Year ended 30 June 2015

Audit Transparency Report

Pitcher Partners Sydney(formerly Moore Stephens Sydney)

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PART A

INTERNATIONAL RELATIONSHIP

Each firm within the Moore Stephens Australia (‘MSA’) network is an independent member firm of Moore Stephens International Limited (‘MSIL’), which comprises 292 separate and independent member firms operating locally in countries around the world. Member firms offer assurance, accounting, tax and a range of other international business services across 103 countries through an aggregate of some 626 offices and 26,290 personnel (based on worldwide statistics for Moore Stephens International Member Firms reported at 31 March 2015).

MSIL is a limited liability company registered in England and Wales and is owned by the member firms. The company does not provide professional services in any jurisdiction. Its role is to promote the co-ordination of member firms’ professional strategies and this is led by an International Policy Committee comprising of regional representatives.

Member firms are divided into eight regions, each with their own co-ordinating committee comprising elected members from firms in that region. Some individual countries also have similar co-ordination structures, according to national circumstances. Broadly, coordinating committees meet quarterly, with intervening electronic contact as considered necessary.

MSIL also has an International Technical Committee comprising representatives from each of the regions. This Committee reports to the International Policy Committee. Operating through the eight regions, its main role is to monitor the adherence by member firms to the quality obligations set by ISQC 1: Quality Control for Firms that Perform Audits and Reviews of Financial Statements and Other Assurance and Related Service Engagements, and to assess the suitability of candidate firms for admission.

Each member firm of MSIL is separate and independent from both MSIL and other member firms. Member firms of MSIL do not share their respective profits or losses, they are not under common ownership or control and each member firm appoints its own management.

Member firms are expected to comply with applicable regulatory and professional obligations including, where relevant, those established by the International Federation of Accountants (‘IFAC’) and its affiliated bodies. Membership also requires compliance with various administrative obligations, but these do not expand upon the requirements of relevant professional bodies. Concerning the delivery of assurance services, member firms are required to complete and maintain compliance questionnaires and are subject to periodic monitoring visits. The nature of monitoring procedures gives recognition to the professional environment in which individual firms operate. Equivalent procedures are applied where firms are candidates for admission. Where deficiencies are identified at a member firm, remedial recommendations are made. If deficiencies are not resolved, then the International Policy Committee may determine that the firm be excluded from membership.

Neither MSIL nor any role within it carries any executive authority over the operations of individual member firms. All member firms and correspondent firms are independent entities owned and managed in each location. Their membership of MSIL should not be construed as constituting or implying any partnership between them.

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AUSTRALIAN NETWORK

As at 30 June 2015, the MSA network comprised five firms: Adelaide; Canberra; Perth; Queensland and Sydney.

These firms operate across 12 office locations throughout Australia. MSA is a limited liability company registered in Australia and is owned by the member firms within Australia. The company does not provide professional services in any jurisdiction. Each member firm with firm revenue exceeding $4m is entitled to have a firm appointed Director on the Board of MSA to represent their interests.

Changes to member firm representation during the year

On 1 March 2015, Moore Stephens’ Melbourne practice left the Moore Stephens network to become ShineWing Australia, one of the branch offices of ShineWing, with headquarters in Beijing.

On 1 July 2015, Moore Stephens’ Perth office merged with UHY Haines Norton’s Perth practice to become Moore Stephens Western Australia.

On 1 October 2015, Nexia Melbourne commenced trading as Moore Stephens Victoria and is represented on the MSA Board by Steve Sakkas, the firm’s Chief Executive Officer.

On 16 October 2015, Moore Stephens’ Canberra practice left the Moore Stephens network after being acquired by Canberra based Synergy Group.

On 31 October 2015, Moore Stephens’ Sydney practice left the Moore Stephens network and merged with Pitcher Partners’ Sydney practice.

MSA Board Members as at 30 June 2015

Moore Stephens Australia Don Boyd (Executive Chairman)

Moore Stephens Adelaide Jim Gouskos

Moore Stephens Queensland Ken Pickard

Moore Stephens Sydney Robert Southwell

Moore Stephens WA Neil Pace

MSA Board members nominate suitable candidates for its Executive Chairman, who is appointed via a resolution of the Board for a period of two (2) years subject to satisfactory performance. The Executive Chairman is appointed as a Director of the Company and has the same voting rights equivalent to those of other directors. The Executive Chairman is not a shareholder however and therefore has no votes upon the call for a poll. The Executive Chairman also serves as the representative for the Australasian region on MSIL’s International Policy Committee.

MSA also has a Chief Executive Officer (“CEO”) who is not a Board member. The CEO Is appointed by the Board and has overall responsibility to provide leadership and strategic direction for the network and overseeing its day to day operations.

Authority to act is granted to the CEO by the Board; hence the CEO ultimately remains accountable to the Board.

MSA Board

Chief Executive Officer

National Head of Professional

Standards

National Head of Technical

Accounting Services

Head of Communications

Moore Stephens Adelaide Moore Stephens Canberra Moore Stephens Perth

Moore Stephens Queensland Moore Stephens Sydney

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MSA GOVERNANCE

The role of the Board of MSA is to serve the interests of all its stakeholders, provide strategic direction for member firms and manage risks associated with being a part of the Moore Stephens network within Australia. Resolutions made by the Board are expected to be adopted by all member firms. Each Board member has the responsibility to communicate resolutions to their respective firms and to ensure they are actioned.

Prior to admission into the network, all prospective member firms are required to be approved by both the MSA Board and the MSIL International Policy Committee (“IPC”). If the approval process is successful, the prospective member firm must enter into a Member Firm Agreement with MSIL and a Deed of Accession, whereby the new member firm agrees to be bound by the MSA Members’ Agreement.

MSA’s constitution is contained in the Members’ Agreement, which includes processes for the appointment of directors, voting rights, and meeting expectations. The Board is required to meet at least

three times in any one financial year. For this financial year past, the Board has met four times.

MSA has a number of committees/groups which have operated during the transparency reporting period. Each committee/group has its own Charter which outlines its primary purpose/s and details relevant duties and responsibilities which align with the expectations of the Board. Each committee/group provides regular updates to the Board, and each Charter is reviewed at least annually to ensure its ongoing relevance.

In promoting quality, the Board actively monitors each group to ensure:

They have the necessary leadership, skills and knowledge to ensure delivery of their Charter and the promoting of a quality-focused culture;

They have clear roles and accountabilities and well understood process for escalating and resolving issues; and

The Board itself is sufficiently aware of quality matters relevant to each committee/group.

Quality Control Review Committee

Risk and Quality Committee

Moore Stephens Adelaide

Moore Stephens Canberra

Moore Stephens Perth

Moore Stephens Queensland

Moore Stephens Sydney

External Audit Champion Group

MSA Board

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Risk Management

The MSA Board established the national Risk and Quality Committee in 2013, with the following key responsibilities:

Confirming effective risk management as a national responsibility;

Establishing MSA’s risk culture, defining its appetite for risk and ensuring alignment with the MSA Board’s vision and mission; and

Identifying, assessing and responding to those risks which have an impact on MSA’s ability to achieve our organisational objectives and strategic goals.

Risks have been identified, assessed and categorised under the following:

Governance Regulatory

Business Financial

Business continuity Technology

Human resources

Due to the various changes to member firms since the last transparency reporting period, the MSA Board has assumed operational responsibility for and oversight of the risks affecting the network that during this transitional period. It is expected that the Risk and Quality Committee will re-assume these responsibilities during the 2016 transparency reporting period.

Quality Assurance

MSA’s established Quality Control Review Committee, holds the following key responsibilities:

Providing the platform to undertake the role of overseeing and managing the Australasian region’s second tier review program on behalf of MSIL;

Enabling MSIL to meet their reporting requirements to IFAC as a member of the forum of firms in respect of Australian and New Zealand member firms and their compliance with respective standards on quality control, ASQC1 and PES 3 over the course of a defined three year cycle;

Enabling each firm within the Australasian region to meet the requirements of professional bodies and regulators within the region;

Reporting in general terms on the progress and outcomes of the review program and by exception, on ‘failed’ reviews or other matters as deemed necessary by the committee, and providing recommendations which promote continual improvement in quality; and

Considering the adequacy and effectiveness of policies and procedures to manage audit regulatory risks facing the MSA network and to liaise with the Risk and Quality Committee and relevant risk owners as appropriate.

External Audit Operations

MSA’s established External Audit Champion Group, holds the following key responsibilities:

Developing and monitoring the MSA network's systems, controls and procedures for compliance with legal and regulatory obligations with respect to external audit engagements;

Promoting continuous improvement, and fostering adherence to, the Network's policies, procedures and practices with respect to external audit engagements;

Creating a forum for the tabling of external audit related issues, challenges, opportunities and sharing of technical knowledge, experiences and resources between all the offices;

Sharing external audit marketing strategies and initiatives and identifying opportunities to grow the Network's fee base and brand awareness; and

Liaising with the Quality Control Review Committee on matters relating to the networks' compliance with legal and regulatory requirements with respect to external audit engagements.

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MAINTAINING QUALITY

As a network firm that undertakes audit and other assurance engagements, we are required to establish and maintain a system of quality control that includes policies and procedures in accordance with the requirements of Auditing Standard ASQC 1, Quality Control for Firms that Perform Audits and Reviews of Financial Reports and Other Financial Information, Other Assurance Engagements and Related Service Engagements.

Key drivers of audit quality across our audit firms, include:

Top-down culture of and commitment to audit quality and independence;

Skills and competencies of our people;

Effectiveness of audit processes; and

Understanding factors outside of our control.

Top-down culture of and commitment to audit quality and independence

Our partners and senior executives recognise audit quality and independence as being fundamental to the ongoing strength of our brand, and success of our business. This is front of mind in all formal and informal communication to Moore Stephens people, and is embedded in our training and technical materials, throughout our documented policies and procedures, and permeates the entire network.

Skills and competencies of our people

We have a diverse mix of partners and senior executives allowing us to meet the challenges of operating in an evolving profession. The perception that auditing is a ‘tick the box’ profession is outdated, and auditors are increasingly expected to be analytical, rational, critical, technical, naturally inquisitive and sceptical thinkers, with excellent communication skills. A national technical training program is run and available to all our auditors, which compliments each firm’s established learning and development framework.

We recognise the importance of attracting and retaining a diverse mix of high performing individuals, who are afforded opportunities to develop genuine industry specialisations to further strengthen our brand in key strategic markets.

Partners and staff are evaluated regularly, taking into account their performance in the period under review, and aiming to identify any ways the firm and broader

network can assist in ensuring individuals continue to progress to be able to meet their full potential. The frequency of evaluations will vary from firm to firm, but typically more junior staff will be assessed at the end of larger individual assignments, and at six-monthly intervals, whilst more senior staff will be assessed six-monthly or on an annual basis.

Effectiveness of audit processes

Our risk-based methodology follows a proven structured approach. Our methodology focuses on examining key business processes that are critical to achieving the goals and objectives of our clients. Our audit approach is designed to be closely aligned with the underlying risks of an organisation.

In this way, we focus our risk assessment and related audit activities on each client’s risks and how well management addresses those risks. By understanding the underlying risks that impact an organisation’s business drivers, we develop a more comprehensive and effective audit strategy that provides our clients with comprehensive risk coverage and increased value.

The audit methodology adopted by the network has been developed nationally by MSA to comply with Australian Standards of Auditing (“ASA’s”) and align with MSIL’s methodology. During the year, our auditors have completed our staged transition from using PROaudit to Caseware Working Papers. Our audit methodology is continually reviewed and updated centrally by MSA to ensure compliance with new and emerging audit requirements, including both International Standards of Auditing (“ISAs”) and ASAs.

Understanding factors outside of our control

There are factors that exist in relation to an entity that are largely outside our control. By obtaining an in-depth understanding of our clients and the environments in which they operate, we are able to determine the extent to which these factors may have an impact on the risks of material misstatement in the engagement. The nature and extent of audit procedures undertaken are intrinsically linked to the identification and assessment of such risks.

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Relevant Ethical Requirements

The provision of our audit services is subject to our strict policies in respect to maintaining our independence. This is achieved through the application of our Quality Assurance Policies and Procedures and Independence Policy to ensure each firm’s compliance with the requirements of APES 320 Quality Control for Firms, the Corporations Act 2001 (where applicable) and APES 110 Code of Ethics for Professional Accountants (“the Code”). The MSA Quality Assurance Policies and Procedures and Independence Policy, including all policies and procedures contained therein, is adopted by all member firms of the MSA network, thus ensuring that we are compliant with the ‘network firm’ requirements of the Code. Compliance is facilitated through our web-based proprietary platform – IQA Monitor. The following safeguards are enforced within IQA Monitor to ensure our objectivity is maintained and we are free from conflicts of interest when discharging our professional responsibilities:

Partners or staff do not act in a managerial or decision-making capacity, and are not involved in processing or originating transactions for our audit clients;

Where non-audit services are provided to our audit clients, we are satisfied that these services do not have a material impact on our planned audit procedures and we will not express any assurance in relation to these procedures; and

Partners and staff involved in the provision of non-audit services to our audit clients do not have the authority to accept these engagements without preliminary authorisation from the audit partner.

As auditors, direct and material financial interest in our assurance clients or controlled entities and material associates is prohibited to us. This prohibition extends to:

All partners and professional staff of any firm within the MSA network, and any superannuation fund, companies or trusts controlled by them;

Partners and dependents of our partners and professional staff;

Certain other relatives of partners and professional staff who directly provide any professional services to the client and its controlled entities; and

The firm and all other firms within the MSA network including controlled entities.

The following policies and procedures are undertaken to ensure compliance with our Quality Assurance Policies and Procedures and Independence Policy:

Six-monthly declarations are signed by all partners and staff confirming they hold no prohibited financial or employment relationships with assurance clients of any firm within the MSA network;

Independence declarations are signed by all engagement team members confirming their independence;

Conflict checks are performed on all new clients to identify any potential conflicts of interest;

Where non-audit services are to be provided to an audit client that might place at risk our audit independence, approval by the firm’s Quality Assurance Partner is obtained prior to the commencement of the engagement, to ensure compliance with the requirements of the Quality Assurance Manual and Independence Policy;

All new partners and professional staff undertake mandatory ethics and independence training when joining a Moore Stephens firm;

All partners and staff are provided refresher training and updates on their mandatory ethics and independence responsibilities annually; and

Monitoring processes are applied to ensure compliance with the requirements of the Quality Assurance Policies and Procedures as documented in IQA Monitor.

Monitoring

External Accountability and Monitoring

ASIC – Most recent inspection commenced in April 2014 and was completed in July 2015.

CAANZ – Follow up from the completion of the 2013 Audit Quality Survey in January 2015.

Those findings from external reviews and follow up action required is communicated to network firms via members of the EACG, biennial audit conferences, and the national audit training program. The successful implementation of remedial action required is reviewed as part of the combined MSIL/MSA internal monitoring program.

Internal Accountability and Monitoring

MSIL – MSIL is a member of IFACs Forum of Firms. As a member, MSIL is required to coordinate regular global internal quality assurance reviews, which includes reviewing each firm in Australia over the course of their defined 2014-2016 review cycle.

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Each audit partner is subject to an annual file inspection review which is co-ordinated by MSA.

In addition, MSA may conduct additional reviews of each firm’s compliance with its ASQC1 obligations. Follow up visits are undertaken as, and when, required at the discretion of the MSA.

MSA runs a financial statement surveillance program which includes an extensive pre-signing review of the financial statements of all new audit clients. This is performed by MSA’s Head of Technical Accounting Services. In addition, all existing audit clients are subjected to a detailed review by the Head of Technical Accounting services at least once over a rolling three year period.

As part of our ongoing commitment to quality, every listed audit client of the network is subject to an Engagement Quality Control Reviews (“EQCR”) for both the annual audit and half-year review in accordance with ASQC1. There are also a suite of other entities subject to EQCRs as and when required:

Where uncertainty around going concern exists;

Where certain types of modified audit opinions are being considered;

In instances where it is required to safeguard against a potential threat to independence;

Where the audit risk associated with the engagement has been deemed high; and

Otherwise, at the lead engagement partner’s request.

Quality Control System

We believe that our quality control system operates effectively and enables us to meet our obligations under ASQC1. Notwithstanding the above, we are always seeking to improve the quality and effectiveness of our quality controls system to meet the changing dynamics of our industry.

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PART B

SYDNEY

Legal Structure

Moore Stephens Sydney comprises a number of separate legal entities as follows:

Moore Stephens Sydney Pty Ltd;

Moore Stephens Sydney;

Moore Stephens Sydney Wealth Management Pty Ltd;

Moore Stephens Sydney Corporate Finance Pty Ltd; and

Moore Stephens Sydney Corporate Recovery Group Pty Ltd.

All companies are privately owned and all shareholders are associated investment entities of the directors of the company. There are no external shareholders. Audit & Assurance services are provided by Moore Stephens Sydney, a partnership, comprising 17 partners who are also directors of Moore Stephens Sydney Pty Limited. Audit & Assurance services are conducted by designated audit partners all of which are registered company auditors.

Governance

Collectively the individual partners form the Full Partners Group. This group delegates responsibility for the day to day running of the firm to the Managing Director and the Advisory Board. The managing director is currently elected from within the full shareholders group and is responsible for leadership and strategic direction of the firm. The key roles of the managing director are:

Leadership and vision

Propose and execute approved strategies

Propose business plans and budgets to support strategies

Operate the business in accordance with the strategies and plans approved by the Board.

This Managing Director role in turn delegates day to day functionality to the Chief Operating Officer. The Advisory Board comprises the Managing Director, Chair of Advisory Board, external to the firm, and four (4) board members selected from the Full Partners Group. The Advisory Board is responsible for:

Governance;

Setting strategic direction;

Ensuring the Managing Director executes the Company’s business strategy;

Reviewing plans and budgets to support the business strategy; and

Monitoring financial compliance.

Names of Relevant Entities Audited (of the kinds mentioned in subsection 332A (1) of the Act)

This list includes those clients to which the firm issued an audit report in accordance with the requirements of Division 3 of Part 2M.3 of the Corporations Act 2001 for the transparency reporting year.

Entity Name

Australian Leaders Fund Limited

Cadence Capital Limited

Clime Capital Limited

Clime Investment Management Limited

Enverro Limited

Future Generation Investment Company Limited

Global Value Fund Limited

Milton Corporation Limited

Pureprofile Limited

QV Equities Limited

Sandon Capital Investments Limited

SCS Super Pty Limited – trustee for Australian Catholic Superannuation and Retirement Fund

WAM Active Limited

WAM Capital Limited

WAM Research Limited

Washington H. Soul Pattinson and Company Limited

Watermark Market Neutral Fund Limited

Wealth Defender Equities Limited

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Financial Information

Revenue from Services

Services Provided 2015

($’000) 2014

($’000)

Audits and reviews of financial statements

8,602 7,742

Other assurance and non-audit services

19,632 17,479

Total fees 28,234 25,221

Basis for Partner Remuneration

Directors of Moore Stephens Sydney Pty Ltd are remunerated by the following components;

A fixed distribution; and

Dividend payments.

Partners contribute from the fixed distribution component to a bonus pool which is then distributed based on a balanced scorecard approach including both financial and non-financial metrics.

Report_Transparency_151027

Get in touch...

PITCHER.COM.AU MELBOURNE

John Brazzale | Managing Partner +61 3 8610 5000 partners@pitcher.com.au

ADELAIDE

Tom Verco | Managing Principal +61 8 8179 2800 partners@pitcher-sa.com.au

SYDNEY

Rob Southwell | Managing Partner +61 2 9221 2099 partners@pitcher-nsw.com.au

BRISBANE

Ross Walker | Managing Partner +61 7 3222 8444 partners@pitcherpartners.com.au

PERTH

Bryan Hughes | Managing Partner +61 8 9322 2022 partners@pitcher-wa.com.au

NEWCASTLE

Greg Farrow | Managing Partner +61 2 4911 2000 newcastle@pitcher.com.au

Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.