Crowe Horwath Perth
Transparency Report 2015
30 June 2015
Contents
Introduction ..........................................................................................................................4
Welcome to the Crowe Horwath Perth Transparency Report ..............................................5
Network of Australian & New Zealand offices ............................................................................................... 6
Message from the Audit & Assurance Leader......................................................................7
Our Structure, Ownership and Governance .........................................................................8
Legal Structure .............................................................................................................................................. 8
Corporate Governance .................................................................................................................................. 8
Oversight of the Audit & Assurance Service Line .......................................................................................... 9
Our international affiliation with the Crowe Horwath International Network........................10
Legal Structure ............................................................................................................................................ 10
Forum of Firms ............................................................................................................................................ 10
Governance ................................................................................................................................................. 10
Membership ................................................................................................................................................. 11
Crowe Howarth International presence ....................................................................................................... 11
Our Internal Quality Control Structure ................................................................................12
Our People ................................................................................................................................................... 12
Client Acceptance and Continuance ........................................................................................................... 12
Our Audit Process ........................................................................................................................................ 13
Review and Consultation ............................................................................................................................. 14
Monitoring .................................................................................................................................................... 14
2
Our Independence and Ethics ...........................................................................................15
External Regulation and review .........................................................................................15
ASIC............................................................................................................................................................. 15
Other Regulators ......................................................................................................................................... 15
Financial Information..........................................................................................................16
Partner Remuneration........................................................................................................16
Internal Quality Control Effectiveness Statement...............................................................17
Our Public Interest Entity Client List ..................................................................................18
3
Introduction
In June 2012, the Corporations Legislation Amendment (Audit Enhancement) Act was passed by the
Australian Parliament. It requires all audit firms conducting ten or more audits of listed or other Public
Interest Entities to publish an annual Transparency Report.
This report has been prepared in accordance with the requirements of Corporations Amendment Regulation
2012 (No. 5) which requires the disclosure of certain information by audit firms, including information on the
firm’s legal structure, network arrangements, quality control systems, and public interest entity clients. It
covers the audit partnership of Crowe Horwath Perth, which is one of the constituent partnerships of the
Australian audit practice of Crowe Horwath Australasia Ltd (hereafter referred to as “the firm” or “Crowe
Horwath Australia”).
4
Welcome to the Crowe Horwath Perth Transparency
Report
Welcome to Crowe Horwath Perth’s annual transparency report which covers the financial year ending 30
June 2015.
It has been an exciting year for Crowe Horwath. We have joined the Findex Group, one of Australia’s leading
providers of financial and wealth management services. This has allowed us to cement our position as
Australia’s largest provider of professional services to small and medium business and families. Sharing the
same commitment to the provision of high quality advice, Findex and Crowe Horwath hold the inherent
values of delivering ‘best of breed’, non-aligned financial solutions, and are, through their strategic alliance,
ultimately setting a new paradigm in the financial service industry.
Within Western Australia, economic conditions remain challenging. The effects of the recent downturn in
commodity prices have flowed beyond the resources sector and into the wider economy. In this environment,
auditors are, quite rightly, under pressure to demonstrate that the value in an audit extends beyond a mere
compliance exercise, but that it also provides a genuine insight for investors and other stakeholders into the
company’s financial statements.
As a firm we pride ourselves on our honesty and integrity and our ability to provide excellent audit, tax,
advisory and financial services. We have a public interest role as auditors, and executing audit quality
continues to be at the heart of our strategy as a firm.
As part of the broader Findex Group and Crowe Horwath International network we are proud to share this
report with you, and look forward to continuing to share our progress with you over the coming year.
Mervyn Kitay
Chief Executive, Crowe Horwath Perth
5
Network of Australian & New Zealand offices
Member of the
9th largest global network
th
5 largest firm in
Australia and New Zealand
Over 3000 Principals and staff
throughout Australia and New
Zealand
6
Message from the Audit & Assurance Leader
This is our third annual Transparency report following the amendments to Section 332 of the Corporations
Act in 2012. In that time, the value of the audit, and the role of the auditor has been a topic of discussion,
both within the profession itself, and among the wider public. Our commitment is to maintaining a strong
focus on integrity and on audit quality even while navigating through change. This is essential to providing
the level of service our clients expect, and to fulfilling the role expected of us not just by them, but by the
communities we represent.
The value of assurance is often overlooked, but it is a key component of effective, transparent capital
markets and, as such, a foundation of our economy. Globalisation and digital disruption have required all
auditors to seek to be efficient and effective in the delivery of assurance services. However, we recognise
that this cannot be achieved at the expense of quality, and we continue to work with clients, businesses,
standard setters and regulators to enhance the quality of financial reporting in Australia.
We are continuing to make, a substantial investment in our people, our methodologies, and our quality
control framework. In particular, we are focussed on investing in technology in order to automate routine
tasks, and ensure that our professionals can focus on those areas that are considered higher risk, or that
require judgment or specialist expertise. We have updated our risk-based audit methodology and customised
software to reflect this growing trend.
We believe that excellence in audit quality complements excellence in client service. Our structure allows us
to ensure a high level of Partner involvement on audit engagements. The close involvement of our partners
in client relationships ensures that we are able to bring the right level of experience and industry expertise to
each engagement, and ensures that we can communicate and respond quickly to issues for all our clients.
This is supplemented by direct access to senior technical resources where appropriate.
I would like to invite all clients, audit committees, regulatory bodies and other stakeholders to take this
opportunity to gain an insight into our business, and how we continue deliver audit quality and exemplary
service to our clients and stakeholders.
Sean McGurk
Head of Audit & Assurance, Crowe Horwath Perth
7
Our Structure, Ownership and Governance
Legal Structure
On 6 October, Crowe Horwath Australasia Ltd announced to the ASX that it had entered into a Scheme
Implementation Arrangement with Financial Index Wealth Accountants (“FIWA”) under which FIWA proposed
to acquire all of the shares in Crowe Horwath. The scheme was implemented in January 2015, and, as a
result, Crowe Horwath Australasia was de-listed from the ASX, and became part of the FIWA Group of
Companies.
Sharing the same commitment to the provision of high quality advice, FIWA and Crowe Horwath hold the
inherent values of delivering ‘best of breed’, holistic financial solutions, and are, through their strategic
alliance, ultimately setting a new paradigm in the financial service industry.
The Crowe Horwath Perth audit partnership consists of a number of individuals and Crowe Horwath ( Aust)
Pty Ltd. Crowe Horwath ( Aust) Pty Ltd is a wholly owned subsidiary of Crowe Horwath Australasia Ltd,
which is a part of the Findex Group of Companies. The Australian operations of Crowe Horwath Australia sit
within Crowe Horwath (Aust) Pty Ltd. Crowe Horwath (Aust) Pty Ltd is the employer of all Australian staff and
Partners within the Crowe Horwath Perth audit practice.
Corporate Governance
As part of the Financial Index Wealth Accountants group of companies, Crowe Horwath Australasia places
great importance on achieving high standards of corporate governance. Accordingly, it operates within a set
of corporate governance principles that take into account relevant best practice and legislative and
regulatory requirements.
Further information on the Group’s corporate governance policies and practices can be found on its website
at www.crowehorwath.com.au and www.findex.com.au.
FIWA is governed by a Board of Directors. The Board of directors provides oversight, support, resources and
supervision to the CEO and senior management. This is done whilst maintaining a high level of
transparency, ethical standards and corporate governance and ensuring that all obligations to, and interests
of, all stakeholders and shareholders are known and met accordingly.
The composition of the Board, and biographies of Board members are set out at www.findex.com.au/board.
The responsibility for managing the day-to-day operations of the Group is held by the Group Chief Executive
Officer and the Chief Operations Officer.
8
Oversight of the Audit & Assurance Service Line
Audit & Assurance Group (“AAG”)
The Audit & Assurance Group is charged with oversight responsibility for audit quality and compliance
structures and initiatives across the Audit & Assurance service line.
The AAG is comprised of one representative from each of our six regions (Queensland, New South Wales,
Victoria, Tasmania, Western Australia, and New Zealand) and the Head of Risk Management. The AAG
elects a Chair who is subject to re-election every two years. The Chair is responsible for communicating the
AAG’s activities to the executive leadership team. Crowe Horwath Perth is represented on the AAG by the
head of the service line.
The AAG meets at least monthly in order to address issues relating to audit quality and risk management, as
well as strategy, business development and financial performance. Our audit technical team reports to the
AAG.
The AAG’s responsibilities include:
 developing and maintaining the Group’s audit methodology;
 oversight of the internal quality control review process;
 development of a standardised approach to training;
 risk management over high risk audit engagements.
Audit Technical Team
The Audit Technical Team is responsible for providing support to the AAG. It is also responsible for
implementing initiatives relating to quality, education and technical support within our audit practice. This
includes providing accounting support and interpretations, updates of our audit manuals and software,
providing training to our audit staff and partners, and conducting our ongoing monitoring activities. The
technical team also prepare thought leadership material in response to technical developments within the
profession, and engaging with professional bodies, standard setters and others.
Perth Risk Group (“PRG”)
The Crowe Horwath Perth Risk Group is made up of representatives from each service line in the Perth firm,
including the audit service line. The PRG’s objectives mirror those of the Group at a local level. The PRG
meets at least four times each year.
9
Our international affiliation with the Crowe Horwath
International Network
Crowe Horwath Australia is a member of the Crowe Horwath International network of firms (“Crowe Horwath
International”). Crowe Horwath International is considered a “network” as defined under the Code of Ethics of
the International Federation of Accountants (IFAC) and by virtue of its membership of the Forum of Firms.
Legal Structure
Crowe Horwath International is an international network of independently owned and managed accounting
and advisory firms that may be licensed to use the “Crowe Horwath” or “Horwath” brand in connection with
the provision of accounting, auditing, tax, advisory and other professional services to their clients. Crowe
Horwath Australasia Ltd is a member of Crowe Horwath International, a Swiss verein. Each member firm of
Crowe Horwath is a separate and independent legal entity. Liability limited by a scheme approved under
Professional Standards Legislation other than for the acts or omissions of financial services licensees.
Forum of Firms
Crowe Horwath International is a member of the Forum of Firms of the International Federation of
Accountants. Members of the Forum are required to implement and monitor quality control standards that the
Forum has prepared. We prepare an annual declaration that our members adhere to the Forum’s standards.
Governance
Crowe Horwath International is run by a Board of Directors which appoints a Chief Executive Officer. The
Board of Crowe Horwath International is primarily elected by member firms, and members serve for a period
of two years after which they retire but may be re-elected.
The Board of Directors is charged with overseeing the activities of the network, and has supervisory
responsibility for the governance of Crowe Horwath International which includes ensuring there are
appropriate quality assurance procedures in place in member firms.
Crowe Horwath International is separated into three geographic regions: Europe Middle-East and Africa
(EMEA), the Americas, and Asia-Pacific (of which Crowe Horwath Australia is a member). Each region has
an appointed Regional Director who reports to the Board of Directors. When working together with other
members of the network, Crowe Horwath Australia usually operates under a professional services
agreement, however for audit work respective firms act on their own as principals.
There are a number of committees chaired by partners in member firms in areas such as Audit and
Accounting, International Tax, Corporate Finance and Risk & Valuation. Partners from Crowe Horwath
Australia take an active part in these committees. In addition, they also participate in training and other
events, both as attendees and as presenters.
Crowe Horwath International has a system of audit quality monitoring in place and Crowe Horwath Australia
is subject to a periodic audit quality assurance review.
10
Membership
Crowe Horwath International has developed a minimum set of criteria against which both existing member
firms and potential new applicants for membership are benchmarked. These criteria include:
 a culture focused on conduct of professional services in adherence to the highest standards of
quality, and in accordance with national and international standards on ethics;
 appropriate technical qualifications, including membership of a recognized professional body;
 commitment to adopt and to continuously build awareness of a common global brand;
 member firms conducting assurance engagements must maintain a system of quality control in
accordance with IFAC’s International Standard on Quality Control (ISQC 1), and must adopt Crowe
Horwath International Audit Methodology; and
 member firms should be recognised within professional circles in their country as a “leader in the
profession.” Leadership is measured in terms of technical excellence, specialties, involvement of the
partners in civic, professional and community activities, size, image and clientele.
Crowe Howarth International presence
Crowe Horwath International Statistics as of December 2014
Member Firms & Business Associates
205
Countries
125
Offices
726
Partners
3,544
Partners & Staff
31,040
Revenue
USD $3.4B
11
Our Internal Quality Control Structure
Audit quality is integral to the work we do, and supports our objective of delivering a high quality and
seamless service to our clients. Our values are built around this objective, and based on a strong “tone at the
top” from our key leadership team.
The key elements of our internal control system for audit quality are:
 the firm’s leadership, which promotes a culture that recognises audit quality;
 operation within a professional and regulated environment and compliance with professional
ethical requirements;
 risk management policies that are used for the acceptance and continuance of audit clients;
 the firm’s provision of adequate resources and policies to address issues such as recruitment,
performance evaluation, capabilities, competence, career development, promotion and
compensation;
 the provision of tools, training and guidance to ensure audit engagements are performed in
accordance with professional standards and regulatory and legal requirements, and that audit
reports issued are appropriate; and
 a system of quality control to monitor the effectiveness of our procedures.
Our People
Our people demonstrate both high standards of technical competency and commitment to the firm’s values
and ethical standards. We annually survey all staff and include a question relating directly to ethical
standards to ensure we are tracking performance on this measure.
In order to ensure that these standards are met, we provide our staff with comprehensive training and
development opportunities, including:
 a structured national audit training programme which is designed to provide all team members
with both technical and soft-skills training appropriate to their level of experience;
 local office-based or web-based courses focusing on topical subjects or specific areas of
expertise;
 an Audit Alert process to ensure that staff are kept informed of technical and regulatory
developments; and
 participation at Crowe Horwath International conferences and events.
Graduate recruits are expected to study for professional qualifications with either the Institute of Chartered
Accountants in Australia, or CPA Australia. Successful completion of professional exams is taken into
account in making decisions about promotion and remuneration. All Audit and assurance staff are expected
to complete at least 120 hours of continuing professional education over a three year cycle, with a minimum
of 20 hours in each year.
Client Acceptance and Continuance
Our client acceptance and continuance process is instrumental in ensuring that we only take on
engagements where we have the competence and capacity to deliver the standard of work which our clients
expect, and that we can comply with our ethical and independence obligations. It also ensures that we
accept only clients who share our values of integrity and ethical behaviour.
12
Our client acceptance process includes risk assessment process, which considers the client’s risk profile, the
nature of its operations, its ownership structure, and the background of its directors and key management. It
also considers independence-related matters, including financial interests and any non-audit services
provided.
Certain clients may be considered to have an increased level of risk, either because they are Public Interest
Entities, or because specific non-standard risks are identified during the acceptance process. Examples of
such risks may include complex transactions, or material operations within emerging markets. Crowe
Horwath Australia maintains a High Risk Register of all such clients. The High Risk Register is overseen by
the Audit & Assurance Group (AAG), and all clients on the register are subject to an Engagement Quality
Control Review.
Our Audit Process
As a member of the Crowe Horwath network we apply Crowe Horwath International’s Audit Methodology.
This provides us with a consistent, high-quality approach across the global network. It ensures compliance
with International Standards on Auditing (ISAs), and with other relevant professional and ethical
requirements.
Our audit methodology adopts a risk-based approach, which relies on developing an in-depth understanding
of the entity under audit, its risks, and the controls in place to manage those risks. This allows us to develop
a tailored response to each issue identified, and to ensure that all material risks of misstatement are
appropriately mitigated. Our understanding of the business and audit risks of our clients is developed
through various procedures, including:
 extensive communication and discussion with management and those charged with governance
throughout the year;
 assessing risk for each financial statement component and assertion;
 use of data analytics and ratio analysis to drill down into client’s data and ensure our testing
approach is targeted effectively;
 an approach that analyses our clients’ processes and controls against each risk identified,
allowing us to focus on key risk areas and also to identify opportunities for our clients to improve
their internal control; and
 use of computer-assisted audit techniques, and assessment of our client’s information
technology environment to ensure that the benefits and risks of increased automation within
financial reporting systems is incorporated into our audit process.
Our audit work programmes include compulsory schedules dedicated to ethical and independence
requirements to ensure that these areas are considered at set stages on all audit engagements.
Our audit software is supplemented by our audit manual, which is based on Crowe Horwath International’s
global audit manual. Supplementary material is then provided by our local technical team to ensure that
specific Australian legal and regulatory requirements are addressed.
All audit staff and partners have access to a full library of technical reference materials on accounting and
audit matters.
13
Review and Consultation
Our audit and assurance policies include detailed requirements in respect of the timely review of audit work
performed. The nature, timing and extent of review depend on the level of audit risk and complexity
associated with the client that is under review, and the experience of the engagement team member.
The firm has in place a set of policies which indicates when an Engagement Quality Control Review (EQCR)
by a second partner is required. There are schedules in the firm’s audit work programs covering the
responsibilities and conclusions of the engagement quality control review partner. Our review policies go
beyond the requirements of law and professional regulation, and are a key element of our system of internal
quality control. EQCR’s are involved throughout the entire audit process and their role is not limited to a
review immediately prior to completion of the engagement.
All EQCRs are performed by audit partners, and we do not permit reviewers to delegate the performance of
this responsibility to any other member of staff.
All partners and other team members are encouraged to consult with peers and subject matter experts on
complex or contentious issues. Our Accounting & Audit technical team contains experienced professionals
who are able to support the engagement team by offering specialized knowledge and advice on accounting,
auditing, ethical or regulatory matters. We have a consultation requirement in place for modified audit
opinions.
Engagement teams also have access to specialist resources when required. Specialists may be used in
complex areas such as information technology, valuation, or taxation. We also have access to a global set of
specialist skills through our membership of the Crowe Horwath International network.
Monitoring
We have an annual peer review process which allows us to gain assurance that our quality control systems
are operating effectively. This is a key component of our overall audit quality, and allows us to drive a culture
of continuous improvement in audit quality.
The audit peer review process is overseen by the AAG, and is conducted using carefully defined procedures
by a small group of experienced reviewers.
14
Our Independence and Ethics
Crowe Horwath Australia has developed policies and process in order to ensure compliance with the
independence standards applicable to each engagement undertaken. These standards include those issued
by the Accounting Professional and Ethical Standards Board (APES) in Australia, and the International
Ethical Standards Board for Accountants (IESBA).
Crowe Horwath Australia maintains a comprehensive Risk Management Manual which is available to all
Principals/Partners and staff via our intranet. This manual includes guidance on financial interests in audit
clients, business relationships, fee arrangements, rotation requirements, and the provision of non-audit
services to audit clients. A listing of restricted clients in which Principals/Partners and staff may be restricted
from holding financial interests is also maintained on the firm’s intranet.
Prior to acceptance of any new client, conflict checks are carried out within the firm and the Crowe Horwath
International network as necessary.
Our procedures require any partner or member of staff to notify the firm immediately should any matters
touching upon independence or ethical requirements arise. In addition, each partner and member of staff
completes annually a set of compliance statements, including an Independence declaration, a fit and proper
form, and a statement of confidentiality.
Compliance with our independence procedures is reviewed internally each year as part of our quality
reviews.
External Regulation and review
Crowe Horwath Australia is subject to oversight and periodic inspection by the Australian Securities and
Investments Commission (ASIC). We may also be subject to inspection by other regulators.
ASIC
As part of its oversight of the audit profession within Australia, ASIC undertakes periodic inspections of
auditors in Australia which include Crowe Horwath Australia. We welcome an ongoing dialogue with ASIC
and believe that an effective and independent regulator is an important part of Australia’s financial reporting
framework.
Further details of ASIC’s audit inspection programme, together with its publicly issued reports, can be found
on ASIC’s website at www.asic.gov.au.
Other Regulators
As a member of the Crowe Horwath International network, we are subject to periodic inspection by Crowe
Horwath International. The most recent inspection occurred in September 2014.
Both the Group and individual Principals/Partners within Crowe Horwath Australia may be subject to review
by professional bodies such as the ICAA or CPA Australia, in accordance with their standard inspection
program for professional practitioners.
15
Financial Information
Year ended 30 June 2015
$
Revenue relating to the audits of
financial statements
2.4m
Revenue for other service lines
13.1m
Total Revenue - Perth
15.5m
Partner Remuneration
While our Partners are members of the Crowe Horwath Perth audit partnership, they are remunerated as
employees of Crowe Horwath Australia.
Partners remuneration includes the following elements:
 base salary; and
 short term incentives (STI’s).
Our Partners base salary is determined in consultation with the Managing Director on an annual basis.
STI’s are performance-based remuneration, which is calculated based on various financial and non-financial
measures. For audit and assurance Partners, audit quality is one of the benchmarks used in measuring
performance.
No element of Partner, or audit staff remuneration is directly related to the provision of non-audit services to
audit clients.
16
Internal Quality Control Effectiveness Statement
Crowe Horwath Perth’s internal quality control system supporting the audit service line is designed to provide
reasonable assurance that audit engagements performed by Crowe Horwath Perth comply with applicable
legal, regulatory and professional requirements.
The results of our quality review programme, and other internal monitoring, in conjunction with the policies,
set out in this report, provide reasonable assurance that our internal quality control system supporting the
audit service line was operating effectively for the year ended 30 June 2015.
Sean McGurk
Head of Audit & Assurance, Crowe Horwath Perth
Mervyn Kitay
Chief Executive, Crowe Horwath Perth
17
Our Public Interest Entity Client List
Listed clients as at 30 June 2015 of Crowe Horwath Perth

Accent Resources

Energia Minerals Limited

Blackgold International Holdings Ltd

Oncosil Limited

Carnarvon Petroleum NL

Pacific Energy Ltd

Carnegie Wave Energy Limited

Western Areas NL

Dragon Mountain Gold Limited

xTV Networks Limited

Encounter Resources Limited
18
Contact Us
Perth Office
Level 5, 45 St Georges Terrace
Perth
Western Australia 6000
Australia
Corporate Office
Level 23,
600 Bourke Street,
Melbourne, Victoria 3000
Australia
Tel +61 8 9481 1448
Fax +61 8 9481 0152
www.crowehorwath.com.au
Tel +61 3 9522 0888
Fax +61 3 9522 0899
www.crowehorwath.com.au
About Crowe Horwath International
Crowe Horwath is ranked among the top 10 global accounting networks with more than 150 independent
accounting and advisory services in over 100 countries around the world. The member firms of Crowe
Horwath International are committed to building lasting relationships with clients, focusing on understanding
the client's perspective, the client's needs and the goals of the client. The results are innovative business
solutions in audit, tax, risk and advisory designed for the unique needs of the client, solutions that improve
performance, enhance shareholder value and build client competitiveness. Each firm is well-established as a
leader in its national business community and is staffed by nationals, thereby providing a knowledge of local
laws and customs which is important to clients undertaking new ventures or expanding into other countries.
Through our highly integrated global network of member firms with broad technical expertise and deep local
market knowledge, Crowe Horwath provides consistent quality and impeccable service to diverse clientele
throughout the world.
Version – 001
Dated : 28 June 2015