As auditing has become an extremely important factor for all entities in Australia, this report has been prepared for providing a detailed overview on how the enhancement of auditing requirements are actually being embraced in the country, through one of its top 20 listed companies, Transurban Group. In this report, the latest annual report of Transurban Group has been obtained, followed by the extraction of all information available in the report related to its auditor and the audit matters. From the report, it has been determined that the Transurban Group has ensured its compliance with audit requirements. With the completion of the report, it can also be determined that the Transurban Group has successfully complied with all the auditing requirements as per the AAS and the IAASB.
Embracing and complying with auditing requirements is one of the most important factors for all Australian listed entities. The Transurban Group is a road operator business, which develops and manages the urban tool networks in both Australia as well as North America (Transurban.com, 2018). Founded in the year 1996, Transurban Group is among the top 20 companies listed under the ASX and aims at providing effectual transportation solutions for supporting the wellbeing and growth of cities (Transurban.com, 2018). In this report, a detailed analysis on how auditor reporting is being embraced in Australia will be analyzed through the examination of the auditor’s report and other auditing matter of a listed company in the country, Transurban Group (TCL). The report is going to analyze the annual report of Transurban Group and relate its Auditor’s role in terms of providing assurance of the control environment and financial statements of the company. A detailed review of all the key matters of audit, the remuneration of auditor, the declaration of auditor’s independence, the functions and composition of its audit committee and the report the independent auditors have written to its members is going to be provided in the report.
In Australia, auditing of the financial statements of a company is of great significance. Enhancement in auditor reporting has been embraced in the country during the recent past and in the present scenario, it is being focused on largely. Since the year 2016, there can be noticed a strong push for the improvement of the quality of audit reporting in Australia. All listed entities in the country now require reporting its “key audit matters” along with improving the way in which material information about the entities are communicated through “plain English”. The IAASB has commenced with its new auditor requirements since December 2016. It can also be noticed that standard setters in various jurisdictions, including New Zealand and Australia, have issued new requirements on audit on the same date, while the others have committed on issuing the standards.
Various key standards have also been set in relation to audit requirements and key audit matters to be disclosed by listed entities. All the requirements and necessary details related to auditing in the country have been done in the portions below. The ISA705, 720, 260, 700 and 701 are the key standards that have been set in order to ensure appropriate auditing of financial statements (Iaasb.org, 2018). Thus, it can be analyzed that auditing and meeting auditing requirements is extremely important in Australian and are needed to be met by all listed entities of the country.
As stated by Louwers et al. (2015), independent auditors are either certified public accountants or chartered accountants, who play the role to examine or assess the financial records and transactions of a business to which the auditor is not affiliated. In the recent past, different standards have been set for ensuring and determining the independence of auditors in an entity. According to Fakhfakh (2016), ISA 700 is the most significant international standard as per which entities need to have a separate statement within which the auditors of the entity will be stating their independence as well as complying with their ethical responsibilities. In Australia, however, there is a separate declaration to be provided a company’s lead auditor as per Section 307C of the “Corporations Act 2001” (Cpaaustralia.com.au, 2018).
From the analysis of the annual report of the Transurban Group, it can be noticed that the company has complied with the requirements related to declaration of independence and ensuring independent audit (Transurban.com, 2018). This can be confirmed from the director’s report of the company in which it is mentioned that the audit services performed in the company are compatible to the general standards related to auditor’s independence. There is also a separate declaration provided by the company’s auditor, in which the requirements under Section 307C have been met (Transurban.com, 2018). Transurban Group’s annual report also shows that its lead auditor has declared his independence along with stating that there are no contraventions of the code, which applies for professionally conducting audit.
From further analyzing the annual report of Transurban Group, it can be evaluated that the company’s independent auditor has mentioned that the auditor has complied with all requirements related to independence as mentioned in the “Corporations Act 2001” along with complying with APES 110’s ethical requirements relevant to financial report auditing (Transurban.com, 2018). Therefore, it can be analyzed that Transurban Group has completely complied with the requirements and declaration of auditor’s independence.
The report, which can also be stated as a disclaimer, that the independent external auditor of a company issues to disclose his or her opinion after conducting an audit of its financial statements for stating how reliable the financial statements are, is known as an independent auditor’s report (Kabul, 2018). The interpretation of Transurban Group’s annual report shows that the independent auditor of the company has prepared a separate report stating his independence (Transurban.com, 2018). The analysis of this report indicates the opinion that the auditor has provided after auditing the company’s financial statements. The opinion that the auditor has stated is that the financial statements of the company are showing a “true and fair view” of Transurban Group’s financial position as well as their financial performance at the year ending June 30, 2017 (Transurban.com, 2018). Opinion has also been provided on the compliance of Transurban Group with Corporations Regulations 2001 and the Australian Accounting Standards (AAS) (Transurban.com, 2018). The auditor, in the auditor’s report, has also stated the basis on which the report has been prepared and has mentioned about the audit evidence, which has been obtained has sufficient and appropriate base for forming the opinion.
As stated by Knechel & Salterio (2016), those professional services that qualified public accountants provide during the span when he or she is engaged for audit in an organization but are not related to reviewing and auditing financial statements are called non-audit services. Assurance services, preparing audit schedules, tax planning, payroll preparation, tax preparation, budget preparation, financial services and other basic accounting services fall under the category of non-audit services. From the evaluation of the annual report of Transurban Group, it can be derived that the company has a policy for the independence of external auditor, which has been develop with the intension of supporting the external auditor’s independence through regulating the provision of services that the external auditor provides (Transurban.com, 2018).
It can also be seen that the company has mentioned that it will not engage its independent auditor for performing any service, which may be impairing or perceiving to impair the independence or judgment of the external auditor. A clear mention has been made on the fact that the external auditor is going to provide only a permissible non-audit service where there exists a persuasive reason to do so (Transurban.com, 2018). Due to this reason, the only non-audit service that Transurban Group has received or availed from its external auditor is assurance services. The figure that has been provided below shows the amount that has been paid by the Transurban Group for the assurance service, which is a non-audit service that the company has availed from its independent auditor -
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