralsT KP G O
indicates towards the fact that the management of the company has prepared and presented
the fi nancial statements in accordance to the Corporations Act 2001 and this aspect leads to the
true and fair view of the fi nancial performance of the company (ozminerals com. , 2018 he). T
opinion of M also indicates towards the fact that the company has followed theK G Australian
Accounting Standards and Corporations Regulations 2001 at the ti me of the process of fi nancial
reporting (ozminerals com. , 2018).

9A D ASS RA C A D C M A CU IT, U N E N O PLI N E
Difference between Responsibilities
t is the responsibility of the management and the directors of z Minerals to prepareI O
and present the fi nancial statements of their business in accordance to the Australian
Accounting Standards and Corporations Act 2001 so that they can reflect the true and fair view
of the fi nancial statements Another two major responsibilities are the assessment of the internal.
control and going concern assumptions of the company (ozminerals com. , 2018).
t is the responsibilities of the auditors of z Minerals to gain enough evidence andI O
assurance on the fact that there is not any material misstatement in the fi nancial statements of
the company as a result of fraud and errors After that the issue of proper audit evidence is. ,
another major aim of the auditors (Brown, Preiato & Tarca, 2014).
Material Subsequent Events
As per the annual report of z Minerals the company has made a payment for the fullyO ,
franked dividend of on March and the date to record was March t can14% 26 2018 12 2018. I
be seen that the total amount was million and the company has not recorded this$41.8
amount in the fi nancial statements for the year ended December Apart from this there31 2017. ,
is not any other material subsequent event in the year for z Minerals2017 O (ozminerals com. ,
2018).
Analysis of the Material Information by the Auditors
rom the above discussion about different dimensions of the audit report of z MineralsF O ,
it can be observed that M has complied with all the relevant standards of the auditKP G

10A D ASS RA C A D C M A CU IT, U N E N O PLI N E
profession like Corporations Act 2001, Australian Auditing Standards and others t can also be. I
seen from the discussion that the auditors have reported about the key audit matters and the
substantive audit tests that they have applied hus based on the above discussion it can be. T , ,
observed that the auditors of M have assessed the material fi nancial information of theKP G
company in the most effective manner (De oort arrisonZ & H , 2018).
Material Information Missing
t can also be observed from the above discussion that M has done the properI KP G
evaluation of the fi nancial statements and reports of z Minerals in the presence of theO
compliance with all the required rules and regulations of the audit profession (Czerney Schmidt,
hompson& T , 2014 t can also be observed from the above discussion that the auditors have). I
considered two aspects in the fi nancial statements of z Minerals as key audit matters they areO ;
the valuation of the carrying value of of rominent ill and the valuation of low grade goldPPE P H
ore After that they have performed different substantive audit procedures for addressing these. ,
issues hus in the presence of all these factors it can be said that the auditors have not. T , ,
missed any material information (Czerney Schmidt hompson, & T , 2014).
Follow-up Questions
Some major questions can be asked to the auditors such as what are the used;
procedures for the detection of the key audit matters s there any loophole in the internal control? I
of the company hat are the future plans for the audit operations of z Minerals? W O ? ( rasel etB
al., 2016)

11A D ASS RA C A D C M A CU IT, U N E N O PLI N E
Conclusion
t can be seen from the above discussion about the audit report of z Minerals that theI O
auditors of M has complied with all the regulations rules and guiding principles of auditKP G ,
profession at the ti me to conduct the audit operations of the companies these regulations and;
standards are Corporations Act professional code of conduct and others t can also be2001, . I
observed from the above discussion that there is an overall increase in the payment for the
auditors due to the increase in the payment for the non audit services t is visible from the- . I
above table discussion that the auditors of M has considered two key audit matters based onKP G
the analysis of the fi nancial statements of the company at the same ti me the auditors have also; ,
applied substantive audit procedures for addressing them he above discussion indicates that. T
z Minerals has both Audit Committee and Audit Committee Charter he above discussion alsoO . T
shows that the auditors have not missed any material information from the fi nancial statements
of z MineralsO .