Transparency Report 2016 - EY Australia - United States€¦ · Transparency Report 201 6 — EY...

TransparencyReport 2016EY Australia

Transparency Report 2016 — EY Australia 2

ContentsMessage from the Country Managing Partner and the EY Australia Assurance Leader .......................................................... 3

About us ........................................................................................................................................................................ 5

Legal structure, ownership and governance ................................................................................................................... 5

Network arrangements………………………………………………………………………………………………………......................................................... 5

Commitment to quality .................................................................................................................................................... 8

Infrastructure supporting quality................................................................................................................................... 8

Instilling professional values ......................................................................................................................................... 9

Internal quality control system .................................................................................................................................... 10

Client acceptance and continuance .............................................................................................................................. 11

Performing audits ..................................................................................................................................................... 12

Review and consultation ............................................................................................................................................ 13

Audit partner rotation ................................................................................................................................................ 14

Audit quality reviews ................................................................................................................................................. 14

External quality assurance review ............................................................................................................................... 15

Compliance with legal requirements ............................................................................................................................ 15

Independence practices ................................................................................................................................................. 17

Continuing education of audit professionals .................................................................................................................... 19

Revenue and remuneration ............................................................................................................................................ 20

Financial information ................................................................................................................................................. 20

Partner remuneration ................................................................................................................................................ 20

Appendix ..................................................................................................................................................................... 22

EY Australia public interest entity audit clients ............................................................................................................... 22

More information about EY can be found at ey.com.


Message from the Oceania Managing Partner and theOceania Assurance Leader

Welcome to the 2016 Transparency Report of Ernst & Young (EY Australia) – just one of the ways we help ourstakeholders to understand how we advance audit quality, manage risk and maintain our independence as auditors.

EY Australia’s reputation is based on and grounded in providing high-quality, professional audit services objectively andethically to every company we audit. It is at the heart of our ability to serve the public interest, while achieving ourpurpose of building a better working world. Auditors play a vital role in the functioning of capital markets by promotingtransparency and supporting investor confidence. Companies, regulators and other stakeholders count on us to deliverexcellence in every engagement.

The 2016 EY Australia Transparency Report, covering the fiscal year ending 30 June 2016, complies with thetransparency objectives of the European Union’s 8th Company Law Directive and the Corporations Act 2001, whichrequire Australian statutory auditors of public interest entities to publish annual transparency reports. In this report,you can learn about our internal quality control system: how we instill professional values, how we perform an audit,our review and consultation processes, our approach to audit quality reviews and our independence practices.

It will show you how EY Australia works to enhance audit quality and maintain our independence. Continuouslyimproving audit quality requires us to challenge our current approaches to audit execution. We do so by evaluating allexternal and internal inspection findings and taking responsive actions. We also support initiatives to enhance auditorreporting, including our Audit Champions network. For example, during the year, we established new subject matterexperts to support our audit teams in the resources (mining) and property investment industries.

EY continuously invests in developing tools to improve what we do, creating the highest-performing teams and buildingtrust and confidence in the audits we perform. During the year, EY Australia completed the roll out of the nextgeneration audit platform, EY Canvas. Over the coming months, we will launch a new, state-of-the-art research tool, EYAtlas, and a new client acceptance and continuance tool.

We hope you find the report useful – and food for thought. Regular dialogue is important to us. We encourage all ourstakeholders, including investors, audit committee members, companies and regulators to continue to engage with uson our strategy and come to us with questions on any of the matters covered in this report.


Tony Johnson Mike Wright

CEO and Regional Managing

Partner - Oceania Oceania Assurance Managing Partner

Ernst & Young Australia Ernst & Young Australia

Our purpose: building a better working worldEY is committed to doing its part in building a better working world.

The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over.We develop outstanding leaders who team to deliver on our promises to stakeholders. In so doing, we play a critical role in buildinga better working world for our people, our clients and our communities.


About usLegal structure, ownership andgovernanceIn Australia, Ernst & Young is a partnership and is a memberfirm of Ernst & Young Global Limited, a UK company limitedby guarantee (EYG). In this report, we refer to ourselves asEY Australia, “we,” “us” or “our.” EY refers collectively to theglobal organisation of the member firms of EYG.

EYG member firms are grouped into four geographic Areas:Americas; Asia-Pacific; Europe, Middle East, India and Africa(EMEIA); and Japan. The Areas comprise a number ofRegions, which consist of member firms or sections of thosefirms.

EY Australia is part of the Asia-Pacific Area, whichcomprises member firms in 22 countries, and is a member ofErnst & Young Asia-Pacific Limited (Asia-Pacific Limited).Within the Asia-Pacific Area, there are five Regions. EYAustralia is part of the Oceania Region.

The principal governing bodies for the Oceania Region andEY Australia are:

Oceania Executive Team

The Oceania Executive Team has the authority andaccountability for strategy and execution. It comprises theOceania Managing Partner, the Markets leader, theOperations leader, the Strategic Growth leader, the serviceline leaders for Assurance, Advisory, Transaction AdvisoryServices and Tax, the Financial Services Office leader andthe People Advisory Services leader. The Oceania ExecutiveTeam meets at least monthly.

Regional Partners Forum

Each Region elects a Regional Partner Forum (RPF), whoserepresentatives advise and act as a sounding board toRegional leadership. The partner elected as PresidingPartner of the RPF also serves as the Region’srepresentative on the Global Governance Council(see page 6).

Asia-Pacific Area

Asia-Pacific Limited, a Hong Kong company limited byguarantee, is the principal coordinating entity for the EYGmember firms in the Asia-Pacific Area. Asia-Pacific Limitedfacilitates the coordination of these firms and cooperationbetween them, but it does not control them. Asia-PacificLimited is a member firm of EYG, has no financial operationsand does not provide any professional services.

The principal governing bodies of the Asia-Pacific Area are:

Area Executive

The Area Operating Executive has authority for overseeingthe execution of the global EY strategy in the Asia-PacificArea. It comprises the Area Managing Partner, the DeputyArea Managing Partner, the leaders for Talent, Risk andAccounts, the service line leaders for Assurance, Advisory,Transaction Advisory Services and Tax and the RegionalManaging Partners of the five Regions in the Asia-PacificArea.

Network arrangementsEY is a global leader in assurance, tax, transaction andadvisory services. Worldwide, 231,000 people in memberfirms in more than 150 countries share a commitment tobuilding a better working world, united by shared values andan unwavering commitment to quality, integrity andprofessional scepticism. In today’s global market, EY’sintegrated approach is particularly important in the deliveryof high-quality multinational audits, which can span multiplejurisdictions.

EY’s central entity, EYG, coordinates the member firms andpromotes cooperation among them. EYG does not provideservices, but its objectives include the promotion ofexceptional, high-quality client service by member firmsworldwide.

Each member firm is a legally distinct entity. Theirobligations and responsibilities are governed by theregulations of EYG and various other agreements.

The structure and principal bodies of the global organisationduring the year ended 30 June 2016 are described below.They reflect the principle that EY, as a global organisation,has one shared strategy.


EY streamlined its operating model by creating theExecutive and the Regions. The Executive includes theGlobal Executive (GE), its committees and teams, and theleadership of the four Areas. This streamlined structureallows EY to further enhance its global scale and the deliveryof consistent exceptional client service worldwide, with theExecutive responsible for one global approach to strategy,quality, risk management, business planning, investmentsand priorities.

At the same time, this operating model allows for greaterstakeholder focus in the 28 Regions, permitting memberfirms to build stronger relationships with clients and othersin each country and be more responsive to local needs.

Global Governance CouncilThe Global Governance Council (GGC) is the main oversightbody of EYG. It comprises one or more representatives fromeach Region, other member firm partners as at-largerepresentatives and six independent non-executives (INEs).The Regional representatives, who otherwise do not holdsenior management roles, are elected by their RPFs for athree-year term, with provisions for one successivereappointment. The GGC advises EYG on policies, strategiesand the public interest aspects of their decision-making. Theapproval of the GGC is required for a number of significantmatters that could affect EY.

Independent non-executivesIndependent non-executives (INEs) are appointed fromoutside EY and bring the global organisation, and the GGC,the significant benefit of their varied perspectives and views.The INEs also form a majority of the Public Interest Sub-

Committee of the GGC, which addresses public interestmatters including stakeholder dialogue. The INEs arenominated by a dedicated committee.

Global ExecutiveThe GE brings together EY’s leadership functions, servicesand geographies. It is chaired by the Chairman and CEO ofEYG and includes its Global Managing Partners of ClientService and Business Enablement; the Area ManagingPartners; the global functional leadership for Talent andFinance; the leaders of the global service lines — Assurance,Advisory, Tax and Transaction Advisory Services; the GlobalLeader for Public Policy; and one EYG member firm partneron rotation.

The GE also includes the Chair of the Global AccountsCommittee and the Chair of the Emerging MarketsCommittee, as well as a representative from the emergingmarkets practices.

The GE and the GGC approve nominations for the Chairmanand CEO of EYG, and ratify appointments of the GlobalManaging Partners. The GE also approves appointments ofGlobal Vice Chairs. The GGC ratifies the appointments of anyGlobal Vice Chair who serves as a member of the GE.Furthermore, the GE appoints Area Managing Partners andapproves appointments of Regional Managing Partners. Theappointments of the Area Managing Partners are subject toratification by the GGC.

The GE’s responsibilities include the promotion of globalobjectives and the development, approval and, whererelevant, implementation of:

• Global strategies and plans


• Common standards, methodologies and policies to bepromoted within member firms

• People initiatives, including criteria and processes foradmission, evaluation, development, reward andretirement of partners

• Quality improvement and protection programs• Proposals regarding regulatory matters and

public policy• Policies and guidance relating to member firms’ service

of international clients, business development, marketsand branding

• EY’s development funds and investment priorities• EYG’s annual financial reports and budgets• GGC recommendations• Any other proposal that supports the global objectivesIt also has the power to mediate and adjudicate disputesbetween member firms.

GE committeesEstablished by the GE and bringing together representativesfrom the four Areas, the GE committees are responsible formaking recommendations to the GE. There are committeesfor Global Markets and Investments, Global Accounts,Emerging Markets, Talent, Risk Management, Assurance,Advisory, Tax, and Transaction Advisory Services, and thereis the Global Audit Committee.

Global Practice GroupThis group brings together the members of the GE, GEcommittees and Regional leaders. The Global Practice Groupseeks to promote a common understanding of EY’s strategicobjectives and consistency of execution across theorganisation.

EYG member firmsUnder the regulations of EYG, member firms committhemselves to pursue EY’s objectives, such as the provisionof high-quality service worldwide. To that end, the memberfirms undertake to implement the global strategies andplans, and to maintain the prescribed scope of servicecapability. They are required to comply with commonstandards, methodologies and policies, including thoseregarding audit methodology, quality and risk management,independence, knowledge sharing, human resources, andtechnology.

Above all, EYG member firms commit to conducting theirprofessional practices in accordance with applicableprofessional and ethical standards and all applicablerequirements of law. This commitment to integrity and doingthe right thing is underpinned by EY’s Global Code ofConduct and EY’s values (see page 10).

Besides adopting the regulations of EYG, member firmsenter into several other agreements covering aspects oftheir membership in the EY organisation such as the rightand obligation to use the EY name and the sharing ofknowledge.

Member firms are subject to reviews that evaluate theiradherence to EYG requirements and policies governingissues such as independence, quality and risk management,audit methodology and human resources. As necessary,special focus reviews are performed to address situations orconcerns as they arise. Member firms unable to meet thequality commitments and other EYG membershiprequirements may be subject to separation from the EYorganisation.


Commitment to qualityInfrastructure supporting qualityQuality in our service linesVision 2020, which sets out EY’s purpose, ambition andstrategy, calls for EY member firms to provide exceptionalclient service worldwide. This is supported by an unwaveringcommitment to quality and service that is professionally andglobally consistent, and means service that is based onobjectivity, professional scepticism and adherence to EY andprofessional standards.

EY service lines are accountable for delivering qualityengagements, including managing quality reviews and real-time quality assurance of engagements, which measurescompliance with professional standards and all EY policies.

Vision 2020 has reinforced the ownership of qualitywithin the service lines, including audit. It has alsoresulted in increased clarity around the role of riskmanagement in policies and practices that support andimprove audit quality.

The Global Vice Chair of Assurance coordinates memberfirms’ compliance with and implementation of EY policiesand procedures for assurance services.

Professional PracticeThe Global Vice Chair of Professional Practice, referred to asthe Professional Practice Director (PPD), is overseen by theGlobal Vice Chair of Assurance and works directly with theArea PPDs to establish global audit quality control policiesand procedures. Each of the Area PPDs is overseen by theGlobal PPD and the related Area Assurance Leader. Thishelps provide greater assurance as to the objectivity of auditquality and consultation processes.

The Global PPD and Area PPDs also lead and oversee theProfessional Practice group. This is a Global and Areanetwork of technical subject matter specialists in accountingand auditing standards who consult on accounting, auditing,and financial reporting matters and perform various practicemonitoring and risk management activities.

For Oceania there is a Regional PPD who reports to the Asia-Pacific Area PPD.

The Global PPD oversees development of the EY Global AuditMethodology (EY GAM) and related technologies to beconsistent with relevant professional standards andregulatory requirements. The Professional Practice groupalso oversees the development of the guidance, training andmonitoring programs and processes used by member firmprofessionals to execute audits consistently and effectively.The PPDs, together with other professionals who work withthem in each member firm, are knowledgeable about EYpeople, clients and processes, and are readily accessible forconsultation with audit engagement teams.

Additional resources often augment the ProfessionalPractice group, including networks of professionalsfocused on:

• Internal-control reporting and related aspects of ouraudit methodology

• Accounting, auditing and risk issues for specificindustries and sectors

• Event-specific issues involving areas of civil and politicalunrest; or sovereign debt and related accounting,auditing, reporting and disclosure implications

• General engagement issues and how to work effectivelywith audit committees

Risk managementResponsibility for the delivery of high quality service andownership of the risks associated with quality is placed in theservice lines. The Global Risk Management Leader overseesthe management of these risks by the service lines, as hedoes in respect of other risks across the organisation as partof the broader Enterprise Risk Management framework, andcontinues to work with the service lines on significant risks.

Member firm partners are appointed to lead riskmanagement initiatives in the service lines and memberfirms, supported by other staff and professionals. The GlobalRisk Management Leader is responsible for establishingglobally consistent risk management execution priorities andenterprise-wide risk management. These priorities cascadeto member firms, and their execution is monitored throughan Enterprise Risk Management program.


Global confidentiality policyProtecting confidential information is engrained in theeveryday activities of EYG member firms. Respect forintellectual capital, and all other sensitive and restrictedinformation, is established within the Global Code ofConduct, which provides a clear set of behaviours expectedof all EY people. In order to further enhance this approach toprotecting information, and to reflect the ever-increasinguse and distribution of restricted data, EYG launched a newGlobal Confidentiality Policy in 2015. This policy providesadded clarity to EY people and forms the fundamentalelement of a wider approach that includes other key policieson conflicts of interest, personal data privacy and recordsretention. Other elements of the approach include:

• Social media guidance• Information handling requirements• Knowledge sharing protocols

Components of audit quality control programIn the following sections, we describe the principalcomponents of the EY Australia audit quality controlprogram:

• Instilling professional values• Internal quality control system• Client acceptance and continuance• Performing audits• Review and consultation• Audit partner rotation• Audit quality reviews• External quality-assurance reviews• Compliance with legal requirements

Instilling professional valuesSustainable Audit QualityWe understand that audit quality is our primary goal, andthis is reflected in the launch of our Sustainable AuditQuality (SAQ) program. SAQ is our globally consistentapproach to implementing the highest level of audit qualityacross the organisation. Launched in 2015, it is the highestpriority for our Assurance practice.

We use the word “sustainable” in SAQ to demonstrate thatthis is not a one-off, short-term initiative, but an ongoingprocess of improvement. EY has had a common auditmethodology for some time, and now we have a commonlanguage and processes regarding audit quality.

There are six components to SAQ: tone at the top; people;simplification; transformation and innovation; enablement,quality support and monitoring; and accountability. SAQ isimplemented by each member firm and is coordinated andoverseen globally.

We are constantly reinforcing the importance of the sixcomponents. It is something we talk about to every regionalAssurance leader and every partner. Audit quality and thekey elements of SAQ are something every senior manager,manager and team member must understand and becommitted to implementing locally. SAQ is essential to allour goals and ambitions.

Tone at the topSenior EY leadership is responsible for setting the right toneat the top and demonstrating EY’s commitment to building abetter working world through behavior and actions. Whilethe tone at the top is vital, our people also understand thatquality and professional responsibility start with them. Ourshared values, which inspire our people and guide them todo the right thing, and our commitment to quality areembedded in who we are and in everything we do.

Our approach to business ethics and integrity is contained inthe EY Global Code of Conduct and other policies and isembedded in our culture of consultation, training programsand internal communications. Senior management regularlyreinforces the importance of performing quality work,complying with professional standards and adhering toour policies, leading by example and through variouscommunications. Also, our quality review programs assessprofessional service as a key metric in evaluating andrewarding all professionals.

Our culture strongly supports collaboration and placesspecial emphasis on the importance of consultation indealing with complex or subjective accounting, auditing,reporting, regulatory and independence matters. We believeit is important to determine that engagement teams andclients correctly follow consultation advice, and weemphasise this when necessary.

Our consistent stance has been that no client is moreimportant than our professional reputation — thereputation of EY Australia and the reputation of each ofour professionals.


Code of conductWe promote a culture of integrity among our professionals.The EY Global Code of Conduct provides a clear set ofstandards that guide our actions and our business conduct.It is organised into five categories containing principles thatare to be followed by everyone at EY Australia to guidebehavior across all areas of activity:

• Working with one another• Working with clients and others• Acting with professional integrity• Maintaining our objectivity and independence• Respecting intellectual capitalThrough our procedures to monitor compliance withthe EY Global Code of Conduct, and through frequentcommunications, we strive to create an environment thatencourages all personnel to act responsibly, includingreporting misconduct without fear of retaliation.

The EY Ethics Hotline provides our people, clients and othersoutside of the organisation with a means to report activityconfidentially that may involve unethical or improperbehavior and that may be in violation of professionalstandards or otherwise inconsistent with the EY GlobalCode of Conduct. The hotline is operated by an externalorganisation that provides confidential and, if desired,anonymous hotline reporting services for companiesworldwide.

When a report comes into the EY Ethics Hotline, either byphone or internet, it receives immediate attention.Depending on the content of the report, appropriateindividuals from Risk Management, Talent, Legal or otherfunctions are involved to address the report. All matters arehandled by experienced individuals, with oversight from theglobal Risk Management function. For those matters that arereported outside of the EY Ethics Hotline, the sameprocedures are followed.

Our valuesWho we are

People who demonstrate integrity, respect and teaming

People with energy, enthusiasm and the courage to lead

People who build relationships based on doing the right thing

Internal quality control systemEY Australia’s reputation for providing high-qualityprofessional audit services independently, objectively andethically is fundamental to our success as independentauditors. We continue to invest in initiatives to promoteenhanced objectivity, independence and professionalscepticism. These are fundamental attributes of ahigh-quality audit.

At EY Australia, our role as auditors is to provide assuranceon the fair presentation of the financial statements of thecompanies we audit. We bring together qualified teams toprovide our services, drawing on our proven experienceacross industry sectors and services. We continually strive toimprove our quality and risk management processes so thatthe quality of our service is at a consistently high level.

We recognise that in today’s environment — characterised bycontinuing globalisation and the rapid movement of capital —the quality of our audit services has never been moreimportant. As part of Vision 2020, EY continues toinvest heavily in developing and maintaining our auditmethodology, tools and other resources needed tosupport quality service delivery.

While the market and stakeholders continue to demand high-quality audits, they also demand increasingly efficient andeffective delivery of audit services. In addition to theinvestment mentioned, EY continues to seek ways toimprove the effectiveness and the efficiency of its auditmethodology and processes, while maintaining audit quality.

We work to understand where our audit quality may not beup to our own expectations and those of stakeholders,including external audit firm regulators. We seek to learnfrom external and internal inspection activities and toidentify root causes of adverse quality occurrences to enableus to continually improve audit quality, and we believe thatan important part of the audit inspections process is to takeeffective and appropriate actions to improve quality.

Effectiveness of the quality control systemEY has designed and implemented a comprehensive set ofglobal audit quality control policies and practices. Thesepolicies and practices meet the requirements of theInternational Standards on Quality Control issued by theInternational Auditing and Assurance Standards Board(IAASB). EY Australia has adopted these global policies andprocedures and has supplemented them as necessary tocomply with local laws and professional guidelines, and toaddress specific business needs.


We also execute the Global Audit Quality Review (AQR)program in order to evaluate whether our system of auditquality control has operated effectively so as to providereasonable assurance that EY Australia and our peoplecomply with applicable professional and internal standards,and regulatory requirements.

The results of the AQR program and external inspections areevaluated and communicated within EY Australia to providethe basis for continual improvement in audit quality,consistent with the highest standards in the profession.

The GE is responsible for implementing quality improvementand protection programs. As such, it reviews the results ofour internal AQR program and external regulatory reviews,as well as any key actions designed to address areas forimprovement.

The recent results of such monitoring, together with therecent feedback from independent regulatory inspectionvisits, provide EY Australia with a basis to conclude that ourinternal control systems are designed appropriately and areoperating effectively.

Client acceptance andcontinuanceEY policyThe Client Acceptance and Continuance Policy sets outprinciples for member firms to determine whether to accepta new client or a new engagement, or to continue with anexisting client or engagement. These principles arefundamental to maintaining quality, managing risk,protecting our people and meeting regulatoryrequirements. The objectives of the policy are to:

• Establish a rigorous process for evaluating risk andmaking decisions to accept or continue clients orengagements

• Meet applicable independence requirements• Identify and deal appropriately with any conflicts

of interest• Identify and decline clients that pose excessive risk• Require consultation with designated professionals to

identify additional risk management procedures forspecific high-risk factors

• Comply with legal, regulatory and professionalrequirements

In addition, the EY Conflicts of Interest Global Policy definesglobal standards for addressing categories of potentialconflicts of interest and a process for identifying them. Italso includes provisions for managing potential conflicts ofinterest as quickly and efficiently as possible through the useof appropriate safeguards. Such safeguards range fromobtaining a client’s consent for EY member firms to act fortwo or more clients to declining an engagement in order toavoid an identified conflict.

The EY Conflicts of Interest Global Policy, and associatedguidance, was updated in early 2015. The updates take intoaccount the increasing complexity of our engagements andclient relationships, and the need for speed and accuracy inresponding to our clients. They also align with the latestInternational Ethics Standards Board for Accountants(IESBA) standards.

Putting policy into practiceWe use the EY Global Tool for Acceptance and Continuance(GTAC), an intranet-based system, for efficientlycoordinating client and engagement acceptance andcontinuance activities in line with global, service line andmember firm policies. GTAC takes users through theacceptance and continuance requirements, and identifies thepolicies and references to professional standards needed toassess both business opportunities and associated risks.

As part of this process, we carefully consider the riskcharacteristics of a prospective client and several duediligence procedures. Before we take on a new engagementor client, we determine if we can commit sufficient resourcesto deliver quality service, especially in highly technical areas,and if the services the client wants are appropriate for usto provide. The approval process is rigorous, and no newaudit client may be accepted without the approval of ourPPD.

In our annual client continuance process, we review ourservice delivery and ability to continue to provide qualityservice and confirm that clients share EY Australia’scommitment to quality and transparency in financialreporting. The partner in charge of each audit, together withour Assurance leadership, annually reviews our relationshipwith the audit client to determine whether continuance isappropriate.

As a result of this review, certain audit engagements areidentified as requiring, and are then subjected to, additionaloversight procedures during the audit (close monitoring),and some audit clients are discontinued. As with the clientacceptance process, our PPD is involved in the clientcontinuance process and must agree with the continuancedecisions.


Both client acceptance and client continuance decisionsconsider the engagement team’s assessment of whetherthe company’s management could pressure us to acceptinappropriate accounting, auditing and reportingconclusions to undermine quality. Considerations andconclusions on the integrity of management are essentialto acceptance and continuance decisions.

Performing auditsAs part of Vision 2020, EY has invested significantly inimproving our audit methodologies and tools, with the goalof performing the highest-quality audits in the profession.This investment is consistent with EY’s goal to have theleading audit practice in the profession by 2020 and reflectsour commitment to building trust and confidence in capitalmarkets and in economies the world over.

Audit methodologyThe EY Global Audit Methodology (EY GAM) provides aglobal framework for delivering high-quality audit servicesthrough the consistent application of thought processes,judgments and procedures in all audit engagements.Making risk assessments, reconsidering and modifyingthem as appropriate, and using these assessments todetermine the nature, timing and extent of audit proceduresare fundamental to EY GAM. The methodology alsoemphasises applying appropriate professional scepticismin the execution of audit procedures. EY GAM is based onInternational Standards on Auditing (ISAs) and issupplemented in Australia to comply with the local regulatory and statutory requirements.

The EY auditor is presented with a version of EY GAMorganised by topic and designed to focus our audit strategyon the financial statement risks and the design andexecution of the appropriate audit response to those risks.EY GAM consists of two key components: requirements andguidance, and supporting forms and examples. Therequirements and guidance reflect both the audit standardsand EY policies. The forms and examples include leadingpractice illustrations and assist in performing anddocumenting audit procedures.

Using technology, EY GAM can be “profiled” or tailored topresent the relevant requirements and guidance, dependingon the nature of the entity being audited. For example, thereare profiles for listed entitles and for those considered non-complex entities.

Enhancements to the audit methodology are made regularlyas a result of new standards, emerging auditing issues andmatters, implementation experiences, and external andinternal inspection results. In 2016, EY GAM was updated toinclude the new and revised ISAs dealing with auditorreporting, other information included in an annual reportand financial statement disclosures. We also enhanced EYGAM by adding guidance to address common questions fromaudit teams and issues arising from inspections.

In addition, we monitor current and emergingdevelopments continually and issue timely audit planningand other reminders. These reminders emphasise areasnoted during inspections as well as other key topics ofinterest to our regulators, including the International Forumof Independent Audit Regulators (IFIAR). These topicsinclude professional scepticism, group audits, revenuerecognition and engagement quality reviews.

EY GAM requires compliance with relevant ethicalrequirements, including independence from the companywe audit.

TechnologyOur audit engagement teams use technology to assist inexecuting and documenting the work performed inaccordance with EY GAM. Beginning in late fiscal year 2015,EY launched the next generation global audit platform EYCanvas, on a phased basis across EYG member firmsglobally. The deployment in Australia was completed in fiscalyear 2016 with Canvas being used for our 30 June 2016audits. EY Canvas is web-based, built using state-of-the-arttechnology to provide heightened data security and allowsus to evolve our software to respond to changes in theaccounting profession and regulatory environment.

Through the use of profile questions, audit engagements inEY Canvas are automatically configured with informationrelevant to the company’s listing requirements and industry,helping keep our audit plans customised and up-to-date byproviding direct linkage to our audit guidance, professionalstandards and documentation templates. It is built with afresh, clear design and user interface that allows users tovisualise risks and their relationship to our planned responseand work performed in key areas. EY Canvas also enables alinkage for our group audit teams to communicate interofficerisks and instructions so that the primary audit team candirect execution and monitor performance of the groupaudit. Over the coming year, we will phase out ourpredecessor audit support tool, GAMx.

Audit engagement teams use other software applications,forms and templates during various phases of an audit toassist in executing procedures, forming and documentingaudit conclusions, and performing analysis.


EY Helix is our suite of data analytic tools for use in audits.These help our engagement teams analyse a company’sdata, enhancing our risk assessment processes and enablingthe audit of higher-risk transactions.

EY Helix is already assisting our people to ask betterquestions about audit findings and evaluating the outcomes.Analytics are transforming the audit by analysing largerpopulations of audit-relevant data, identifying unseenpatterns and trends in that data, and helping to direct ouraudit efforts. The use of analytics also allows us to obtainbetter perspectives, richer insights and a deeperunderstanding of transactions and areas of risk.

Formation of audit engagement teamsEY Australia policies require an annual review of partnerassignments by our Assurance leadership and PPD to makesure that the professionals leading listed-company auditspossess the appropriate competencies (i.e. the knowledge,skills and abilities) to fulfill their engagement responsibilitiesand are in compliance with applicable auditor rotationregulations.

The assignment of professionals to an audit engagement isalso made under the direction of our Assurance leadership.Factors considered when assigning people to audit teamsinclude competence, engagement size and complexity,specialised industry knowledge and experience, timing ofwork, continuity and opportunities for on-the-job training.For more complex engagements, consideration is given towhether specialised or additional expertise is needed tosupplement or enhance the audit engagement team.

In many situations, internal specialists are included withinthe audit engagement team to assist in performing auditprocedures and obtaining appropriate audit evidence. Theseprofessionals are used in situations requiring special skills orknowledge, such as information systems, asset valuation andactuarial analysis.

Review and consultationReviews of audit workOur policies describe the requirements for timely and directsenior professional participation as well as the level ofreview required for the work performed. Supervisorymembers of the audit engagement team perform a detailedreview of the audit documentation for accuracy andcompleteness. Senior audit executives and/or engagementpartners perform a second-level review to determineadequacy of the audit work as a whole and the relatedaccounting and financial statement presentation. A taxrepresentative reviews the significant tax and other relevantworking papers. For listed and certain other companies, anengagement quality reviewer (described below) reviewsimportant areas of accounting, financial reporting and audit

execution, as well as the financial statements of thecompany we audit and our audit report.

The nature, timing and extent of the reviews of audit workdepend on many factors, including:

• The risk, materiality, subjectivity and complexity of thesubject matter

• The ability and experience of the audit team memberspreparing the audit documentation

• The level of the reviewer’s direct participation in theaudit work

• The extent of consultation employedOur policies also describe the roles and responsibilities ofeach audit engagement team member for managing,directing and supervising the audit, as well as therequirements for documenting their work and conclusions.

Consultation requirementsOur consultation policies are built upon a culture ofcollaboration, whereby audit professionals are encouragedto share perspectives on complex accounting, auditing andreporting issues. Consultation requirements and relatedpolicies are designed to involve the right resources so thataudit teams reach appropriate conclusions.

Consultation is built into the decision-making process; it isnot just a process to provide advice.

For complex and sensitive matters, we have a formal processrequiring consultation outside of the audit engagement teamwith other personnel who have more experience orspecialised knowledge, primarily Professional Practice andIndependence personnel. In the interests of objectivity andprofessional scepticism, our policies require members ofProfessional Practice, Independence and certain others towithdraw from a consultation if they currently serve, or haverecently served, the client to which the consultation relates.

Our policies also require that we document all consultations,including written concurrence from the person or personsconsulted, in order to demonstrate their understanding ofthe matter and its resolution.

Engagement quality reviewsEngagement quality reviews are performed by auditpartners in compliance with professional standards foraudits of all listed companies and those considered higherrisk. Engagement quality reviewers are experiencedprofessionals with significant subject matter knowledge.They are independent of the engagement team and ableto provide objective evaluation of significant accounting,auditing and reporting matters. In no circumstances maythe responsibility of the engagement quality reviewer bedelegated to another individual.


The engagement quality review spans the entireengagement cycle, including planning, risk assessment,audit strategy and execution. Policies and procedures for theperformance and documentation of engagement qualityreviews provide specific guidelines on the nature, timing andextent of the procedures to be performed and the requireddocumentation evidencing their completion. Our PPDapproves all engagement quality review assignments forlisted companies and those considered higher risk. For listedcompanies the engagement quality review includes a “pre-issuance” technical review of the financial statements by anexecutive in the IFRS Desk accounting technical group.

Audit engagement team resolution process fordifferences of professional opinionEY has a collaborative culture that encourages and expectspeople to speak up, without fear of reprisal, if a differenceof professional opinion arises or if they are uncomfortableabout a matter relating to a client engagement. Policiesand procedures are designed to empower members of anaudit engagement team by requiring them to raise anydisagreements relating to significant accounting, auditingor reporting matters.

These policies are clearly communicated to people as theyjoin EY, and we continue to promote a culture that reinforcesa person’s responsibility and authority to make their ownviews heard and canvas the views of others.

Differences of professional opinion that arise during an auditare generally resolved at the audit engagement team level.However, if any person involved in the discussion of an issueis not satisfied with the decision, he or she has both theright and the obligation to see that the issue is referred tothe next level of authority until agreement is reached or afinal decision is made. Until such time, the parties to thediscussion do not withdraw, step aside or otherwise extractthemselves from the process.

Furthermore, if the engagement quality reviewer makesrecommendations that the engagement partner does notaccept or the matter is not resolved to the reviewer’ssatisfaction, the audit report is not issued until the matter isresolved by following due consultation processes forresolving differences of professional opinion. Ourdocumentation requirements for disagreements and theirresolution are the same as for other consultations. Anyoneinvolved in the process may separately document his or herpersonal position in an attachment to the documentation ofthe final decision.

Audit partner rotationEY supports mandatory audit partner rotation to helpstrengthen auditor independence. EY Australia complieswith the audit partner rotation requirements of the code ofthe International Ethics Standards Board for Accountants

(IESBA), and the independence standards of the AustralianAccounting Professional & Ethical Standards Board (APESB)and the Corporations Act, as well as the APRA and the U.S.Securities and Exchange Commission (SEC), where required.EY Australia supports audit partner rotation because itprovides a fresh perspective and promotes independencefrom company management while retaining expertise andknowledge of the business. Audit partner rotation, combinedwith independence requirements, enhanced systems ofinternal quality controls and independent audit oversight,helps strengthen independence and objectivity and areimportant safeguards of audit quality.

For listed entities in Australia rotation of the audit partner ismandated by the Corporations Act 2001 and ourindependence policy requires the lead engagement partnerand the engagement quality reviewer to be rotated after fiveyears. The lead engagement partner may remain in place foran additional two years subject to exceptional circumstancesif approved by the listed entity. Following rotation, thepartner may not resume the lead or engagement qualityreview role until at least two years have elapsed.

We employ tools to track partner rotation that enableeffective monitoring of compliance with requirements.We have also implemented a process for partner rotationplanning and decision-making that involves consultationwith, and approvals by, our Professional Practice andIndependence professionals.

Audit quality reviewsThe Global Audit Quality Review (AQR) program is thecornerstone of our process to monitor audit quality. EYAustralia executes the Global AQR program, reports resultsand develops responsive actions plans. The primary goal ofthe program is to determine whether systems of qualitycontrols, including those of EY Australia, are appropriatelydesigned and followed in the execution of auditengagements to provide reasonable assurance of compliancewith policies and procedures, professional standards, andregulatory requirements. The Global AQR program complieswith guidelines in the International Standard on QualityControl No. 1, as amended (ISQC No. 1), and issupplemented where necessary to comply with Australianprofessional standards and regulatory requirements. It alsoaids EY Australia’s continual efforts to identify areas wherewe can improve our performance or enhance our policiesand procedures.

Implemented annually, the program is coordinated andmonitored by representatives of the PPD network, withoversight by the Assurance leadership.

The engagements reviewed each year are selected on a risk-based approach emphasising audit engagements that arelarge, complex or of significant public interest. The Global


AQR program includes detailed, risk-focused file reviewscovering a large sample of listed and non-listed auditengagements to measure compliance with internal policiesand procedures, EY GAM requirements, and relevant localprofessional standards and regulatory requirements. It alsoincludes reviews of a sample of non-audit engagements.These measure compliance with the relevant professionalstandards and internal policies and procedures that shouldbe applied in executing non-audit services. In addition,practice-level reviews are performed to assess compliancewith quality control policies and procedures in the functionalareas set out in ISQC No. 1. The Global AQR programcomplements external practice monitoring and inspectionactivities, such as regulatory inspection programs andexternal peer reviews.

In 2016, EY Australia‘s AQR program resulted in theinspection of 35 audit engagements and 100% of theengagements inspected were rated as having no materialfindings or deficiencies. These results compare to 31engagements reviewed in 2015, of which 97% were rated ashaving no material findings or deficiencies. Whether thereare material or minor findings or deficiencies, EY Australialooks at the findings from internal and external inspectionsto identify root causes, develop action plans and improveaudit quality.

AQR reviewers and team leaders are selected for their skillsand professional competence in accounting and auditing, aswell as their industry specialisation; they often work in theGlobal AQR program for a number of years and are highlyskilled in the execution of the program. Team leaders andreviewers are assigned to inspections outside of their homelocation and are independent of the audit teams reviewed.

The results of the Global AQR program and external practice-monitoring and inspection activities are evaluated andcommunicated to improve quality. Any quality improvementplans describe the follow-up actions to be taken, the peopleresponsible, the timetable and deadlines, and sign-off oncompleted actions. Measures to resolve audit quality mattersnoted from the Global AQR program, regulatory inspectionsand peer reviews are addressed by our Assurance leadershipand our PPD with input from Risk Management groups. Theactions are monitored by our PPD and Assurance leadership.These programs provide important practice monitoringfeedback for our continuing quality improvement efforts.

External qualityassurance reviewsEY Australia’s audit practice and our registered statutoryauditors are subject to annual inspection by the AustralianSecurities and Investment Commission (ASIC). As part of itsinspections, ASIC evaluates quality control systems andreviews selected engagements.

In 2015, ASIC moved to an ongoing review rather than oneextended visit during the period under review. The results ofthe last inspection cycle (for 2014 - 2015 inspection) wereincluded in ASIC’s public report on the audit profession inDecember 2015. The current ASIC quality assuranceinspection cycle commenced in July 2015 and will finish inDecember 2016.

We respect and benefit from the ASIC inspection process.We thoroughly evaluate points raised during the inspectionin order to identify areas where we can improve auditquality. Together with our AQR process, external inspectionsaid us in making our audits and related control processes ofthe highest quality in the interests of investors and otherstakeholders.

Information on the above-mentioned regulator along withpublicly available inspection reports can be found on itswebsite www.asic.gov.au.

Compliance with legalrequirementsThe EY Global Code of Conduct provides a clear set ofstandards that guide our actions and business conduct.EY Australia complies with applicable laws and regulations,and EY’s values underpin our commitment to doing the rightthing. This important commitment is supported by a numberof policies and procedures, including:

Anti-briberyThe Anti-bribery Global Policy provides our people withdirection around certain unethical and illegal activities. Itemphasises the obligation of our people to comply with anti-bribery laws and provides greater definition of whatconstitutes bribery. It also identifies reportingresponsibilities when bribery is discovered. In recognition ofthe growing global impact of bribery and corruption, effortshave been increased to embed anti-bribery measures acrossEY, and training is mandated for all our people.

Insider tradingThe Insider Trading Global Policy reaffirms the obligation ofour people not to trade in securities with insider information,provides detail on what constitutes insider information and


identifies with whom our people should consult if they havequestions regarding their responsibilities.

Trade sanctionsGiven the level of EY’s global integration, it is important thatwe are aware of the ever-changing situation in respect ofinternational trade sanctions. EY monitors sanctions issuedin multiple geographies and provides guidance to our peopleon impacted activities.

Data privacyThe Global Personal Data Privacy Policy sets out theprinciples to be applied to the use and protection of personaldata, including that relating to current, past and prospectivepersonnel, clients, suppliers and business associates. Thispolicy is consistent with applicable laws and regulationsconcerning data protection and privacy for maintaining andprocessing personal data. Furthermore, we have a policy toaddress our specific Australian data privacy requirementsand business needs.

Document retentionEY Australia’s record retention policy applies to allengagements and personnel. This policy emphasises that alldocuments must be preserved whenever any personbecomes aware of any actual or reasonably anticipatedclaim, litigation, investigation, subpoena or othergovernment proceeding involving us or one of our clientsthat may relate to our work. It also addresses Australianlegal requirements applicable to the creation andmaintenance of working papers relevant to the workperformed.


Independence practicesEY Independence policies require EY Australia and ourpeople to comply with the independence standardsapplicable to specific engagements, including, for example,the independence standards of the International EthicsStandards Board for Accountants (IESBA) of theInternational Federation of Accountants (IFAC) and theindependence standards of the Australian AccountingProfessional & Ethical Standards Board (APESB).

We consider and evaluate independence from severalperspectives, including: our financial relationships and thoseof our people; employment relationships; businessrelationships; the permissibility of non-audit services weprovide to audit clients; partner rotation; fee arrangements;audit committee preapproval, where applicable; and partnerremuneration and compensation.

Failure to comply with applicable professionalindependence requirements will factor into a person’spromotion and compensation decisions and may lead toother disciplinary measures, including separation from EYAustralia.

EY Australia has implemented EY’s global applications, toolsand processes to support us, our professionals and otheremployees in complying with independence policies.

EY Global Independence PolicyThe EY Global Independence Policy contains theindependence requirements for member firms, professionalsand other personnel. It is a robust policy predicated on theIESBA Code of Ethics, supplemented with more stringentrequirements where prescribed by a given regulator. Thepolicy also contains guidance to help people apply theindependence rules. The EY Global Independence Policyis readily accessible and easily searchable throughEY’s intranet.

Global Independence SystemThe Global Independence System (GIS) is an intranet-basedtool that helps our professionals identify the listed entitiesfrom which independence is required and the independencerestrictions that apply. Most often, these are listed auditclients and their affiliates, but they can be other types ofattest or assurance clients too. The tool includes family-treedata relating to affiliates of listed audit clients and is

updated by client-serving engagement teams. The entitydata includes notations that indicate the independence rulesthat apply to each entity, helping our people determine thetype of services that can be provided or other interests orrelationships that can be entered into.

Global Monitoring SystemThe Global Monitoring System (GMS) is another importantglobal tool that assists in identifying proscribed securitiesand other impermissible financial interests. Professionalsranked as manager and above are required to enter anysecurities they hold, or those held by their immediate family,into the GMS. When a person enters a proscribed security orif a security they hold becomes proscribed, they receive anotice and are required to dispose of the security. Identifiedexceptions are reported through the Global IndependenceIncident Reporting System for regulatory matters.

GMS also facilitates annual and quarterly confirmation ofcompliance with independence policies, as described below.

Independence complianceEY has established a number of processes and programsaimed at monitoring the compliance with independencerequirements of EY member firms and their people. Theseinclude the following activities, programs and processes:

Independence confirmations

Timely and accurate completion of annual and quarterlyindependence confirmations is a high priority for theresponsible leadership teams.

Annually, EY Australia is included in an Area-wide process toconfirm compliance with the Global Independence Policy andrequirements and to report identified exceptions, if any.

All EY professionals, and certain others based on their roleor function, are required to confirm compliance withindependence policies and procedures at least once a year.All partners are required to confirm compliance quarterly.

Global independence compliance reviews

EY conducts member firm visits to assess compliance withindependence matters. These reviews include aspects ofcompliance related to non-audit services, businessrelationships with the companies we audit and financialrelationships of member firms and our systems to manageaudit partner rotation.

EY Australia confirms that the Global Internal Audit lastoccurred during 2015.


Personal independence compliance testing

Each year, EY’s global Independence team establishes aprogram for testing compliance with personal independenceconfirmation requirements and with reporting of informationinto GMS. For the 2016 testing cycle, EY Australia tested265 partners and other personnel.

Non-audit services

We monitor compliance with professional standardsgoverning the provision of non-audit services to audit clientsthrough a variety of mechanisms. These include the use oftools (e.g., GTAC — see page 11 and Service OfferingReference Tool — see below), training and requiredprocedures completed during the performance of audits andinternal inspection processes.

Global independence learning

EY develops and deploys a variety of independence learningprograms. All professionals and certain other personnelare required to participate in annual independence learningto help maintain our independence from the companieswe audit.

The goal is to help our people understand theirresponsibility and to enable each of them, and EY, to befree from interests that might be regarded as beingincompatible with objectivity, integrity and impartiality inserving an audit client.

The annual independence learning program coversindependence requirements focusing on recent changes topolicy, as well as recurring themes and topics of importance.Timely completion of annual independence learning isrequired and is monitored closely. EY Australia supplementsthis program with local content to cover local independencerequirements under the Corporations Act 2001 and theindependence standards of APESB that differ from the EYGIndependence Policy.

In addition to the annual learning program, independenceawareness is promoted through a number of events andmaterials, including the new-hire program, milestoneprograms and core service line curriculum.

Service Offering Reference Tool

We assess and monitor our portfolio of services on anongoing basis, confirming that they are permitted by law andprofessional standards, and to make sure that we have theright methodologies, procedures and processes in place asnew service offerings are developed. We restrict servicesfrom being provided that could present undue independenceor other risks. Service Offering Reference Tool (SORT)provides our people with information about our serviceofferings. SORT includes guidance around which servicescan be delivered to audit and non-audit clients, as well asindependence and other risk management issues.

Business Relationship Evaluation Tool

The Business Relationship Evaluation Tool (BRET) processhelps to support our business relationships’ compliance withindependence requirements. Our people are required touse BRET in many circumstances to evaluate and obtainadvance approval of potential business relationship with anaudit client.

Audit committees and oversight of independenceWe recognise the important role audit committees andsimilar corporate governance bodies undertake in theoversight of auditor independence. Empowered andindependent audit committees perform a vital role on behalfof shareholders in protecting independence and preventingconflicts of interest. We are committed to robust and regularcommunication with audit committees or those charged withgovernance. Through our quality review programs, wemonitor and test compliance with our standards for auditcommittee communications, as well as the pre-approval ofnon-audit services, where applicable.


Continuing education ofaudit professionalsProfessional developmentThe EY career development framework, EYU, provides ourpeople with opportunities for the right experiences, learningand coaching to help them grow and achieve their potential.

The learning component of EYU is based on an extensive andglobally consistent learning curriculum that helps all ourpeople develop the right technical and personal leadershipskills, wherever they are located around the world. Coreaudit training courses are supplemented by learningprograms that are developed in response to changes inaccounting and reporting standards, independence andprofessional standards, and emerging practice issues.

We are redesigning our core audit training into “The AuditAcademy” — a curriculum for learning. This high-impactlearning combines interactive classroom-based simulations,“on-demand” e-learning modules and relevant reinforcementand application support.

EY Australia requires our audit professionals to obtain atleast 20 hours of continuing professional education eachyear and at least 120 hours over a three-year period. Ofthese hours, 40% (8 hours each year and 48 hours over athree-year period) must cover technical subjects related toaccounting and auditing.

In addition to formal learning, professional developmentoccurs through coaching and experiences our professionalsreceive on the job. Coaching helps to transform knowledgeand experience into practice.

Experienced professionals are expected to coach anddevelop less experienced personnel to create a continuallearning environment. We also manage the assignment ofour people to particular engagements in a systematic waythat helps to ensure they have exposure to a range ofexperiences as part of their own development.

Knowledge and internal communicationsIn addition to professional development and performancemanagement, we understand the importance of providingclient engagement teams with up-to-date information to helpthem perform their professional responsibilities. EY makessignificant investments in knowledge and communicationnetworks to enable the rapid dissemination of information tohelp people collaborate and share best practices. Examplesinclude:

• Global Accounting and Auditing Information Tool, whichincludes local and international accounting and auditingstandards as well as interpretive guidance

• Publications such as International GAAP, IFRSdevelopments and illustrative financial statements

• Global Accounting and Auditing News, a weekly updatecovering assurance and independence policies,developments from standard setters and regulators aswell as internal commentary thereon

• Point of view and Overviews, which provide importantperspectives on current public policy and regulatorydevelopments

• Practice alerts and webcasts covering a range of globaland country-specific matters designed for continuousimprovement in the member firms’ Assurance practices.

Performance managementA comprehensive performance management processrequires our people to set goals, have clear workexpectations, receive feedback and talk about theirperformance. The Performance Management andDevelopment Process (PMDP) is designed to help our peoplegrow and succeed in their careers.

Under the PMDP, periodic job performance reviews arecombined with annual self-appraisal and reviews. As part ofthe annual review process, each professional, in conjunctionwith his or her counselor (an assigned, more experiencedprofessional), identifies opportunities for furtherdevelopment. Professionals and their counselors are guidedby a set of expectations that articulate the knowledge, skillsand behaviors that should be maintained and developed fortheir respective ranks. These expectations are derived from,and align with, EY’s global strategy and values.


Revenue andremunerationFinancial informationThe financial information presented below for EY Australiarepresents revenues and includes expenses billed to clientsand revenues related to billings to other EYG member firms.Also, revenue amounts disclosed in this report includerevenues from both audit and non-audit clients.

Financial information for the year ended 30 June 2016expressed in millions of Australian dollars

Service Revenue ($m) Percent

Audit services 353,000 24%

Other assurance services 191,000 13%

Tax advisory 426,000 29%

Other non-audit services 517,000 34%

Total 1,487,000 100%

Prior-year performanceFinancial information for the year ended 30 June 2015expressed in millions of Australian dollars

Service Revenue ($m) Percent

Audit services 338,000 26%

Other assurance services 169,000 13%

Tax advisory 376,000 29%

Other non-audit services 403,000 32%

Total 1,286,000 100%

”Other assurance services” revenue includes accounting andfinancing services; certain due diligence services; and risk-related services including internal controls, internal audits,technology and security; Sarbanes-Oxley (SOX) compliance;actuarial; fraud and forensics; and other attestationservices. ”Other non-audit services” revenue includestransaction, valuation, performance improvement,restructuring and other advisory-related services.

Partner remunerationQuality is at the center of EY’s business strategy and a keycomponent of our performance management systems. EYAustralia partners and other professionals are evaluated andcompensated based on criteria that include specific qualityand risk management indicators, covering both actionsand results.

Global performance management processes cover partnersin EYG member firms around the world. They reinforce theglobal business agenda by linking performance to widergoals and values. These ongoing, cyclical processes includegoal setting, personal development planning andperformance review, and are tied to partners’ recognitionand reward. It is the cornerstone of the evaluation process todocument partners’ goals and performance. A partner’sgoals are required to reflect various global priorities, one ofwhich is quality.

EY prohibits evaluating and compensating lead auditengagement partners and other key audit partners on anengagement based on the sale of non-Assurance services totheir audit clients. This reinforces to our partners theirprofessional obligation to maintain our independence andobjectivity.

Specific quality and risk performance measures have beendeveloped to account for:

• Technical excellence• Living the EY values as demonstrated by behaviors and

attitude• Demonstrating knowledge of, and leadership in, quality

and risk management• Compliance with policies and procedures• Compliance with laws, regulations and professional

duties• Contributing to protecting and enhancing the EY brandThe EY partner compensation philosophy calls formeaningfully differentiated rewards based on a partner’slevel of performance, as measured by the Global PartnerPerformance Management process, which is a globallyconsistent evaluation process for all partners in EYGmember firms around the world. Partners are assessedannually on their performance in delivering quality,exceptional client service and people engagement alongsideour financial and market metrics.


We operate under a system that requires quality tobe a significant consideration in a partner’s overallyear-end rating.

To recognise different market values for different skills androles, and to attract and retain high-performing individuals,the following factors are also considered when calculatingtotal reward:

• Experience• Role and responsibility• Long-term potential• MobilityInstances of non-compliance with quality standards result inremedial actions, which may include compensationadjustment, additional training, additional supervision orreassignment. A pattern of non-compliance or particularlyserious non-compliance may result in actions that includeseparation from EY Australia.


AppendixEY Australia public interest entity audit clients

In the financial year ended 30 June 2016, EY Australiaperformed audits of the following public interest entities:

360 Capital 111 St George’s Terrace Property Trust360 Capital Group Limited

360 Capital Industrial Fund

360 Capital Investment Management Limited360 Capital Office Fund

360 Capital RE Limited

360 Capital Total Return Active Fund360 Capital Total Return Fund

360 Capital Total Return Passive Fund

3P Learning LimitedAAPC Management Limited

Abacus Diversified Income Fund 11

Abacus Group Holdings LimitedAbacus Group Projects Limited

Abacus Hospitality Fund

Abacus Income TrustAbacus Storage Operations Limited

Abacus Storage Property Trust

Abacus TrustAbacus Wodonga Land Fund

Aconex Limited

Acorn Capital Investment Fund LimitedActinogen Medical Limited

Adairs Limited

Aditya Birla Mineral Resources LimitedAfrican Petroleum Corporation Limited

Ahalife Holdings Limited

Aioi Nissay Dowa Insurance Company LimitedAJ Lucas Group Limited

Alchemia Limited

Allan Gray Australia Equity Fund

Allan Gray Australia Opportunity FundAlliance Mineral Assets Limited

Alternative Investment Trust

Altius Asset Management Pty Limited

AMP Bank LimitedAMP Capital China Growth Fund

AMP Capital Funds Management Limited

AMP Eligible Rollover FundAMP Life Limited

AMP Limited

AMP Superannuation Savings TrustAnaeCo Limited

Antares Capital Partners Ltd

Antares Energy LimitedAntisense Therapeutics Limited

Aquarius Platinum Limited

Argonaut Resources NLAsia Pacific Digital Limited

Assist Finance Corporation Limited

Astarra Personal Pension PlanAstarra Pooled Superannuation Trust

Astarra Superannuation Plan

Atlantic LimitedAUB Group Limited

Aurecon 37 Limited

Aurelia Metals LimitedAustal Limited

Australasian Resources Limited

Australasian Wealth Investment LtdAustralian Meat Industry Superannuation Trust

Australian Property Growth Limited

Australian Unity Funds Management LimitedAustralian Unity Health Limited

Australian Unity Investment Bonds Limited

Australian Unity LimitedAustralian Unity Property Limited

Avanco Resources Limited

Avenira Limited

Aventus Retail Property FundAveo Group Limited


AVJennings Limited

AvSuper

AWE LimitedAzonto Petroleum Ltd

Bank Australia

Bank of China LtdBannerman Resources Limited

Bell Asset Management Limited

Bendigo and Adelaide Bank LimitedBendigo Superannuation Plan

Berkeley Energia Limited

Boston Global Food Company LimitedBGD Corporation Ltd

Big Sky Credit Union Limited

Bisalloy Steel Group LimitedBlue Energy Limited

Blue Sky Alternative Investments Limited

Blue Sky Alternative Access Fund LimitedBluechiip Limited

BlueScope Steel Limited

BOC Gases Superannuation FundBradken Limited

Brain Resource Limited

Brainchip Holdings Ltd

Breville Group LimitedBrickworks Ltd

Brierty Limited

Brisbane Broncos LimitedBurrabulla Corporation Limited

Cape Lambert Resources Limited

Capricorn Society LimitedCarindale Property Trust

Catholic Church Insurances Ltd

CCA International Retirement FundChallenger Life Company Limited

Challenger Limited

Challenger Retirement and Investment Services LimitedChallenger Retirement Fund

Champion Iron Limited

Christian SuperChubb Insurance Company of Australia Limited

CI Resources Limited

Clancy Exploration LimitedCleanaway Waste Management Limited

Club Plus Superannuation Pty Ltd

CMI Limited

Coca-Cola Amatil LimitedCoInvest Limited

Cokal Limited

Commonwealth Steamship Insurance Co. Pty LimitedConcept One Superannuation Fund

Cooper Energy Ltd

Cove Resources LimitedCradle Resources Limited

Cre8tek Limited

Credo Resources LimitedCrown Resorts Limited

CSL Ltd

Cullen Resources LimitedDakota Minerals Limited

Danakali Limited

David Jones LimitedDecimal Software Limited

Deep Yellow Limited

Delecta LimitedDelta SBD Limited

Devine Limited

Dnister Ukrainian Credit Co-operative Limited

DPM Retirement ServiceDragon Mining Limited

DUET Group

E & A LimitedElders Limited

Eastern Goldfields Limited

EECU LimitedEllerston Aasian Investments Limited

Ellerston Capital Limited

Ellerston Global Investments LimitedEmmerson Resources Limited

Empire Oil & Gas NL

Energy Action LimitedEnergy World Corporation Ltd

Equatorial Resources Limited

EquipsuperESTIA Health Limited

Eureka Group Holdings Limited

Eurogold LimitedFairfax Media Limited


Fe Limited

FeOre Limited

Ferrum Crescent LimitedFidante Partners Limited

Fidante Partners Services Ltd

Fife Capital Funds LimitedFlinders Resources Limited

First Quest Retirement Service

Flight Centre Travel Group LimitedFM Insurance Company Limited

Forte Energy NL

Fundhost LimitedG8 Education Limited

Gateway Credit Union LTD

Gateway Lifestyle Operations LimitedGazal Corporation Limited

Geodynamics Limited

Golden Cross Resources LtdGrays eCommerce Group Limited

Guild Insurance Limited

Guild Retirement FundGuvera Limited

Halidon Asset Management Ltd

Hannan Rewards Limited

Harvey Norman Holdings LtdHawkley Oil and Gas Limited

HBF Health Limited

HCF Life Insurance Co Pty LimitedHeemskirk Consolidated Limited

Heritage Bank Limited

Hillcrest Litigation Services LimitedHomeloans Limited

Hua Nan Commercial Bank LTD.

ICar Asia LimitedIgnite Energy Resources Pty Ltd

IMF Bentham Limited

ImpediMed LimitedInabox Group Limited

Incremental Oil and Gas Limited

ING Bank (Australia) LimitedING Bank N.V.

ING Direct Superannuation Fund

Ingenia Communities GroupIntegrated Research Limited

International Ferro Metals Ltd

International Goldfields Limited

Investec Property LimitedInvestors Mutual Limited

Invion Limited

ipac Asset Management LimitediProperty Group Limited

iSelect Limited

ITL LimitedJupiter Energy Limited

K & S Corporation Limited

Katana Capital LimitedKibaran Resources Limited

King River Copper Limited

Kingrose Mining LimitedKresta Holdings Limited

Kula Gold Limited

Legend Mining LimitedLG Super

Liberty International Underwriters

Life Corporation Ltd.Lifeplan Australia Friendly Society Limited

Linfox Staff Superannuation Fund

Lion Energy Limited

Liquefied Natural Gas LtdLithex Resources Limited

Lynas Corporation Limited

Macquarie ADF Superannuation FundMacquarie Alternative Assets Management Limited

Macquarie Diversified Private Equity Fund

Macquarie Financial Products Management LimitedMacquarie Investment Management Limited

Macquarie Media Limited

Macquarie Superannuation PlanMagellan Financial Group Limited

Magellan Flagship Fund Limited

MainstreamBPO LimitedMagnis Resources Limited

Man Investments Australia Ltd

Mandalay Resources Australia Pty LimitedManildra Flour Mills Retirement Fund

Maritime Super Pty Limited

Masterplan Managers Superannuation FundMawson West Ltd


Mayne Pharma Group Limited

MDA National Insurance Pty Ltd

Medical Indemnity Protection Society LimitedMelbourne IT Ltd

MEO Australia Limited

Metals X LimitedMetcash Limited

Migme Limited

MinRex Resources LimitedMizuho Corporate Bank Ltd

MLC Investments Limited

MLC LimitedMLC Pooled Superannuation Trust

MLC Superannuation Fund

Monadelphous Group LtdMount Gibson Iron Limited

MQ Portfolio Management Limited

My Retirement PlanNational Australia Bank Group Superannuation Fund

Namoi Cotton Co-Operative Ltd

National Australia Bank LimitedNational Mutual Life Association

National Mutual Pro Super Fund

National Mutual Retirement Fund

National Storage REITNavigator Australia Limited

Neptune Marine Services Limited

New South Wales Electrical Superannuation SchemeNewcastle Permanent Building Society Limited

Newcrest Mining Limited

News Australia Holdings Pty LtdNick Scali Limited

Nine Entertainment Co Holdings Limited

Nkwe Platinum LimitedNMMT Limited

Noble Mineral Resources Limited

Nucoal Resources LimitedOnevue Re Services Limited

Onthehouse Holdings Limited

Ookami LimitedOptiscan Imaging Limited

Orbis Global Equity Funds

Orbital Corporation LimitedOrocobre Limited

Ozgrowth Limited

Packer & Co Investigator Trust

Pact Group Holdings LtdPaladin Energy Ltd

Pan Pacific Petroleum NL

Panoramic Resources LimitedPaperlinx SPS Trust

Peak Resources Limited

Peet LimitedPepinnini Minerals Limited

Perseus Mining Limited

Perth Airport Pty LtdPlatypus Asset Management Pty Limited

Plum - Pooled Superannuation Trust

Plum Superannuation FundPo Valley Energy Limited

Polynovo Limited

Portigon AGPostSuper Pty Ltd

Potash West NL

Prairie Mining LimitedPremier Investments Limited

Prescient Therapeutics Limited

Prime Media Group Limited

Prime Super Services Pty LimitedPro Medicus Limited

Queensland Professional Credit Union Limited

Rabo Australia LimitedRabo Capital Securities Limited

Rabobank Australia Limited

RAC Insurance Pty LimitedRamsay Health Care Limited

REA Group Ltd

Reckson New York Property TrustRedflex Holdings Limited

Redbubble Limited

Regis Healthcare LimitedRei Superannuation Fund Pty Limited

Reproductive Health Science Limited

Residential Parks Trust No. 2 LimitedResolute Mining Limited

Rift Valley Resources Limited

RMG LimitedRox Resources Limited


Rural Bank Limited

Sacgasco Limited

SAI Global LimitedSalt Lake Potash Limited

Sandfire Resources NL

Santos LimitedScentre Group Limited

Schaffer Corporation Limited

SCOR Global Life Australia Pty LimitedSCOR Reinsurance Asia Pacific Pte Ltd

Sealink Travel Group Limited

Seeing Machines LimitedSenetas Corporation Limited

Senex Energy Limited

Shine Corporate LimitedSino Gas and Energy Holdings Limited

SIPA Resources Limited

Site Group International LimitedSlater & Gordon Limited

Spotless Group Holdings Limited

State Street Bank & Trust CompanySummit Resources Limited

Sundance Energy Australia Limited

Sunland Group Limited

Super Directions FundSynergy Superannuation Master Fund

TWU Nominees Pty Ltd

Tabcorp Holdings LimitedTaiwan Business Bank

Taiwan Cooperative Bank Limited

TAL Life LimitedTAL Super Fund

TAPP Commerce Australia

Tawana Resources NLTech Mpire Limited

Technology One Limited

Telstra Corporation LimitedTelstra Superannuation Scheme

Temple & Webster Group Limited

Terracom LimitedTerry White Management Pty Ltd

TFS Corporation Limited

The Flexible Benefits Super Fund

The Hospitals Contribution Fund of Australia LimitedThe Star Entertainment Group Limited

The Universal Super Scheme

Thorney Opportunities LtdTimpetra Resources Limited

Tomizone Limited

Touchcorp LimitedTransatlantic Reinsurance Company

Treasury Group Investment Services Limited

Trilogy Funds Management LimitedTWC Group Investments Limited

TWC Nominees Pty Ltd

Tyro Payment LimitedUBS AG, Australia

UBS Global Asset Management (Australia) Ltd

Unisuper LimitedUS Masters Holdings Limited

Vango Mining Limited

VDM GroupVicinity Centres

Victoria Teachers Limited

Vietnam Industrial Investments Limited

Villa World LimitedVillage Roadshow Limited

Virginia Surety Company Inc.

Vision SuperWealth Personal Superannuation and Pension Fund

Wesfarmers Limited

Westfield CorporationWestoz Investment Company Limited

Whitehaven Coal Ltd

Wholesale Australian Property FundWingate Asset Management Pty Limited

Wollongong Coal Limited

Woodside Petroleum LimitedWorleyParsons Limited

Xanadu Mines Ltd

Zicom Group Limited

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