Independence of the audit process An auditing academic was heard to make the following true audit independence can never be achieved! Auditor operate le a commercial environment and needs to work to win the audit of a dient. The ongoing fees that they secriver are then obviously conditional un management's approval If management is Unhappy with the auditor they will find a way to get rid of them - it is as simple as that perhaps a solution could be to give the role of appointing auditor to Asic? They could infocate auditon to the top 300 listed companies and give them a fixed term audit for five years. Then they would reallocate auditors to those carripanlin Auditor would not have to compromise their independence to win the client or keep the dient. Itis a brilliant idea - even if I do sup so myselft Required Priscus the academic's proposal. CASE study 6.29 Corporate governance and the audit role * * Outlined below is an extract from the Quntes Corporate Governance Statement jutted in 1012) The Board safeguards the integrity of financial reporting Audit Committee The Board has an Audit Committee which . has four Members who are Independent Non Executive Director . is chaired by Garry Hounall, an Independent Non Executive Director who is a Fellow of The Institute of Chartered Accountants In Australia and a Certified Practising Accountant . has a written Charter which is available in the Corporate Governance section on the Qantas website . includes Members who are all financially literate . is responsible for assisting the Board In fulfilling is corporate governance responsibilities up relation for - the integrity of the Qantia Group financial reporting - compliance with legal and regulatory obligations The effectiveness of the Quitas Group's enterprise wide ruk management and Internal control framework oversight of the independence of the external and internal anchitors The experience and qualifications of Members of the Audit Committee are detailed on pages 12 to 15, Membership of and attendance at 201 1/2012 Audit Committee Meeting ate detailed on Page 37, "The Board and Audit Commitee closely monitor the Independence of the external auditor Regular reviews occur of the Independence safeguards put in place by the external audime As required by section 300(| Halfa) of the Corporations Act and the Audit Comminge Charts, the Audit Committee has advised the Board that it in appropriate for the following andement to be Included in the 2012 Directors' Report under the heading Non-audit Services "The Directors are satinfind that The non audit services provided during the 2011/2012 financial year by KPMG as the external auditor were compatible with the general mandand of independence for aliditors Imposed by the Corporations Act 2001 Chapter QUERVIEW Of THE AUDIT OF FINANCIAL REPORTS: 277by Any son audit services provided dining the amazon financial Year by KPMG chirinil auditor did not not compromise the audime independence requirements of Corporations Act 2001 for the following reasons KPMG services have not involved partners or stall acting in a runpretrial or decim making capacity within the dante Group or being Involved inthe processing are inating of transactions - KPMG holl-likedit services have only been provided where Ugnias is satisfied that related function or process will not have a material bearing on the audit procedures KPMG partners and waterelse is the provisine of non suit services have not pup pated In anociated approval or authornation processes A description of a h-andit services undertaken by KPMG and the related feen hy been reported to the Boarit to ensure complete transparency in relation to the spry provided The declaritinin required by section sort of the Corporations Act 2001 confirmifij Independence has been received from KPMG! Qantas rotates the lead aut partner every five years and Imposes restrictions on the employ of personnel previously employed by the external auditor. Policies are in place to restrict the type of non audit services which can be provided by external auditor and a detailed review of non audit fees paid to the external auditor in undertalis on a quarterly basis, Al Cach meeting, the Audit Committee meets privately with Executive Management without the external auditor and with the Internal and external auditors without Execut. Munigement" Internal Audit The internal audit function to carried but by Group Audit and Risk and is independent of the external auditor. Group Audit and Risk provides independent, objective assurance and consulting services on Qatar system of risk management, internal control and governance through * maintaining and Improving the risk management framework as approved by the Board . bi annual risk reporting to the Board " performing audits and other advisory services to assure risk management throughout the Qantas Group Group Audit and Risk adopt a risk-based approach in formulating its audit plan to allen andit activities to the key risks across the Qantas Group The audit plan is approved by Audit Committee bi-annually and submitted to the Safety, Health. Environment and Start Committee for information and approval where appropriate. The Auda Committee approves the Group Audit and Risk Internal Audit Charter who provides Group Audit and Risk with full access to Qantas Group functions, recordy, property Will personnel. and establishes independence requirements, The Audit Committee also approved the appointment or replacement of the internal mullior. The internal auditor has a direct ipotting line to the Audit Committee and also provides reporting to the Safety, Health, Environment and Security Committee In addition to Group Audit and Risk, operationally focussed business units within the Grantas Group have their own internal audit functions to provide assurance to accountable managers as the effectiveness of operational rule munligerment and compliance The findings from these sitit acovidio, along with the status of audit management actions, are reported through operaskins Required safety governance structures and to the Safety, Health, Environment and Security Commale andbags do his or her work Outline even key strengths of this pulley and explain why each one will help the iquependent