Audit plan for ANZ

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ANZ has weathered a challenging year in 2008 and been able to maintain the dividend for shareholders. Underlying business performance was solid, however dislocation in global financial markets and the change in the cycle in Australia and New Zealand impacted parts of our business.

This report will give the certain appropriate discussion to the case of bank and give some suggestions and recommendations to the bank's future development. We plan the audit for the bank. Firstly, we can introduce some circs of the ANZ and its environment. Then, make preliminary judgment about materiality levels and do some audit risk analysis. Last, we can make preliminary audit strategies for significant assertions and do some audit risks. For the banks, do the audit plan is very important. It can help banks in the whole environment of the economic crisis in an invincible position. This is a very meaningful one thing for the ANZ.

Key words: bank audit risk assessment banking business cycle

Audit plan of ANZ


With increasing development of market economy, competition in the banking sector is becoming fiercer and fiercer, and possibility of banking crisis is increased. Internal audit as an important part of internal audit management system of bank is of great significance for the realization of all business objectives in bank. The topic of prudential regulation of banking has received much attention in both theoretical and policy domains over the last decade or so. On the policy side, we have progressed from the rapid deregulation of controls on banks' asset portfolios and deposit interest rates in the early 1980s, to rethinking about sensible regulations especially on bank capital requirements as well as on monitoring and closure rules in the 1990s, epitomized by the Basle accords on capital ratios recently extended to 'market risks' on traded asset portfolios. On the theoretical side, interest in these issues has been rekindled by recent advances in the microeconomic modeling of banks (see Bhattacharya and Thakor, 1993, for a survey), and also on capital structure and optimal (contingent) control rules for corporate governance of a leveredErm; see Fischer et al. (1989), Hart (1996), and Dewatripont and Tirole(1994) for applications to bank regulation. The policy debate on bank regulation-whereby regulatory authorities serve as a "proxy" for both (a) dispersed bank deposit holders subject to free-rider problems in monitoring their banks' asset choices and returns performances, and (b) the general public concerned with the "contagion eLects" of a bank's failure on other related banks and the payment system-has occurred with the backdrop of heightened instabilities in the banking systems of many countries (the US in the 1980s, and Japan today). The market environment facing banks has also changed quite dramatically since the 1970s, beginning with disintermediation arising from the advent of money market funds for short-maturity deposits, to increased interbank competition in the deregulated environment of the 1980s, through the explosive growth of derivative asset markets that allow banks much greater Mexibility in hedging their asset portfolios risks, and also to speculate on such risks in the economy as whole.

Australia and New Zealand Banking Group limited (ANZ )

ANZ Bank is one of four major banks in Australia, the world's top-ranked 50. Bank's history can be traced back 150 years ago. It is headquartered in Melbourne, the thirties the nineteenth century opened its first office, then called the Australian bank (Bank of Australia). ANZ Bank is a public company, set up in Victoria, Australia, and the Australian Securities Exchange Limited. ANZ's global headquarters in Melbourne, that is, its predecessor banks in Macao and Asia opened in 1835, the first place. ANZ Bank is one of Australia's four major banks. At the same time, the acquisition of National Bank of New Zealand (The National Bank of New Zealand) became New Zealand's largest bank. ANZ bank has 1,190 outlets around the world, has 742 branches in Australia. Australia & New Zealand Bank, "Fortune" 500 companies and for the global banking sector has a high reputation in the commercial banks.

ANZ is an international banking and financial services organisation with around 23,500 people employed worldwide. By assets, we are one of the world's 100 largest banks. As well as offering a full range of financial products and services in Australia and New Zealand, ANZ has a network of banking operations across Asia and the Pacific providing trade finance and commercial banking services. Many of these offices also provide corporate banking, project and structured finance, foreign exchange and personal financial services. In November 2000, ANZ developed a plan to become a high performing, values driven organisation. The plan was called Perform, Grow and Breakout. Part of the plan (Perform) was for ANZ to continue to build upon its strong financial performance; another part (Grow) was to invest in new, high-growth opportunities. The final part (Breakout) was to create a new way of working - a culture where an agreed set of ANZ-wide values were used as a reference point for decision making; where interaction was open and trusting and new ways of thinking encouraged; and where staff had many and varied opportunities. ANZ has weathered a challenging year in 2008 and been able to maintain the dividend for shareholders. Underlying business performance was solid, however dislocation in global financial markets and the change in the cycle in Australia and New Zealand impacted parts of our business. The Board and new Chief Executive acted decisively to address the changing environment and a number of process and control issues in the Bank. While the economic outlook is softer, they have a clear strategy and the foundations on which to plan positively for the future.

Make preliminary judgment about materiality levels

The new international auditing standards than the old criteria, compared to the number of major real Qualitative in nature, in the new auditing standards, the audit risk is defined as "when the financial Statements free of material misstatement and the auditor express an audit opinion that can be inappropriate.

The new audit risk model: Audit Risk = risk of material misstatement Ã- Check risk; the old audit risk model: audit risk = inherent risk Ã- control System risk Ã- detection risk. This change made clear the risk of material misstatement. Because they had been audited entities in the accounting process, as well as the process of preparation of financial statements (Including its accounting control systems), can not discover and correct a major error risk.The new audit risk model, one can clearly see that the production of audit risk can be summarized into two aspects: one is controlled by the audit inspection of the risk, while the other is being audited person's risk of material misstatement, which auditors are powerless and can only be assessed on their level of risk in order to determine an acceptable level of risk checks to decide whether to accept the commission.

Commercial Bank has always been a high debt, high-risk special industry, his own business activity, there are many inherent risks. Reflected in the branches of Trinidad and Tobago, business outlets and more decentralized system, resulting in the accounting processing system and control system difficult to maintain consistent; banking business is very complicated, and average daily volume of business large amounts are also great, and there is a large number of currency funds receipt and payment , notes transfer, discount, cash, etc.; but also frequently do not involve the transfer of funds is making no commitment to matters of the normal accounting records, known as balance-sheet business (ie off-balance sheet business).

For social audits, the so-called audit risk is the auditor of the existence of significant errors on the financial statements audit opinion on the risk of inappropriate. United States Institute of Certified Public Accountants "issued by Auditing Standards Description" No. 47, made a widely recognized audit risk model: audit risk = inherent risk X control risk X detection risk. Inherent risk and control risk is that auditors can not control, and therefore, in order to audit the level of risk to the established, under the implementation of specific audit projects, to the object of audit risks inherent risk and control identification and assessment, and inspection the risk to make appropriate arrangements. Particularly in the widespread use of computer systems for e-banking money transfer day and age, if the bank's internal control system is not perfect, did not work, it would make more difficult the work of the audit were great, all decisions of the audit risk of commercial banks higher than the general business of the audit risk.

Consider the audit risk

Inherent risk

ANZ is positioned well in a difficult environment. Although ANZ'searnings fell 21% in 2008, underlying revenue* grew 12%. Lending growth for the year was 16% and growth in deposits and other borrowings was 21% highlighting an increased reliance on AA rated banks, the relative strength of the regional economy and the quality

of ANZ's franchise.The Personal Division and our rapidly growing Asia Pacific Division delivered very good performances. The Institutional Division improved on an underlying basis but provisions and valuation adjustments had a significant impact on the result for the Group as a whole. The performance in New Zealand was softer reflecting a weaker economy.Our results demonstrated ANZ's ability to weather an extremely challenging year. We have maintained our dividend, provided security and confidence for our customers and worked hard to meet community expectations with responsible, sustainable banking services.Since I joined ANZ in October 2007, we have done much to put the Bank on a new footing with a clear strategy focused on creating a super regional bank. We recognised the new reality in financial markets early and strengthened the balance sheet, increased capital and liquidity and systematically tackled some deficiencies in operating processes and controls.

Inherent risk (IR) is the possibility that a material misstatement could occur in the absence of related internal controls. This risk exists independently of the audit of a financial report. The auditor cannot change the actual level of inherent risk.

Control risk

We have made good progress in 2008, however there is much that needs to be done over the next four years to deliver on our aspirations.

Although we expected credit costs to increase in 2008, provisions were high. In the wake of these losses, we have undertaken a review of our business to ensure that everything we do is core to our clients' needs and our risk appetite is managed well. We undertook a review of our Securities Lending business. Action was taken against a number of employees and we committed to a 13-point remediation plan.

In September, we announced a new structure for our business to accelerate progress with our strategy and to improve financial performance. We have also built a strong management team of bankers with over 250 years of banking experience on our management board.I believe there is no substitute for bankers with experience of good

times and bad, and the experience to understand and see difficult times through. These actions will ensure ANZ will be a stronger, more effective business in the future.

Detection risk

The operational risk management process adopted by ANZ consists of a staged approach involving establishing the context, identification,analysis, treatment and monitoring of current, new and emerging operational risks. This is based on the Risk Management Standard issued by Standards Australia/New Zealand (AS/NZS 4360).

ANZ's Operational Risk Framework is supported by a number of operational risk policies and procedures with the effectiveness of the framework assessed through a series of assurance reviews and processes. This is supported by an independent review program by Internal Audit. ANZ employs the "Risk Drivers and Controls Approach" (RDCA),underpinned by a statistical quantification model to measure the level of operational risk and to determine and allocate operational risk capital.

The Australian Transaction Reports and Analysis Centre ("AUSTRAC") has responsibility for overseeing compliance with the Anti-Money Laundering and Counter Terrorism Financing Act (being phase in between December 2006 and December 2008) and the Financial Transaction Reports Act 1998. As in Australia, financial services and international suppliers, the Group is committed to the Financial Action Task Force principles. It is the international standard setter for anti-money laundering and counter-terrorism financing efforts. The Australian Competition and Consumer Commission ("ACCC") promotes competition and fair trade to benefit consumers, business and the community through the administration of The Trade Practices Act 1974.

Develop preliminary audit strategies for significant assertions

The use of advanced auditing practices, norms and standards for auditing procedures

first of all, the internal audit in improving the central bank on the basis of scientific and technological content optimize the allocation of internal audit resources, by means of a variety of audits are sequence combination, efforts to reduce the cost of internal audit work to achieve economic on the "Pareto optimal", attach importance to modern science and technology in the field of transport Internal Audit use. Means of modernizing the banking system in operation the speed and scope, than most other industries and sectors to be fast and wide, which requires internal audit should closely follow the work of the means necessary, out of the past, the traditional "read and listen to Cha, manual operation "mode, and vigorously promote the application and audit of microcomputer software parts-based computer-assisted audit techniques, using these advanced techniques operation mode in order to improve audit quality and efficiency.

Second, improve the operating procedures of the audit, a clear audit and the appointment and removal of the relationship between business and other officials, according to various sectors of the audit features, system the corresponding set of audit quality control standards, using scientific, qualitative, granular methods to achieve the central bank internal audit project quality control, transport in the audit to make, we should reflect the normative standards. (1) focus on the audit plan programs development and pre-trial investigation. The use of risk assessment and analysis methods to determine the Commonwealth Bank of Australia of various management and operations of the level of risk, work out covering all audit areas of the audit work plan.(2) Establish and improve the internal audit quality assurance system. As standardized system of follow-up audit degrees, the audit project quality evaluation system. The audit staff performance appraisal system as well as the accountability system, emphasis on internal audit the project annual consolidated sub - analysis of the reports, as a good management decision-making level advisers and assistants.


We plan the audit for the bank. Firstly, we can introduce an understanding of the Commonwealth Bank of Australia and its environment. Then, make preliminary judgment about materiality levels and do some audit risk analysis. Last, we can make preliminary audit strategies for significant assertions. For the banks, do the audit plan is very important. It can help banks in the whole environment of the economic crisis in an invincible position. This is a very meaningful one thing for the Commonwealth Bank of Australia. As I country's financial system reform and financial opening-up of the expansion large, the use of theory to guide the internal audit system, the agricultural Bank of internal audit work on improving operational efficiency and effectiveness of banks fruit has a positive practical significance.