Deloitte Transparency Report 2017

Transforming audit Transparency Report 2017 Audit & Assurance Our purpose defines us

We serve our clients with quality and distinction Transformation. Quality. Impact. Making a measurable and attributable impact We are continually seeking to

We inspire our people to deliver value transform the way we deliver Mentoring and developing future leaders and colleagues for life audits to enhance audit quality We contribute to society and provide meaningful insights Building confidence and trust, upholding integrity and supporting the community to clients.

We are leaders in the profession Challenging ourselves to deliver innovative ideas that reflect unique capabilities Contents Making an impact that matters i

Quality control effectiveness statement ii

Leadership and governance 01

Our commitment to audit quality 02

Ethics, privacy and independence 03

Learning, measuring and refining 04

External monitoring 05

Appendix A Financial information Deloitte Network and legal structure

Context: This Transparency Report is prepared in accordance with the Deloitte audit clients requirements of Section 332 of the Corporations Act 2001 (Corporations Act). Glossary This Transparency Reporting Year is from 1 July 2016 to 30 June 2017. Deloitte refers to the Australian partnership of Deloitte Touche Tohmatsu. Contacts Introduction Making an impact that matters i

ii Deloitte’s commitment to Agility purpose by what we do and how we do it, driven quality and integrity underpins We recognise today’s business environment by our will to be the best and inspired by what is constantly evolving at a rapid pace, and we know to be right. These shared values ensure 01 everything we do – end-to-end – in response we are continually seeking to that both quality and integrity guide the way we as we seek to make an impact transform the way we deliver audits. The behave, to make a positive and enduring impact. that matters for clients, our investments we have made and are 02 continuing to make in innovation and This report provides you with an insight of our people and our communities. emerging technologies, audit processes Firm, along with demonstrating our commitment and policies, and our system of quality to audit transformation and quality. 03 Confidence control are enhancing the quality of our audits. At Deloitte, we recognise the important role that audit plays in contributing to market Innovation 04 confidence and integrity. The impact of our work Transformational change is at the top of our Cindy Hook extends far beyond the audit itself. Attesting agenda. This is about doing things smarter Chief Executive Officer on financial statements provides investors the and experimenting with new, cutting-edge 05 confidence to make sound business decisions. and disruptive approaches to revolutionise Tom Imbesi It shows clients where they stand today, so that the audit and its impacts. Chairman they can respond appropriately for tomorrow. A In conjunction with directors, who have their Integrity Richard Deutsch own responsibilities for high quality financial Making an impact that matters is a choice we Managing Partner, reporting, we can improve the outcome for all. make each and every day. As leaders, we live our Assurance and Advisory

4 Introduction Quality control effectiveness statement i

ii The system of quality control that supports the Deloitte Assurance Practice is designed to provide reasonable assurance that: 01 a. Assurance engagements comply with Australian Auditing and Assurance Standards, relevant ethical requirements, and applicable legal and regulatory requirements 02 b. Reports issued are appropriate in the circumstances.

Our monitoring programs provide evidence of our compliance with the 03 application of Deloitte policies and methodologies, as well as pinpointing areas for improvement where consistent application is not achieved. 04 Our most recent Practice Review Program was completed in September 2016. It enables us to conclude that, overall, our system of quality control is operating effectively. 05

Cindy Hook Richard Deutsch Chief Executive Officer Managing Partner, Assurance and Advisory

5 01 Leadership and governance i

ii High quality audits are fuelled by a strong leadership framework and robust 01 governance structures. 02

6 01 Leadership and governance Establishing the right tone i

ii Our culture is driven by our Chief Executive Officer (CEO) and Our Purpose 01 fully endorsed by our Board of Serve clients Partners and National Executive. with distinction & integrity Our strategy is guided by our 02 Purpose, and the Firm’s culture is captured in seven ‘Signals’ that Develop Inspire trust 03 bold leaders in business enable us to deliver on our promise of professional excellence at all 04 Making an impact times – our foundation for achieving that matters consistently high audit quality. 05 Help people Cindy Hook, our CEO, is an auditor by trade and Spark reach their understands the importance and value of a quality innovation potential audit. Richard Deutsch, our Managing Partner A Assurance and Advisory (A&A), leads the audit quality agenda and is accountable for creating, Solve cultivating and supporting a business model and daunting culture that allows practitioners to conduct high- problems quality audits. In addition Jody Burton, our Chief Risk Officer (CRO), also an auditor, is a member of the National Executive team, increasing governance in relation to audit quality. 7 01 Leadership and governance Deloitte’s seven Signals i

Recruit and Empower Play to win – Talk Aim to be Continuously Have fun 02 retain the best and trust think globally straight famous grow & improve and celebrate

We seek to attract We empower We encourage Through a culture We encourage our Through We believe that 03 the best talent in our people to our people to of talking straight, people to become an ongoing when our people the market with take personal approach every our people are market leaders commitment enjoy what they the right skills and responsibility client engagement encouraged to by developing to learning and do and are 04 experience so for delivering with the right team voice their ideas specialist development our recognised for we can serve our high-quality drawn from the and challenge skills, gaining people have the their accomplish- clients well and work to clients. capabilities of the each other. recognition and necessary skills ments, they are 05 deliver high- entire Australian Constructive, building extensive to consistently inspired to deliver quality solutions firm and, where two-way networks they deliver high- to the highest and output. needed, the communication can draw on to quality outcomes. standards. A DTTL Network, is viewed as a enhance quality to support the way to achieve and insight in highest quality the right quality their work. output. outcome for our teams and clients.

8 01 Leadership and governance Governance structures i

ii The leadership and management Our governance structure includes specific The National Executive terms around the length of service for Board The CEO appoints the National Executive, of the Firm are underpinned by members. Our newly elected Chairman is which manages the Firm’s day-to-day activities. 01 strong governance structures, Tom Imbesi. The separation between the The National Executive comprises the CEO, including a quality and risk roles of Chairman and CEO provides a strong the Chief Operating Officer (COO), the Chief measure of accountability. The Board has Strategy Officer, the Managing Partner Markets, 02 function that provides oversight established five committees to support the Managing Partner Clients Industries & of the Assurance Practice. its objectives. Markets, the Chief Financial Officer, the CRO, the Asia Services Leader and the six business 03 The Board of Partners The Chief Executive Officer managing partners for Assurance and Advisory, Our Board of Partners (the Board) is responsible Our CEO has full executive authority for Consulting, Deloitte Private, Financial Advisory, for protecting the interests and reputation of managing the Firm. The CEO is nominated by a Risk Advisory and Tax. 04 the Firm and its partners, and for overseeing Board-appointed committee of between four management and operations at a strategic level. and eight partners, and elected by the partners The Board ensures the Firm has an appropriate for a four-year term. Unless approved by an 05 structure for corporate governance and has ordinary resolution of partners, the maximum specific oversight of quality and risk. The Board overall period for the CEO is eight years. comprises the elected CEO and between seven A and ten elected partners.

9 01 Leadership and governance Figure 1: Deloitte Australia organisation chart i

Board National Executive ii

Board of Chief Executive Officer Partners 01

Managing Partner Managing Partner Chief Operating Officer Chief Strategy Officer Clients, Industries Markets & Markets 04

Chief Financial Chief Risk Managing Partner Managing Partner Managing Partner 05 Officer Officer Assurance & Advisory* Deloitte Private* Risk Advisory*

Asia Services Managing Partner Managing Managing Partner Leader Financial Advisory* Partner Tax Consulting

* Assurance services are provided by Partners and staff within these businesses 10 01 Leadership and governance

ii The overall responsibility for developing, Assurance Practice The A&A Quality & Risk and Accounting implementing and monitoring quality policies Leadership Technical functions and procedures and risk-related matters rests The Managing Partner A&A and the A&A The A&A Quality & Risk and Accounting 01 with the CEO. Day-to-day responsibility is Executive are responsible for delivering on Technical functions are led by Jamie Gatt. Jamie delegated as follows: the Assurance Practice’s business objectives is the Assurance Practice’s Risk Leader and •• CRO – Enterprise risk framework; ethics and are accountable for its compliance with National Professional Practice Director (NPPD). 02 and privacy; independence and conflicts; quality standards. The Managing Partner A&A As the Assurance Practice’s Risk Leader he has business resilience; compliance, including appoints members of the A&A Executive after operational responsibility for the system of regulatory compliance; engagement risk, consultation with the CEO. The A&A Executive quality control and oversees the A&A Quality 03 client and engagement acceptance; quality meets monthly, and audit quality is regularly on & Risk Team and the Accounting Technical Team. control; confidentiality and security; and the agenda. As the NPPD he is responsible for all decisions complaints handling relating to the interpretation of accounting and 04 auditing matters. He is also a member of the •• COO – people and performance; legal and A&A Executive. professional indemnity insurance. 05

A What is the role of the quality and risk functions? They significantly contribute to Deloitte’s prosperity and the execution of strategy in a commercial and sustainable manner – while protecting the Firm and its people.

11 01 Leadership and governance

ii The A&A Quality & Risk Team is responsible for Audit Quality Network These global leaders are supported by implementing the quality agenda, establishing We have an Audit Quality Network of partners member firm leaders participating in global function-specific policies and procedures, and staff within geographic or market segments forums. Australia is an active member of the 01 audit technical training, monitoring and risk of our Assurance Practice. The network helps quality forums depicted in Figure 2. Through mitigation, and supporting engagement teams the A&A Quality & Risk Team reinforce key our participation we significantly influence the on a day-to-day basis on audit technical and messages, raising awareness of quality and strategic direction of our global audit programs 02 risk matters. risk matters and helping us be more agile in and oversee implementation, execution and responding to new developments. monitoring thereof. The National Accounting Technical Team is 03 responsible for providing accounting technical Global and external contribution We are also proud that our Firm is actively support, including training, to the Assurance Deloitte Touche Tohmatsu Limited (DTTL) is involved in driving and shaping the future Practice and clients. It specialises in accounting a UK private company (limited by guarantee) of accounting and auditing through the 04 standards and interpretations, including that all Deloitte member firms are members involvement of our partners with international Australian International Financial Reporting of. Panos Kakoullis, the Managing Director and Australian standards-setting bodies and Standards (A-IFRS), and the financial reporting Global Audit & Assurance Business Leader, professional associations. Our teams benefit 05 requirements of the Corporations Act. and Cal Buss, the Managing Director Global from these partners’ access to global expertise Audit Quality, actively set the tone about and being at the very forefront of professional audit quality through all member firms. developments. A

12 01 Leadership and governance Figure 2: External and DTTL contribution i

ii Name Partners contributing to the accounting and Partners are active participants auditing landscape through membership of: of DTTL quality forums: 01 Richard Deutsch, Accounting and Auditing Standing Committee Global Audit & Assurance Managing Partner, Assurance and Advisory Leadership Team Jamie Gatt, NPPD and Assurance Risk Leader Global Audit Quality Board 02 Caithlin McCabe, Audit Quality Australian Auditing and Assurance Global Audit Technical and Regulatory Partner Standards Board (until December 2016) Advisory Board Chair of the Australian Auditing Regulatory Leadership 03 and Accounting Public Policy Committee Advisory Board Gareth Bird, Partner Assurance and Advisory Australian Auditing and Assurance 04 Quality & Risk Standards Board (from January 2017) Jody Burton, Chief Risk Officer Global Risk Executive 05 Anna Crawford, Partner Accounting Australian Accounting Standards Board Global IFRS Leadership Technical (until December 2016) Marisa Orbea, Independence Partner Global Independence A John Leotta, Audit Partner International Accounting Standards Board’s Consultative Group for Rate Regulation Tara Hill, Audit Partner Global Audit Learning Council (until May 2017)

13 01 Leadership and governance

The role of directors in achieving high quality financial reporting 01 We recognise that directors are primarily responsible for the quality of financial reporting and play an important role in supporting the audit process. Directors can meet these responsibilities by: 02

Challenging whether the company has systems, Maintaining an open dialogue with the processes and controls, as well as appropriately auditor on matters affecting the financial 03 skilled personnel responsible for financial report, the audit and audit quality reporting, and a culture that values quality and transparency Understanding the cause of observations 04 and findings from the auditor and ensuring Having the requisite skill mix and thorough management responds appropriately understanding of the business model to be able 05 to critically evaluate information, anticipate and Setting audit fees that support the manage risks, and engage in frank and open delivery of a quality audit dialogue with the auditor A Considering the independence and Challenging the appropriateness of the effectiveness of the external audit process. accounting policies and judgements exercised by management in preparing the financial statements and making disclosures in financial reports

14 02 Our commitment to audit quality i

ii We put a spotlight on quality at every single stage. From the mindset of the auditor to 01 the specific capabilities, tools, methods and standards we apply in conducting audits 02 and managing our Assurance Practice – our commitment to audit quality is paramount. 03

15 02 Our commitment to audit quality Our approach to quality is holistic and multifaceted i

ii We are aware of our obligation to deliver audits in compliance 01 with professional and regulatory standards. We are committed to doing more than simply meeting 02 these requirements. 03 Our desire is to be seen as the industry standard of excellence for the profession as articulated in our global audit aspiration 04 ‘to be the world’s most trusted audit provider’. Our audit aspiration is underpinned by an Audit Quality Framework with clear strategic 05 objectives as depicted in Figure 3.

To keep us focused, accountable and A continually moving forward we have an Audit Quality Plan, structured around our Audit Quality Framework, which includes specific measurable actions. The Audit Quality Plan is updated regularly to remain current and responsive, and we are accountable to DTTL to deliver on the planned actions. 16 02 Our commitment to audit quality Figure 3: Audit Quality Framework Strategic objectives i

ii Be the world’s most trusted audit provider driven by a commitment to delivering high quality

Recognise 1. Strong tone-from-the-top 2. Ongoing dialogue with regulators 3. Clear understanding of 01 We are a regulated consistently demonstrates leaders’ results in the appreciation of their stakeholders’ needs and profession with commitment to audit quality points of view and contributes to expectations unwavering focus on leading audit reforms 02 exceeding stakeholders’ expectations 03

4. Deloitte auditors are 5. Consistent application 6. The Deloitte audit 7. The value of a Deloitte Execute recognised for achieving of the Deloitte Audit approach meets or audit is clearly recognised 04 Deliver the highest the highest standard of Imperatives drives the exceeds the requirements by stakeholders quality audits and value professional excellence performance of high of professional standards to all stakeholders quality audits and is consistenty applied 05

Improve 8. Strong and robust monitoring 9. Active response to stakeholders’ 10. Shared accountability for audit A Continuously measure, reinforces a culture of continuous feedback and rapid remediation of quality across the network learn, and drive to imporvement in an environment all inspection outcomes achieve the highest that fosters rapid innovation quality audits

All strategic objectives are supported by robust programs and innovative enablers 17 02 Our commitment to audit quality Figure 4: Audit Quality Framework Strategic implementation activities i

Recognise Audit Quality Plan Deloitte position on emerging issues 01 We are a regulated profession with unwavering focus on 02 Leadership tone Regulator engagement exceeding stakeholders’ expectations 03

Global audit imperatives Deloitte Audit Methodology Audit project Execute implementation enhancements management Deliver the highest 04 quality audits and value Extended auditor Analytics Internal Controls Program EQCR/Partner to all stakeholders reporting review 05

Improve Practice Review and External Audit Quality Indicators Causal Factor Analysis A Continuously measure, Inspection Monitoring learn, and drive to achieve the highest Deloitte Audit Diagnostics Mandatory learning quality audits

18 02 Our commitment to audit quality Client acceptance and continuance i

ii From the very start we incorporate Our Firm’s engagement risk assessment review by a national panel of experienced quality across all of our client procedures provide a basis for tailoring the audit partners. audit approach to address engagement-specific 01 engagements. It is all about risks. For higher-risk engagements, additional Our engagement risk assessment begins at accepting the right clients, risk management safeguards are applied, such the client acceptance process. We perform an understanding their risks and as assigning a more experienced partner as the annual continuance assessment to determine if 02 Engagement Quality Control Reviewer (EQCR), the Firm should continue providing services. In formulating an appropriate audit assigning a Special Review Partner in addition addition, any time an entity changes significantly response to address them. to the EQCR to much greater than normal (for example, a change in ownership) the Firm 03 engagements, involving experts or requiring a considers whether to continue the relationship. We have rigorous policies, procedures and approval processes in place for accepting Figure 5: Client and engagement acceptance and continuance considerations 04 prospective clients and engagements, and assessing engagement risk. This includes a Risk Consideration documented evaluation of the client’s risk Client risk Management characteristics and integrity 05 profile and information regarding the client and Organisational and management structure The nature of the business its management. The client and engagement The business environment Financial results risk is classified as normal, greater than normal, Business relationships and related parties A or much greater than normal. Prior knowledge and experience of client. Service risk The nature of the engagement Team competence to handle the technical aspects of the specific engagement In this process, we focus on confirming that The availability of a competent team. we have the capacity and capability to act, Engagement risk A function of both client risk and service risk. that we can comply with relevant ethical and Independence Financial and other relationships independence requirements, and that we Non-audit services have considered the integrity of the client. Other threats: self-interest, self-review, advocacy, familiarity or intimidation. 19 02 Our commitment to audit quality Engagement team selection and expertise i

ii The selection of the engagement Considerations for engagement team Our audit partners also collaborate in cross– team is key to developing and selection include: service line industry groups, which are led by •• The size and complexity of the entity’s business senior partners with deep industry knowledge 01 executing a high-quality audit. and expertise. These groups share their Every audit engagement is led by •• The applicable financial reporting framework understanding of market developments, used in preparing the financial statements a partner, and our engagement risk assessments and emerging trends. 02 •• Applicable independence considerations They bring this expert knowledge to bear on partners are fully responsible for •• Any possible conflicts of interest audit engagements to perform their role more the services they provide. The effectively and share this knowledge with 03 •• The qualifications and experience of their engagement team. engagement partner is responsible professional staff, including industry credentials for ensuring that the professionals •• The availability of staff to commit time to 04 assigned to an engagement the engagement. have the required competencies. 05 The right engagement team A is key to audit quality

20 02 Our commitment to audit quality Executing with the right behaviours and a focus on professional scepticism i

ii We believe that creating the We continually emphasise the importance right culture and focusing on of our role as evaluators. This is reflected in Audit Imperatives many aspects of our methodology, processes, 01 the right mindset and practices procedures and training. We also create audit is key to achieving high-quality working environments that take a ‘design’ 1. Act as an independent evaluator audits. We continue to reinforce approach to issue identification and problem with a professional auditor mindset 02 solving. When reporting to those charged with 2. Focus on the importance of the fundamental importance governance, we include discussions on areas of auditing internal control of demonstrating the right significant professional judgement to make it 3. Optimise audit execution 03 behaviours through our Audit clear how we have exercised scepticism in 4. Use specialists’ expertise effectively reaching our conclusions. 5. Drive continuous improvement of Imperatives, which we believe work of component auditors Given the increasingly complex nature of our 04 6. Pursue continuous are vital to a quality audit and clients’ businesses, engagement teams often professional development for us to deliver on external also involve specialists from across the Firm with 7. Tailor risk assessments and expertise in areas such as economics, valuation, 05 stakeholder expectations. The audit responses tax, actuarial services, analytics and information 8. Demonstrate professional excellence Audit Imperatives are a list of technology. This informs how we exercise our core actions requiring audit judgement and brings the best of Deloitte to A team focus. the audit.

21 02 Our commitment to audit quality Shaping the audit of the future i

ii Our dedicated journey to shape the audit of the future continues, 01 with a significant investment in training and implementation, to embed quality improvements. We 02 have implemented methodology enhancements that focus on 03 fact based risk assessments, incorporating information 04 obtained through analytics and an enhanced understanding of 05 client’s business processes.

Intensive training for partners was held to A introduce the enhancements to our audit methodology and to provide the tools to lead the implementation of these changes on audit engagements. Subsequently, partners and staff attended specific and practical training on the methodology enhancements and the effective use of audit tools and resources available to improve audit quality. 22 02 Our commitment to audit quality

Shaping the audit of the future i A new angle on audit execution ii Audit technology Our audit platform is a trusted source for documenting our audits, accessing leading tools and driving greater collaboration. 01

Methodology Through a systematic approach 2017 & beyond 2017 and fact based risk assessments, we drive 02 smarter and more effective audits.

Monitoring and measurement A focus on 03 being nimble and agile through an increasingly robust monitoring program. 04 Analytics for all By infusing a data-driven and insightful approach, our analytics brings concepts and solutions to life. 05

People We develop auditors for today and tomorrow, building advanced skills and critical A thinking for the future.

Internal controls We gain a deep understanding of our clients through a deeper understanding of internal controls.

23 02 Our commitment to audit quality Audit technology and methodology i

ii Our risk-based audit methodology The Deloitte Audit Approach Manual Having robust requires us to develop an complies with International Standards on Auditing. In Australia, Deloitte supplements resources is critical. 01 understanding of the client’s the global methodology with material to reflect business and risks, and apply local obligations, including the Corporations Our practitioners have this to the design and execution Act, professional and ethical standards, access to a wealth of 02 and differences between Australian and of our audits. Methodology International Standards on Auditing. materials to support enhancements focus on fact an unwavering focus 03 based risk assessments to Engagement teams are further supported by a wealth of other resources delivered via on quality. ensure the most effective audit the global intranet to assist teams in delivering 04 response to risks are identified. professional excellence. This includes our policies, industry information, templates, tools, practice aids and answers to frequently 05 Magnia is our advanced global audit delivery asked questions. platform, designed to support our methodology and deliver comprehensive, focused and The A&A Quality & Risk and Accounting A streamlined audits. Magnia enables the Technical Teams issue regular communications performance and documentation of our work to maintain focus on audit quality and inform in accordance with auditing standards and or remind partners and staff about matters in How we deliver applicable professional, regulatory and legal accounting and auditing, including clarifications our audits obligations. Magnia includes the Deloitte Audit on aspects of the Deloitte Audit Approach our world class approach to Approach Manual and provides links to guidance Manual, new policies, developments in financial audit delivery developed globally and locally to enhance reporting, or to convey findings from quality and consistency across all audits. monitoring processes. 24 02 Our commitment to audit quality Transforming the Deloitte Audit i

ii Our Audit Transformation We use human-centred design techniques Our partners and staff use Cognia, a program is systematically to carefully consider how best to embed market- global audit portal with tailored local content, leading data analytics and technology driven providing a full suite of world class tools 01 redesigning the way in which approaches within the way we deliver an audit to support our goal of transforming the a Deloitte Audit is delivered to, for our clients. We continue to evolve and way we deliver audits, through the use of and experienced by, our clients. enhance the capabilities of our people, allowing innovative technology. This platform enables 02 them to harness these technological advances us to continually drive consistency, quality, in a way that enables them to provide our clients and impact throughout the audit by providing At the heart of a transformed Deloitte with value through the quality of our audit and access to tools such as data analytics, project 03 Audit is our focus on continuing to enhance delivery of insights that are relevant to our management tools and collaboration solutions. the quality of the audits we deliver, and clients and their business. One new collaboration solution is a crowd constantly and consistently providing our support platform where staff can ask 04 clients with exceptional client service. and answer questions about auditing, which helps to build a culture of sharing solutions and better practice. 05

How we equip our people our portal providing a full suite of world class tools to our people 25 02 Our commitment to audit quality Analytics Our point of difference i Layers of analytic capability ii Data analytics is a foundation of a transformed Deloitte Audit. 01

Our continued investment in market-leading data analytics has allowed us to apply more 02 sophisticated and comprehensive audit techniques on selected audit engagements Custom Analytics to dive deeper into risk assessment and Bespoke solutions 03 audit testing. myAnalytics We have also made analytics accessible 04 to all Auditors through Excel Analytics and A technology platform myAnalytics. This has enabled our people with putting analysis in the data analytic capability at their fingertips; helping 05 them be more efficient and better analyse data, hands of our auditors enhancing the quality of the audit they deliver for standardisation and insights they provide to our clients. A Excel Analytics Creating high-end functionality accessible to every auditor

26 02 Our commitment to audit quality Leading edge use of technology i

ii The Deloitte Audit is at the forefront of major technological 01 advancements. Through our Audit Transformation program we have embedded process automation, 02 robotics and machine learning into our audit processes. 03

These technologies enable highly repetitive and often complex tasks to now be completed 04 by computers – further enhancing the quality of these audit activities and enabling our people to focus on the things that matter most to the 05 quality of the audit and our audit clients.

27 02 Our commitment to audit quality Focus on internal controls i

ii At the centre of our audit We continue to focus on our expertise in approach is developing a deep auditing internal controls to shift more of our audits from a substantive approach to one with 01 understanding of the clients we greater controls reliance where appropriate. audit, so we can appropriately This allows for a greater tailoring of risks and identify and respond to risks of reduced substantive procedures as well as an 02 ability to provide insights to management on material misstatement in the improving their internal controls environment financial statements. This includes and on emerging trends. 03 the internal control environment What are clients looking for? It’s a focus of our clients. 04 on new ideas, practical insights and

sustainable solutions. 05

In today’s environment where there is an increasing use of technology, IT is at the A cornerstone of every internal controls environment. We have driven specific initiatives to embed IT as a core component of internal controls assessment.

28 02 Our commitment to audit quality Supervision and review i

ii Our audit approach requires that audit engagements are adequately 01 planned, supervised and managed so that the work performed provides reasonable assurance 02 that it complies with our policies and professional standards. The 03 overall supervision of each audit engagement is the responsibility 04 of the engagement partner.

05 Figure 6 summarises the Firm’s policies and procedures in relation to engagement reviews. A number of the reviews, including Panel or A Special Reviews, illustrates how our system of quality control goes beyond legal and professional requirements.

29 02 Our commitment to audit quality Figure 6: Deloitte’s review policies and procedures for audit engagements i

ii Type of review Required on Performed by Review objective

Working paper reviews 01 Detailed review All engagements A more experienced member To consider whether: of the engagement team • The work has been completed appropriately • Any significant matters have been raised for further consideration Primary review All engagements Manager, director, principal • Appropriate consultations have taken place and the resulting conclusions have been 02 or partner appropriately documented • There is a need to revise the nature, timing and extent of planned audit procedures • The evidence is sufficient to support our opinion Overriding review All engagements Partner • The objectives of the engagement procedures have been met. 03

Engagement quality control reviews 04 Engagement Quality Public interest and Partner To consider whether: Control Review high risk entities • The conclusions reached on significant judgements made by the engagement team are appropriate Engagement Quality Other entities, based Partner, principal • The audit documentation selected for review in relation to significant 05 Control Review on risk criteria or director judgements supports the conclusions reached • Appropriate consultations have taken place and the resulting conclusions have been appropriately documented • The engagement team has made an appropriate evaluation of independence A • The opinion is appropriate after reviewing the financial statements • Appropriate matters have been considered for reporting to those charged with governance.

30 02 Our commitment to audit quality

ii Type of review Required on Performed by Review objective

Specialist reviews 01 Special Review Entities assessed as Partner To challenge the key elements of the engagement. much greater than normal risk 02 Key Audit Matters Enhanced Partner To support the determination of KAMs, and consider the KAM documentation (KAMs) auditor’s reports included in the auditor’s report. for listed entities 03 Panel Review All engagements Partner To consider the appropriateness of the type of audit opinion to be issued and where we are considering the wording of the modification or material uncertainty related to going concern. a modified opinion, 04 material uncertainty related to going concern, or a restatement 05

31 02 Our commitment to audit quality Consultation i

ii While each partner is empowered We have a dedicated group of accounting The management, visibility and consistency to make appropriate decisions for specialists that provides support to of consultations has been enhanced by the engagement teams on financial reporting introduction of a new query management 01 their engagements, we encourage matters under a formal and documented portal which facilitates the consultation our engagement teams to consult consultation process. This team also provides process with specialists. whenever they need additional disclosure coaching to selected engagements 02 to assist teams assess financial statements Differences of opinion information, perspectives or compliance with the relevant financial An audit requires professionals to exercise specialised knowledge on reporting framework. In addition, we have a judgement, which can result in differences 03 accounting, auditing, legal, dedicated group specialising in quality and of opinion. When these arise, either among risk management who provide first-line audit members of the engagement team or regulatory, or other issues. technical and risk support to our engagement between members of the engagement team 04 partners and teams. and consultants, we use resolution policies and procedures. These include escalation procedures to resolve differences and 05 requirements for documenting outcomes.

32 02 Our commitment to audit quality Engagement documentation and security i

ii Maintaining client confidentiality is of the utmost importance 01 to Deloitte. The Deloitte Policy Manual includes specific requirements in relation to client 02 confidentiality, privacy, insider trading and information security. 03 In addition, access to individual client Magnia files is restricted to 04 engagement team members.

Firm policy requires audit files to be archived 05 in accordance with relevant requirements, and archiving is closely monitored. Non- compliance with the archiving policy affects A partner performance and our Practice Office Review Program rating. All work papers supporting our audit reports are retained for seven years from the date of our report, as required by the Corporations Act.

33 02 Our commitment to audit quality Talent development i

ii As a professional services leader, Recruitment Professional development we understand that our success Our attraction and selection methodology Our continuing professional development is designed to recruit highly talented, well- programs focus on both technical and non 01 depends on developing talented rounded team members with strong technical technical topics. The learning approach is and motivated practitioners who capabilities and who demonstrate exceptional designed to: can deliver world-class audit client service, commercial acumen and •• Provide the right skills, at the right time, to 02 innovative thinking. services. Our comprehensive provide both quality outcomes for clients and rewarding career experiences for our people talent programs start at the time Career experience 03 •• Keep partners and staff at the forefront of new of recruitment and continue To deliver high quality audits to our clients, we continue to evolve our strengths based developments in the accounting, auditing and throughout each career coaching culture; focusing on rewarding and regulatory environment 04 experience with Deloitte. recognising exceptional performance and •• Embed the Firm’s quality and risk imperatives creating high performing and agile teams. in the Deloitte culture and its leadership. Our goal is to bring out the best of each and 05 every person and the best of every team, and measure the impact on our business using reliable, consistent, and real-time data. A strong A coaching culture is at heart of this experience – engaging in more frequent, practical and meaningful conversations to drive the performance of our people and teams and playing to people’s strengths.

34 02 Our commitment to audit quality

ii Assurance partners are required to fulfil •• Recruiting, motivating, inspiring Deloitte’s partner appointment process is minimum learning requirements to maintain and developing our people thorough and robust. It is based on a detailed their Deloitte accreditation to sign audit •• Developing personal networks business case that incorporates compliance 01 opinions. Partners who sign audit opinions for that are shared with colleagues with the Firm’s quality and risk management other jurisdictions (such as the US) undertake practices as a key consideration. All business additional mandatory training. •• Supporting and contributing cases for partnership include feedback from 02 to firm-wide initiatives the relevant Risk Leader, are endorsed by the We require our assurance professionals •• Demonstrating a strong commitment Managing Partner for the relevant business to obtain a minimum of 20 hours of to quality, risk management and the and are approved by the National Executive. 03 comprehensive mandatory audit learning stewardship of our reputation. and development per annum and 120 hours Our partner performance management Both partner remuneration and partner in every three-year period. and remuneration process creates a strong appointments are approved by the CEO and 04 link between audit quality and partner the Board of Partners to validate that Firm Partner remuneration remuneration. Partners receive a ‘partner processes have been followed, contributions Partner remuneration is based on achieving quality dashboard’ as part of their performance are properly recognised and the Firm’s 05 individual partner plans, which are aligned management, which includes granular feedback values have been maintained. to firm-wide and business strategy. A strong relating to audit quality. contribution is expected from all partners in A the following areas: Assurance partners are prohibited from earning •• Achieving performance and living or receiving compensation, bonuses and other our culture, personally and in teams, direct financial incentives for selling products or as articulated in the ‘Signals’ services to their audit clients. •• Serving our clients with distinction

35 03 Ethics, privacy and independence i

ii Deloitte’s commitment to quality and integrity underlies everything we do, as we seek to make an 01 impact that matters for clients, our people, and our communities. It is expected that all our employees 02 will act with integrity, ethics, and maintain their independence in accordance with the Firm’s policies. 03

36 03 Ethics, privacy and independence Ethics and privacy i

ii Our expectations of partners Deloitte has an Ethics Officer who promotes Closely related to this, is our commitment and staff are documented in our the importance of ethical behaviour and who is to protecting the privacy of people whose supported by Ethics Advocacy Officers in each personal information we hold. An important 01 Principles of Business Conduct office. The Ethics Officer formally reports to the part of this commitment is about being open (our Code), which captures how CEO and the Board on an annual basis. and transparent about the way we handle our vision, shared values and personal information. Therefore, we maintain 02 The Firm reinforces its commitment to ethics and regularly update an external privacy policy Principles of Business Conduct and integrity through communication tools, that sets out in easy to understand language work together. The Code reminds learning programs, compliance processes and how we handle the personal information that 03 our people that certain skills are measurement systems, including the provision we collect, both from our clients and from our of ethics training, and an annual ethics survey staff. We also have a Privacy Officer, supported fundamental to ethical decision to gauge understanding of our ethics program. by a dedicated privacy team, who work together 04 making, and that each of us is The Firm also has an anonymous 24 hour to handle any privacy inquiries or complaints personally responsible for our ethics hotline to report ethics issues. and promote privacy awareness. We also have a privacy hotline. 05 decisions and actions.

A Culture is at the heart of what we do. We consider it fundamental that all partners and employees do their part in continuing to cultivate a culture that aligns to our Code. 37 03 Ethics, privacy and independence

ii What do we stand for? Our Principles of Business Conduct commitment to independence 01 and objectivity is the essence Integrity of our brand and the foundation 02 Quality

Professional behavior on which we have built our 03 Objectivity reputation for integrity

Competence and quality. 04 Fair business practices

Confidentially, privacy and data protection 05 Respect, diversity and fair treatment

Professional development and support A Anti-corruption

Responsible supply chain

Social responsibility

38 03 Ethics, privacy and independence Independence i

ii We assess our independence for Independence policies Restricted entity list each client and on each assurance To establish clear guidance for partners and The restricted entity list is accessed staff, Deloitte’s independence policies include online and includes all Deloitte Network 01 engagement. Our commitment to the auditor independence requirements of the audit clients and their affiliates that are listed independence is demonstrated Corporations Act, APES 110 Code of Ethics for companies or other Public Interest Entities by the tone set by our leaders, Professional Accountants and, where applicable, (such as financial institutions and insurance 02 the independence rules of other jurisdictions companies, registered schemes or retail and is reinforced by carefully such as the US Public Company Accounting superannuation funds). Deloitte Australia has and consistently implementing Oversight Board, and US Securities and also included all its non-public interest audit 03 and monitoring comprehensive Exchange Commission. clients on the restricted entity list. The entity information provided in the restricted entity independence policies The policies include restrictions on the financial, list is continuously updated to help ensure its 04 and procedures. employment or business relationships that accuracy and completeness, including periodic can be entered into with audit clients, as well validation processes performed by engagement Marisa Orbea, our Independence Partner, as guidance on the non-audit services and fee teams and/or the DTTL member firms. 05 is supported by experienced and dedicated arrangements that, if provided to audit clients, independence specialists who are responsible may impair independence. The policies require for communicating independence policies and partners and staff to notify the Independence A procedures, providing consultation support, team promptly if they become aware of any implementing and monitoring independence independence breaches. quality controls, designing and conducting independence training, and monitoring The independence policies and related compliance with independence requirements. guidance are available to all partners and employees on Deloitte’s intranet.

39 03 Ethics, privacy and independence

ii Monitoring of financial interests To allow for the timely resolution of any Business relationships and alliances Professionals are required to search the potential independence issues, the monitoring Business relationships and alliances with third restricted entity list before acquiring a financial system is linked to the restricted entity list, so parties can impair auditor independence. 01 interest or other financial product. To support the system can automatically email users when Therefore, all proposed marketplace business compliance with the financial and investment a potential exception may need to be addressed relationships require evaluation and approval restrictions placed on our professionals, we due to a change in restriction. by the Independence Group and are then 02 use an automated independence monitoring maintained and monitored in a central system to track personal financial holdings. All Scope of services for audit clients database of approved relationships. Deloitte partners and management-level client Deloitte engagement acceptance 03 service professionals are required to record policies require the partner leading a Deloitte has processes and procedures for and update their investments and those of their potential engagement to undertake a process engaging independent contractors, including immediate family members in their individual designed to identify entities from which we the centralised management of contractors 04 accounts in the monitoring system. During must maintain independence. This includes through a single third-party service provider. 2017 we implemented a Financial Institution determining whether Deloitte has an audit This allows for potential independence issues Data Import Program that enables partners to relationship with the potential client or any to be identified and assessed before entering 05 authorise their investments to be automatically of its affiliates and, if so, our policies require into arrangements, and includes a due diligence imported into their account, as well as a service us to obtain and document approval from the process to assess and mitigate the corruption centre that assists in answering their questions lead client service partner prior to accepting risk posed by certain non-client third parties. A about personal independence requirements. any new engagements.

40 03 Ethics, privacy and independence

ii Independence training Independence confirmations Deloitte has implemented an ongoing program All partners and professional employees are and internal monitoring to test the accuracy and completeness of the required to complete training in relation to All partners and employees are required to independence confirmations and the financial 01 the Firm’s independence policies when they submit an annual written confirmation that information in the automated independence join Deloitte. they have read, understood and complied monitoring system. During 2016, 41% of with Deloitte’s independence policies. The partners were selected for independence 02 Ongoing training incorporates updates to the Independence Group carefully monitors the compliance testing (2015: 46%). independence policies and case studies. The confirmation process, and any exceptions Independence Group and the DTTL Global are evaluated and resolved. 03 Independence Group issue regular policy updates and independence alerts to promptly In addition, all professionals who are assigned communicate changes in the global regulatory to provide services to an audit client are 04 landscape and new policies or interpretations required to confirm their independence of the to all of our people. audit client through an automated process. 05

41 03 Ethics, privacy and independence

ii Disciplinary process Review of independence practices Audit partner rotation Deloitte’s leaders take a zero-tolerance and monitoring Rotation of engagement partners, EQCRs and approach to non-compliance with the Firm’s The Firm performs an annual internal review other key audit partners helps to provide a 01 independence policies. Our partners and of independence quality controls, which is fresh perspective and to reduce familiarity and employees are subject to disciplinary action overseen by an individual nominated by DTTL. self-interest threats to independence. if they violate these guidelines. Depending An external review of our independence quality 02 upon the severity of the violation, sanctions controls is undertaken at least every three years Our rotation policies require that the include written warnings, financial penalties and the results are communicated to the CEO. engagement partner and the EQCR for the and potentially termination of employment The most recent review was an external review audits of listed entities and APRA-regulated 03 or removal from the partnership. undertaken during March 2015. In addition entities are rotated after five consecutive years to the external review, independence is an of service. For other key audit partners involved element of the system of quality control which in the audits of listed entities and other public 04 is assessed annually as part of the Practice interest entities, the rotation requirement is Review discussed in Chapter 4. seven years. Following rotation, these audit partners are not permitted to be involved in the 05 audit engagement for a period of two years.

Deloitte maintains a database that tracks the A We have a comprehensive and number of years of audit partner involvement to facilitate succession planning and monitor multi-layered independence framework. compliance with rotation requirements.

42 04 Learning, measuring and refining i

ii Learning never stops. We use ‘inflight’ and ‘after-the-fact’ reviews as part of a framework 01 for continuous improvement. We also continue to look at ways to be more agile and nimble. 02

43 04 Learning, measuring and refining Monitoring of quality-control policies and procedures i

ii Our monitoring initiatives In-flight engagement reviews Our ‘Health Check’ Program for selected complement our policies, Completed engagement reviews engagements focuses on specific topics and 01 procedures and tools we have is designed to improve our responsiveness to in place to drive audit quality, Practice Review and inspection findings, as well Practice enabling us to continually improve. as to assess the effectiveness of actions we 02 have previously put in place. These audit ‘Health Review Checks’ are conducted throughout the year and Completed engagements are intended to be short, deep-dives on a topic. 03 Our annual Practice Review Program is a key They are performed on ‘live’ engagements and component of the Firm’s overall system of themes are communicated back to the practice In-flight engagement reviews quality control. This inspection and monitoring when applicable. Engagements are identified on 04 mechanism provides evidence of compliance a risk basis, using diagnostic data. with, and consistency in, the application of Audit Health Deloitte Network policies and methodologies. Our Audit Quality Coaching Program for Quality Checks 05 selected engagements is used to embed Coaching The Practice Review Program assures that our the Firm’s audit approach and methodology system of quality control complies with Auditing enhancements, and the focus areas set out A Standard ASQC 1 and is operating effectively. in our Audit Quality Plan. The findings and recommendations resulting Causal factor analysis from the practice reviews are presented to Rather than formal ‘after the fact’ reviews, Undertaken to understand and the Firm’s CEO and form the basis for future ‘Health Check’ reviewers and coaches work address the root cause of identified improvement initiatives. with the engagement teams to reinforce our findings or issues. Analysis is built methodology, challenge teams and provide back into our Audit Quality Plan. timely advice that can be acted on immediately during the engagement. 44 04 Learning, measuring and refining Practice Review Program: key features i

ii •• The program is led by the Firm’s Practice •• Every audit partner is reviewed at least •• Causal factor analysis is performed on Review Director. once every three years. In addition, partner all common findings and poor rated files, •• The Practice Review plan, process and candidates are reviewed prior to promotion in order to more effectively identify the 01 results are reviewed and concurred on by to partner. Engagement files of 42% of our cause of deficiencies and determine a partner from another DTTL Network firm. Assurance Practice partners were subject an appropriate response. to review in FY 2017 (38% in FY 2016). 02 •• The Practice Review includes a review of •• A mid-year assessment monitors the our system of quality control and a selection •• IFIAR and ASIC focus areas are emphasised. impact of the prior year’s action plan on of engagement files. •• Reviewers are chosen from international addressing Practice Review findings so that adjustments can be made where actions 03 •• Engagement selections are risk-based and pools or from other practice offices within the Firm. have not resulted in clear improvement to all major industries served by the Firm or engagements and/or our system of practice office are considered. •• The Firm communicates any deficiencies quality control. 04 that were noted and recommendations for remedial action as a result of the review •• Each year, the Firm also communicates the to the relevant partner or staff member. results of the Practice Review Program, and 05 Findings are incorporated into partner ongoing consideration and evaluation of its performance assessments, and poor system of quality control, to its partners performing partners may be sanctioned and other appropriate individuals within A 38% 42% depending on the severity of the findings. the Firm. FY 2016 FY 2017 •• If partners are rated below a certain level, an additional number of their engagements will be reviewed and they Percentage of our Assurance Practice will be automatically listed for review partners subject to review the following year. 45 04 Learning, measuring and refining Client Service Assessment and Complaints i

ii Providing our clients with Complaints policy feedback mechanisms is part To allow the Firm to retain its strong reputation, we have a publicly available Complaints 01 of our commitment to Handling Policy. This provides guidance on professional excellence. the manner in which Deloitte receives and manages complaints made against the Firm, 02 Client Service Assessment Program its partners and its employees. The policy is Deloitte is committed to providing excellent supported by a procedures manual to help staff client service. An essential part of delivering, resolve complaints in an efficient, effective and 03 sustaining and improving our service is professional manner. obtaining regular and structured feedback from our clients. Our process includes appointing a 04 Complaints Officer and designating At the end of a selection of engagements, communication channels to manage complaints. Deloitte partners who are independent of Complaints are documented and analysed 05 the engagement and/or client relationship by the Complaints Officer to determine if any conduct structured face-to-face interviews action, including changes to the system of with key contacts at the client organisation. quality control, should be taken to address A The engagement team is given specific specific problems. feedback from these interviews and takes action to continuously improve service delivery.

46 05 External monitoring i

ii We recognise the important role of regulators and we share a common goal of achieving high-quality 01 financial reporting. 02

47 05 External monitoring

ii Given the important role Australian Securities & Chartered Accountants Australia of auditors in the financial Investments Commission and New Zealand (CAANZ) ASIC has responsibility for oversight of CAANZ has a Quality Review Program to 01 markets, our profession and auditors in Australia, including Deloitte. ASIC monitor whether its members have quality- Deloitte are subject to external monitors compliance with the requirements control policies and procedures in place to oversight by regulators. Deloitte of the Corporations Act as it relates to comply with professional standards and 02 auditor independence and audit quality. ASIC legal requirements. recognises the important role introduced a continuous inspection process the Australian Securities & for the largest firms in 2014. Deloitte has been The most recent review of Deloitte 03 Investments Commission (ASIC) subject to ongoing engagement file reviews involved using an online quantitative audit throughout the Transparency Reporting Year. quality survey to assess partner and staff plays in Australia and through its perceptions of the Firm’s commitment to audit 04 membership of the International ASIC reports inspection findings in a private quality. The survey was conducted in the year Forum of Independent Audit report to each individual firm. Periodically, ASIC to 30 June 2012. publicly reports on its audit inspection program, 05 Regulators (IFIAR) in promoting summarising the scope and overall findings of Each year, CAANZ summarises its overall findings high-quality external audits of inspections (see www.asic.gov.au for the report in a public report on its Quality Review Program financial reports. on the 2015-16 audit inspection program issued (see www.charteredaccountantsanz.com). A on 29 June 2017). Foreign Regulators Matters raised by ASIC both in our private As we audit a number of entities that are report and the public report are analysed to publicly accountable in a foreign jurisdiction, determine root causes and develop strategies a number of foreign regulators are also to rectify problems and improve processes. authorised to inspect Deloitte as outlined Where we deem it necessary, we remediate in Figure 7. our audit engagement file for ASIC observations. 48 05 External monitoring Figure 7: Foreign regulators authorised to inspect Deloitte i

ii Name of regulator Date of last inspection Comment Public Company Accounting Oversight Nov 2011 The PCAOB publishes a report on its website in relation 01 Board, United States (PCAOB) to each firm inspected (seewww.pcaobus.org).

Financial Reporting Council (FRC), No inspection to date The FRC previously advised Deloitte that it will not be 02 United Kingdom separately inspecting Deloitte as it will rely on ASIC’s inspection program. 03 Canadian Public Accountability Board No inspection to date CPAB publishes an annual report on its website in relation (CPAB) to its audit inspection findings (seewww.cpab-ccrc.ca). Financial Markets Authority, No inspection to date Their approach to overseas auditors that are already 04 New Zealand regulated in their home country is to place some reliance on the home regulator. 05

49 Appendix i

50 Appendix Financial information i

ii Deloitte provides audit, tax, consulting, financial advisory, and 01 risk advisory services to public and private clients in many industries. 02 Globally, the Deloitte Network’s revenue was US$36.8 billion for the year ended 31 May 2016 (2015: US$35.2 billion). It employs approximately 03 245,000 professionals worldwide across a globally connected network of member firms operating in more than 150 countries. 04

In Australia, Deloitte recorded revenue of A$1.76 billion for the year ended 31 May 2017 05 (2016: A$1.53 billion). It employs over 6,000 people in 15 offices. A The Corporations Act prescribes the Transparency Reporting Year as a period of 12 months starting on 1 July. This differs from our financial year, which commences on 1 June. For this Transparency Reporting Year to 30 June 2017, our revenue from audits of financial statements was A$261 million (2016: A$251 million). 51 Appendix Figure 8: Deloitte audit and other revenue in Australia for the year ended 30 June i

ii Total revenue for the 12 months ended 30 June (A$m)

01 $1,541 $1,771 02 03

2016 2017 04 116 122 05 Non-audit services to audit clients 2016 2017 251 261 A Audits of financial statements1 2016 2017 1,174 1,388

Non-audit services to non-audit clients 2016 2017

1. Includes revenue derived from audits of financial statements. Other related assurance services are classified as non-audit services. 52 Appendix Deloitte Network and legal structure i

ii ‘Deloitte’ is the brand under The independent firms are a network of firms customary practice and other factors, and may which more than 245,000 (Deloitte Network) and each is a member firm secure the provision of professional services in of Deloitte Touche Tohmatsu Limited (DTTL), its territory through subsidiaries, affiliates and/ 01 dedicated professionals in a UK private company limited by guarantee. or other entities. independent firms in more than Each member firm provides professional 150 countries collaborate to services in a particular geographic area and is Each member firm has voluntarily become a 02 subject to the laws and professional regulations member of the Deloitte Network with a primary provide audit, consulting, financial of the particular country or countries in which purpose to coordinate their approach to client advisory, risk advisory and tax it operates. In Australia, the member firm service, professional standards, shared values, 03 services to selected clients. is the Australian partnership of Deloitte methodologies, and system of quality control Touche Tohmatsu. and risk management. DTTL has adopted certain policies and protocols in each of these 04 DTTL does not itself provide services to clients, areas in an effort to establish a consistently high or direct, manage, control or own any interest level of quality, professional conduct and service in any member firm. Further, member firms in all member firms. This structure confers 05 are not subsidiaries or branch offices of DTTL. significant strengths, combining high quality DTTL and each DTTL member firm are separate standards and methodologies with a deep and distinct legal entities, which cannot obligate understanding of local markets and a sense of A each other. DTTL and each DTTL member responsibility and initiative among professionals firm are liable only for their own acts or who have a direct stake in the integrity and omissions and not those of each other. Each growth of their respective practices. DTTL member firm is structured differently in accordance with national laws, regulations,

53 Appendix

ii There are governance and management The Global Audit & Assurance Leadership structures at both the DTTL and member- Team comprises the audit leaders of the firm levels. At the DTTL level, the DTTL Board 12 largest member firms and is responsible 01 of Directors has adopted certain resolutions, for setting global audit strategy and overseeing policies and protocols regarding the governance implementation plans. Richard Deutsch, our of DTTL, professional standards and Managing Partner, A&A, represents Australia 02 methodologies, and systems of quality control on the Global Audit & Assurance Leadership and risk management in an effort to establish Team. In addition, a number of other partners a consistently high level of quality, professional are active participants of DTTL forums as 03 conduct and service in all member firms. outlined in Chapter 1. Member firms are responsible for applying these policies as well as for setting their own Further, DTTL sets the standards for what 04 policies and exercising professional judgement high-priority programs look like, such as the to allow compliance with applicable professional implementation of Deloitte Audit, the Audit standards and local laws and regulations. Imperatives and the Audit Quality Plan. This 05 is in addition to the Practice Review Program The DTTL Board is the highest governing described in Chapter 4. body of DTTL. Our Chief Strategy Officer, A John Meacock, is Vice-Chairman of the DTTL Board. DTTL’s highest management body is the DTTL Global Executive Committee, which is led by the global CEO. Our CEO, Cindy Hook, is a member of the DTTL Global Executive Committee. Jody Burton, our CRO, represents Australia on the DTTL Global Risk Executive. 54 Appendix Deloitte audit clients i

ii Listed companies and Audio Pixels Holdings Limited Boyuan Holdings Limited listed registered schemes Aurora Absolute Return Fund Brookfield Prime Property Fund Aurora Dividend Income Trust BSA Limited 01 Deloitte completed statutory audits2 Aurora Global Income Trust Byron Energy Limited of the following listed entities during Aurora Property Buy-Write Income Trust Capral Limited the year ended 30 June 2017. Australian Finance Group Limited Cash Converters International Limited 02 Australian Masters Corporate Bond Fund No 5. Centrepoint Alliance Limited A.P. Eagers Limited Limited CIMIC Group Limited Aberdeen Leaders Limited Australian Masters Yield Fund No. 1 Limited Clarius Group Limited 03 Accent Resources NL Australian Masters Yield Fund No. 2 Limited Clearview Wealth Limited AGL Energy Limited Australian Masters Yield Fund No. 3 Limited Coal of Africa Limited Aguia Resources Limited Australian Masters Yield Fund No. 4 Limited Crusader Resources Limited 04 Altona Mining Limited Australian Vintage Limited CSR Limited Andromeda Metals Limited Auswide Bank Ltd Dawine Ltd Angas Securities Limited Autosports Group Limited Dominos Pizza Enterprises Limited 05 APA Group (Australian Pipeline Trust and APT Baby Bunting Group Limited eChoice Limited Investment Trust) Bass Oil Limited Elanor Investors Group (Stapled security) APN Property Group Limited Bionomics Limited Elanor Retail Property Fund A APN Regional Property Fund BioTech Capital Limited Electro Optic Systems Holdings Limited Apollo Consolidated Limited Black Rock Mining Limited Embelton Limited APT Pipelines Limited Blackmores Limited Emeco Holdings Limited Ariadne Australia Limited Bluechiip Limited EML Payments Limited Asian Masters Fund Limited Boart Longyear Limited Energy Metals Limited

2. A udit means an audit conducted for the purposes of the Corporations Act and includes a half-year review of a financial report. 55 Appendix

ii Equity Trustees Limited Ikwezi Mining Limited iShares S&P/ASX 20 ETF eServGlobal Limited Imdex Ltd iShares S&P/ASX Dividend Opportunities ETF FAR Ltd Incitec Pivot Limited iShares S&P/ASX Small Ordinaries ETF 01 Fitzroy River Corporation Ltd Industria REIT iShares Treasury ETF Folkestone Limited Infomedia Ltd JB Hi-Fi Limited Freedom Foods Group Limited Invitrocue Limited Keybridge Capital Limited 02 Funtastic Limited IPH Limited Kore Potash Limited Gale Pacific Limited IRESS Limited Mareterram Limited Generation Healthcare REIT Isentia Group Limited Matrix Composites & Engineering Ltd 03 GLG Corp Ltd iShares Core Composite Bond EFT Medical Developments International Limited Godfreys Group Limited iShares Core Global Corporate Bond (AUD Megaport Limited Golden Rim Resources Ltd Hedged) ETF Mineral Deposits Limited 04 GPS Alliance Holdings Limited iShares Core MSCI World All Cap (AUD Hedged) MMA Offshore Limited GR Engineering Services Ltd ETF Moly Mines Limited Greenland Minerals and Energy Limited iShares Core MSCI World All Cap ETF Mortgage Choice Limited 05 Havilah Resources Limited iShares Core S&P/ASX 200 ETF Motorcycle Holdings Limited Healthscope Limited iShares Global 100 AUD Hedged ETF Multiplex SITES Trust HGL Limited iShares Global High Yield Bond (AUD Hedged) Murray River Organics Limited A Hillgrove Resources Limited ETF NAOS Absolute Opportunities Company Limited Homeloans Limited iShares Government Inflation ETF NAOS Emerging Opportunities Company HUB24 Limited iShares J.P. Morgan USD Emerging Markets Limited IDP Education Limited Bond (AUD Hedged) ETF Navitas Limited IDT Australia Limited iShares S&P 500 AUD Hedged ETF Neometals Ltd

56 Appendix

ii New Hope Corporation Limited Resource Generation Limited Strike Energy Limited Northern Star Resources Limited Respiri Limited Sundance Energy Australia Limited NRW Holdings Limited Retail Food Group Limited Sundance Resources Limited 01 Odyssey Energy Limited Rubicor Group Limited Superloop Limited Oil Basins Limited Saunders International Limited Swick Mining Services Limited Opthea Limited Scottish Pacific Group Limited Tag Pacific Limited 02 OreCorp Limited SDI Limited Tap Oil Limited Pacific Current Group Limited Seafarms Group Limited Tasmania Mines Limited Panorama Synergy Limited Servcorp Limited Tassal Group Limited 03 Paringa Resources Limited Seven Group Holdings Limited The PAS Group Limited Pental Limited Seymour Whyte Limited Tigers Realm Coal Limited Pepper Group Limited Shopping Centres Australasia Property Group Troy Resources Limited 04 Pioneer Resources Limited Shriro Holdings Limited US Masters Residential Property Fund PMP Limited Sigma Healthcare Limited US Select Private Opportunities Fund Primary Health Care Limited Simonds Group Limited US Select Private Opportunities Fund II 05 Primary Opinion Limited SIMS Metal Management Limited Vocus Group Limited Programmed Maintenance Services Limited SIV Asset Management Limited Warrnambool Cheese and Butter Factory QANTM Intellectual Property Limited SMS Management & Technology Limited Company Holdings Limited A QRxPharma Limited Sovereign Metals Limited WCP Resources Ltd R3D Global Limited Spark Infrastructure Group (Stapled Securities) Webster Limited RCG Corporation Limited Specialty Fashion Group Limited Woolworths Limited RCR Tomlinson Limited Stellar Resources Limited WPP AUNZ Ltd Reckon Limited Stone Resources Australia Limited Yowie Group Limited Regional Express Holdings Limited Stonewall Resources Limited ZipMoney Limited

57 Appendix

ii Authorised deposit-taking Insurers institutions (ADIs) Deloitte completed statutory audits of General Reinsurance Life Australia Ltd 01 Hollard Holdings Australia Pty Limited Deloitte completed statutory audits the following general insurance and life 3 MetLife General Insurance Limited of the following ADIs during the year insurance entities regulated by APRA MetLife Insurance Limited ended 30 June 2017. during the year ended 30 June 2017. 02 NobleOak Life Limited Optus Insurance Services Pty Limited Arab Bank Australia Limited Allied World Assurance Company Limited Pacific International Insurance Pty Limited Auswide Bank Ltd Ansvar Insurance Limited 03 Pacific Life Re (Australia) Pty Limited Banco Santander, S.A. AssetInsure Pty Limited Rapid Solutions Holdings Pty Ltd Bank of Baroda Atradius Credit Insurance N.V. RGA Reinsurance Company of Australia Limited Bank of Sydney Ltd Australian Scholarships Group Friendly Society 04 The Hollard Insurance Company Pty Ltd BNP Paribas Limited BNP Paribus Security Services Berkshire Hathaway Speciality Insurance Cuscal Limited Company 05 Defence Bank Limited ClearView Life Assurance Limited Mega International Commercial Bank Co., Ltd Compagnie Francaise D’Assurance Pour Le Members Equity Bank Limited Commerce Exterieur A Police Credit Union Limited General Reinsurance Australia Ltd The Bank of Tokyo-Mitsubishi UFJ, Ltd

3. Includes the following bodies regulated by APRA: A general insurer, authorised non-operating holding company (NOHC) or subsidiary of a general insurer or authorised NOHC, within the meaning of the Insurance Act 1973 and a life company that is registered under section 21 of the Life Insurance Act 1995 or a registered NOHC within the meaning of the Act. 58 Glossary i

ii Term Description Term Description A&A Assurance and Advisory Deloitte The Australian partnership of Deloitte Touche 01 Tohmatsu which is a member firm of DTTL ADI Australian deposit-taking institution Deloitte Network Individual independent member firms of the A-IFRS Australian International Financial DTTL Network of member firms 02 Reporting Standards DTTL Deloitte Touche Tohmatsu Limited, a UK Assurance Practice The Assurance Practice referred to in this private company limited by guarantee report comprises the audit practitioners, 03 partners and staff of Deloitte EQCR Engagement Quality Control Reviewer

APRA Australian Prudential Regulation Authority FRC Financial Reporting Council 04 ASIC Australian Securities & Investments Firm Refer to ‘Deloitte’ Commission IFIAR International Forum of Independent 05 Board of Partners Board of Partners of Deloitte Audit Regulators

CAANZ Chartered Accountants Australia and IFRS International Financial Reporting Standards New Zealand A NPPD National Professional Practice Director CEO Chief Executive Officer PCAOB Public Company Accounting Oversight Board COO Chief Operating Officer The Board Refer to ‘Board of Partners’ Corporations Act Corporations Act 2001 The Code Ethical Code of Conduct CPAB Canadian Public Accountability Board Transparency The period 1 July to 30 June CRO Chief Risk Officer Reporting Year 59 Contacts i

02 Richard Deutsch Jamie Gatt Caithlin McCabe Managing Partner Assurance Risk Leader Partner Assurance and Advisory National Professional Practice Director Audit Quality and Regulatory 03 Tel: +61 2 9322 5070 Tel: +61 2 9322 5396 Tel: +61 2 9322 7288 Email: [email protected] Email: [email protected] Email: [email protected] 04

Gareth Bird Catherine Flower Partner Director Assurance and Advisory Assurance and Advisory Quality & Risk Quality & Risk Tel: +61 2 9322 3434 Tel: +61 8 8407 7154 Email: [email protected] Email: [email protected] 60 This publication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively the “Deloitte Network”) is, by means of this publication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this publication.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/au/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

About Deloitte Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte’s approximately 245,000 professionals are committed to becoming the standard of excellence.

About Deloitte Australia In Australia, the member firm is the Australian partnership of Deloitte Touche Tohmatsu. As one of Australia’s leading professional services firms. Deloitte Touche Tohmatsu and its affiliates provide audit, tax, consulting, and financial advisory services through approximately 6,000 people across the country. Focused on the creation of value and growth, and known as an employer of choice for innovative human resources programs, we are dedicated to helping our clients and our people excel. For more information, please visit our web site at www.deloitte.com.au.

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Member of Deloitte Touche Tohmatsu Limited.