Report On Commonwealth Bank Of Australia

Commonwealth Bank of Australia

Write a report on “Commonwealth Bank of Australia”.
 

This report aims at describing how the auditing aspects affects Commonwealth Bank of Australia and the way they are related to the operations of this multinational organisation. However, not all the aspects are linked to the company and therefore only those which affect this particular company are discussed. The aspects discussed in this case are: The role of audit committee, ethics, the role of internal and external controls, the audit expectation gap, auditing planning and finally audit evidence (Fischer, 2010).

This a bank that offers services entailing finance matter for instance insurance and revenue management among others. This bank is multinational and has subsidiaries all over Europe and Asia specifically UK, Fiji, Newzealand. It is also believed to have a branch in US. In the securities exchange market of Australia it is the biggest company in that list by the year 2015.The headquarters are in the Martin Palace in Australia specifically Sydney city. Not forgetting the several brands that the company boosts of such as Commonwealth Insurance Company, Bank west just to name but a few.

The audit board (the committee) has an indispensable function in structure and supporting efficient and dependable organization. Responsiveness exercised by the board has an consequence on lucidity, not only for how funds are managed, but also in relative to the information regarding the performance and  endorsement of an situation conducive to moral values ​​surroundings and these, in turn, related to the obligation and institutional goal (Ellwood & Newberry, 2007).

The responsibility of the board may vary from one institute to another, depending on their authorized, monetary, and public environment;    oversee the truthfulness of the information controlled in the fiscal statements.

• keep an eye on the efficiency of interior accounting control structure.
• evaluate the extent and efficiency of the system recognized by administration to recognize, assess, and scrutinize fiscal and commerce risks. The board assumes this accountability, as there is a risk board.
• analysis efficiency and competence of interior audit.
• recommend the selection of exterior auditor and review the autonomy, impartiality and efficiency (Hatherly, 2001).

The audit board is a component of public accountability aspect and the authority. The function of the board is to maintain the duty of leading body complies with fiduciary as well as legal obligation, mainly with regard to the reliability of fiscal reporting, interior control structure along with fair setting. Among the tasks of these committee, comprise:

• the sanction of the capacity of the audit and its efficiency
• keep an eye on the monetary statement in addition to interior control
• advocate authorization of the fiscal statements
• carry out exceptional investigation for principal body 

The audit work must be planned and implemented and in case there are assistants should be monitored satisfactorily. The audit work requires proper planning methods and procedures to be applied as well as the working papers that will serve as the basis for the conclusions of the review.

It is not possible, nor would it be desirable, that the auditor does all the work personally. There are routine tasks that do not require the auditor’s professional capacity and can be performed by assistants; for example, cash count, checking mathematical operations, etc. However, this delegation of tasks to assistants does not relieve the auditor of the personal responsibility of all the work (Improving Public Service, 2008).

The auditor shall examine, check, and make the system of internal control in the company to meet two fundamental aspects:
The trust that deserves it as a means of generating reliable information.
Determine the scope, nature, and timing of the different audit procedures.
The Audit Expectation Gap
The conditions of the company I terms of  the way they operate, how to internally handle cases, measures have to control of  the accuracy of operations and their pass books and financial statements are the particular circumstances of each company that modify the nature audit tests.  The extent and timing with which these tests can be performed. Hence, it is necessary that the auditor, to perform satisfactorily, ought to take into considerations these specifics of the business whose monetary statements are probing.

It is as a result crucial for the auditor to study and appraise the interior control of the corporation whose fiscal statements analysed. This study targets to get out how that interior control is not only in the organization strategy, but in the authentic implementation of day by day operation (Pandey, 2005).
The audit work required to obtain, by applying audit procedures, elements of good and sufficient, in both quantity and quality, allowing obtaining an objective opinion on the financial statements trial.

The evidence to form an opinion should be objective and true, they must be based on the nature of the facts examined, having reached the knowledge of them with reasonable assurance; the final judgment on the audit work is whether it has provided the auditor sufficient material to support their professional opinion. The material or evidence to which we refer are called evidential, and should be sufficient in quantity and quality.
The role of internal and external review
The interior control comprise the preparation of business and all synchronized method and procedures taken in company to guard your asset, confirm the accurateness as well as dependability of its office data, endorse operational competence furthermore support observance to policy structured by the administration (Bijkerk, Karamychev, & Swank, n.d.).

An interior control structure extend past matter openly connected to the function of office and fiscal department. Accounting controls have as core goals to offer organization of the business guarantee that the office information is honest and trustworthy (Pandey, 2005).

These controls include systems authorizations and approvals of transactions, segregation of duties in different departments, physical controls on assets, internal audit, accounting policy manuals and procedures, etc.
Audit planning

The Role of Audit Committee

Plan is the primary stage of the audit procedure in addition  it will depend on the competence and efficiency of the accomplishment of the goals, by means of firmly putting up  obligatory funds. Planning ought to be cautious, imaginative, constructive, and real, you must reflect on alternative and go for the mainly suitable method to execute the responsibilities, so this action ought to rest with the more skilled members of the assembly (Sin, Moroney, & Strydom, 2015).

Planning an audit begins with obtaining information necessary to define the strategy to employ and culminates with the detailed definition of the tasks in the implementation phase.
Planning objective.

The main objective of planning is to determine appropriate and reasonable audit procedures that apply to apply, how and when executed, so that the activity is met efficiently and effectively.

Planning is a dynamic process, but starts at the beginning of the audit work can be modified during the execution of the same.
Planning phases: Planning each audit it is divided into two phases, called preliminary planning and specific planning (Tewarie, 2011). 

the audit examination requires the auditor to obtain the necessary evidence to enable it to ensure that transactions, accounting records and balances of the fiscal statement are factual as well as precise. The facts required by auditors to consider valid and substantive examination is obtained through a series of tests that professional jargon has called substantive.

The proof is adequate in magnitude from the outcome of a solitary experiment or else by the consensus of numerous auditors. The assessor may obtain the ethical assurance that the details are trying to provide evidence or else the criterion for amendment is judged to be  productively tested. The degree of safety that can assert facts and things with full confidence that it is not making a bold statement, even if not absolutely certain of them have. This level of security is called moral certainty. The certainty that the assessor ought to guarantee that they are capable to give their expert judgment in an honest and clear  conduct moreover gratifying the duty of his line of work (“The ASQ auditing handbook: principles, implementation, and use”, 2006).

The quality of evidence depends on the circumstances in which it is obtained. The evidence obtained from sources outside the company provides superior to that obtained within the company confidence. The evidence comes from a reliable internal control system is greater than that resulting from poor control system.

Personal knowledge that the auditor obtains directly through physical examinations, inspections, calculations, etc., is more persuasive than information obtained indirectly.
In carrying out the work, the auditor should always be guided by the criteria of materiality and risk likely.
The auditor should focus its examination according to the importance of different items.
Moreover, the auditor should perform procedures according to the relative risk of error runs in each of the groups under consideration. The comprehensive understanding of all the problems of the company and the environment and circumstances in which it operates will enable you to interpret facts and draw conclusions more logically and convincingly (Turnbull, n.d.).
It is intended that the auditor develop its audit from a managerial point of view, knowing the business as if it were a manager and reaching conclusions, saving the differences, the management bodies of the company would get.

The audit understood as a routine practice that tries to verify whether the transactions recorded in the accounting records are backed by documents is doubtful that he ever had effective results. The documents are simply a means of transmitting information where what matters, for audit purposes, is not the documents as such but the analysis and study of the underlying reality in them.

To achieve this general knowledge of the company and its economic environment the auditor has multiple possibilities: conversations with company executives, meetings with business associations, reading of general and specialized economic journals, attending meetings, conferences and any other source of reliable information of credit (Wan Hua, Georgakopoulos, Sotiropoulos, & Galanou, 2010). 

Conclusion

In conclusion, the arrangement of business,  methods and procedures associated to operational effectiveness are some of the management policies.
This principle may be difficult to implement, since it is not always possible to estimate the benefits that provide control in the future. All internal and external control, no matter how good and effective it is, has a number of limitations that are inherent in the system. In the operation of most control, procedures exist possibilities of error resulting from lack of understanding of the instructions, misjudgments, personal carelessness, fatigue, etc.  

References

Bijkerk, S., Karamychev, V., & Swank, O. Aggressive Reporting and Probabilistic Auditing in a Principles-Based Environment. SSRN Electronic Journal. 

Ellwood, S. & Newberry, S. (2007). Public sector accrual accounting: institutionalising neoâ€Âliberal principles?. 

Fischer, F. (2010). The Application of the Controllability Principle and Managers’ Responses. Wiesbaden: Gabler Verlag / GWV Fachverlage, Wiesbaden.

Hatherly, D. (2001). Principles of Auditing: An International Perspective. The International Journal Of Accounting, 36(2), 259-261. 

Macve, R. & Chen, X. (2010). The “equator principles”: a success for voluntary codes?. Accounting, Auditing & Accountability Journal, 23(7), 890-919. 

Pandey, A. (2005). “Auditing: Principles and Techniques” by S. K. Basu(Pearson Education, New Delhi, 2005). Paradigm, 9(2), 97-97. 

Sin, F., Moroney, R., & Strydom, M. (2015). Principles-Based versus Rules-Based Auditing Standards: The Effect of the Transition from AS2 to AS5. International Journal Of Auditing, 19(3), 282-294.

Tewarie, W. (2011). A structured approach to IT auditing. Amsterdam, The Netherlands: VU University Press.

The ASQ auditing handbook: principles, implementation, and use. (2006). Choice Reviews Online, 43(09), 43-5363-43-5363. 

Turnbull, S. How US and UK Auditing Practices Became Muddled to Muddle Corporate Governance Principles. SSRN Electronic Journal.

Wan Hua, L., Georgakopoulos, G., Sotiropoulos, I., & Galanou, E. (2010). Main Principles and Practices of Auditing Independence in China: A Multifaceted Discussion.