The business of one of AMP's star financial advisers appeared to have cut and pasted signatures on to loan contracts, including one for a $600,000 loan to a woman who knew nothing of its existence until AMP pursued her for repayments on it after her divorce.

A confidential review of the loan, conducted after a request for information from the NSW Police Fraud Squad, also exposed deficiencies in AMP’s credit approval processes and recommended a review of 10 AMP Bank staff and the financial adviser, who has been an authorised representative of AMP for more than 30 years.

Question

What would be an appropriate audit opinion for AMP if the outcome of the case is

i) Against AMP;

ii) In favour of AMP?

You need to substantiate the audit opinion with your judgment on (a) internal controls preventing the occurrences of the malpractices; and (b) potential misstatements of management assertions (be specific with the account balances and/or disclosures) in the financial report.

Please state whatever assumptions you consider appropriate for your answer.

i) Against AMP:

Audit Opinion:___________________________________________________________________________

Justification:_____________________________________________________________________________

ii) In favour of AMP:

Audit Opinion:___________________________________________________________________________

Justification:_____________________________________________________________________________

Answer rating: 100% (QA)

If the outcome of the case is against AMP the company should work towards restoring faith in its cli... View the full answer