STAKEHOLDERENGAGEMENT MODEL
FOR RELATIONSHIP WITH
THE EXTERNAL AUDITORFEBRUARY 2024

VERSION 14.0
RICHARD HAYESGROUP GENERAL MANAGER FINANCE

CONTENT

Purpose ...................................................................................................................................... 2External Auditor ........................................................................................................................... 2
Key Stakeholders ......................................................................................................................... 2
Roles & responsibilities ................................................................................................................. 2
Relationship with the External Auditor – Key Principles ..................................................................... 3
Application of this Engagement Model to Associates ......................................................................... 5
Appendix 1: Categories of services that may be provided by the External Auditor (Subject to PreApproval) .................................................................................................................................... 6
Appendix 2: Categories of services that may not be provided by the External Auditors ......................... 8

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PURPOSE
The External Auditor Stakeholder Engagement Model (this engagement model) has been preparedin accordance with the global Stakeholder Engagement Policy. It applies to ANZ Group Holdings Limited(ANZGHL), its controlled entities (ANZ Group) and related bodies corporate, encapsulating ANZ Group’sbanking and non-banking businesses.
Auditor independence is fundamental to the credibility and reliability of the auditors’ reports. This
engagement model for the relationship with the External Auditor has been designed to ensure that ANZ’s
External Auditor is both independent and perceived to be independent. The engagement model is basedon the specific requirements of the Australian Corporations Act 2001, Securities Exchange Commission(SEC) independence rules and other professional standards.
The engagement model should be read in conjunction with the Audit Committee Charter which is locatedat www.anz.com/shareholder/centre/about/corporate-governance/. The Audit Committee has primary
responsibility for all aspects of the External Auditor relationship and the Charter provides a detailed
description of the responsibilities and duties of the Audit Committee in relation to the External Auditor.
It includes matters related to the appointment, evaluation and oversight of the External Auditor, theconsideration and response to matters raised by them, and maintenance of their objectivity andindependence.
This engagement model has been put in place to govern and guide the appropriate application of
relevant responsibilities and duties of the Audit Committee as outlined in the Audit Committee Charterand to operationalise the enforcement of this across the ANZ Group. It outlines the key principles andpolicies for dealings with the External Auditor, is mandatory and must be followed by all personnel
engaging the External Auditor.

EXTERNAL AUDITORThe ANZ Group’s External Auditor is KPMG. The Group appointed Peat, Marwick, Mitchell & Co
(predecessor to KPMG) in 1969 and it was resolved as part of the annual formal assessment of theperformance and independence to reappoint KPMG for the current financial year audit.
This engagement model must be followed for any proposed engagement of the External Auditor and its
staff. The principles of this engagement model should also be applied where ANZ engages audit firms
other than KPMG for local reporting purposes.

KEY STAKEHOLDERS
The key stakeholders for the purpose of this document are:•

Chairman of the Audit Committee and members of the Audit Committee;•

Chief Financial Officer (CFO);•Group General Manager Finance;•

Head of Statutory Reporting, Policy & Governance;•

Divisional Chief Financial Officers (Divisional CFOs);•

Senior Risk Executives (Credit, Operating and Market); and•Business Unit Management who seek to place reliance on KPMG reports commissioned by a client or
a syndicate of lenders in decision making.

ROLES & RESPONSIBILITIES
Audit Committee•

The Audit Committee is responsible for the appointment, compensation, retention and oversight of
the External Auditor, including resolving disagreements between management and the External
Auditor regarding financial reporting. The External Auditor will provide reports directly to the Audit
Committee.

•

The Audit Committee must pre-approve all audit, audit-related and non-audit services either on an
engagement by engagement basis, or pursuant to specific pre-approval policies adopted by the Audit
Committee.

•

The Audit Committee will regularly assess the independence of the External Auditor, with at least one
formal review per year.

•

The Audit Committee will regularly evaluate the effectiveness of the External Auditor, with at least
one formal review per year.

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•The Audit Committee will maintain an engagement model covering the provision of services by theExternal Auditor.

•

The Audit Committee will perform an annual performance assessment of the External Auditor, which
will inform an assessment on whether to commence an external audit tender process.

•

The Audit Committee also oversees the application of key External Auditor staff rotation practices.

Subsidiary Board Audit Committees
Subsidiary Board Audit Committees may have specific regulatory requirements in relation to external
audit. The key principles set out in this policy should be applied by the Subsidiary Board Audit
Committees in the management of external audit engagements. If there are any perceived issues orconflicts between local regulatory requirements and this engagement model these should be raised with
the Group General Manager Finance for escalation to the ANZ Audit Committee Chairman for resolution.
Global Leader
In accordance with the Stakeholder Engagement Policy, the global leader for the External Auditor
engagement model is ANZ’s Group General Manager Finance, who under the oversight of the Audit
Committee is responsible for the effective management of this engagement model.
Global Relationship Owners
The global relationship owners responsible for the application of the engagement model for the
relationship with the External Auditor are as follows:•

Group/global relationship –This is owned by the Group General Manager of Finance, supported byGroup Financial Policy and Divisional CFO’s, who are responsible for oversight and management of
the relationship on a global basis.

•

Divisional / Country CFOs - In other countries or legal entities of the Group, this is owned by therelevant CFO unless there is a local regulatory rule stipulating that dealings with the External Auditor
must be conducted by a specified in-country officer.

•

Other Finance - Where there is no in-country CFO, the primary relationship lies with the country
CEO and/or the country Chief Operating Officer, although all material queries and disputes must bereported to Group Finance.

•

Other functions - For engagements outside Finance, the person signing the engagement letter is
responsible for oversight and management of the relationship for the duration of the engagement.

The relationship owners identified above are responsible for ensuring that all communications with theExternal Auditor, for whom they have been assigned responsibility, are prompt, accurate and inaccordance with the key principles outlined in this document and the applicable ANZ policies.
All Staff
In line with audit requirements, the External Auditor has unrestricted access to all ANZ staff in order toobtain audit evidence. All staff should be aware that engagement of the External Auditor should comply
with this engagement model. If unsure of these requirements ANZ staff should contact Group Financial
Policy (GFP).

RELATIONSHIP WITH THE EXTERNAL AUDITOR – KEY PRINCIPLES

1. ENGAGEMENT OF EXTERNAL AUDITOR
All services provided by the External Auditor must be in accordance with the following Independence
Principles:•

any audit, audit related and non-audit services must not, or must not be perceived to, impair or
impact the independence of the External Auditor;•

the External Auditor should not have a mutual or conflicting interest with ANZ;•

the External Auditor should not audit its own work;•

the External Auditor’s relationship with ANZ, or a service provided to ANZ, should not result in it
acting as management, agent or as an employee of ANZ or in a project management/oversightcapacity for an ANZ project;•

the External Auditor should not act as an advocate for ANZ;•

there must be a compelling reason for the External Auditor to provide the service; andVersion 14.0 - February 2024

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A) in all cases, contingent fees, co mmission or success fees areprohibited.Services that may be provided by the External Auditor(subject to approval)
Categories of Services that may be provided by the External Auditor are outlined in Appendix 1
and are subject to the following requirements:• Every September, for the following financial year, the Audit Committee will pre-approvecategories of Audit and Audit-Related services that may be performed by the External
Auditor.
• Details of all individual recurring Audit and Audit-Related services and the associated fees,
should be provided to GFP annually, and will be submitted to the Audit Committee forapproval at the February meeting. Note that permissible Non-Audit services, even ifrecurring, must be approved on an engagement by engagement basis and are not to be
included in the annual approval process.
• Details of any Audit and Audit-Related and Non-Audit services, not included in the February
approval should be provided to GFP by management with the final draft engagement letter.
GFP1 will:a. Review and escalate new and non-recurring Audit, Audit-Related and Non-Audit services
with a value above A$50,000 to the Audit Committee Chair for approval.
b. Approve new and non-recurring Audit, Audit-Related and Non-Audit services with a value
under A$50,000.
c. Report all approved new and non-recurring Audit, Audit-Related and Non-Audit services
on a periodic basis to the Audit Committee.
• Fees for all proposed services should be fixed. GFP or Audit Committee approval must be
obtained for any overruns (subject to the above escalation thresholds).
B) Services that may not be provided by the External Auditor
The services for which the External Auditor is not permitted to be engaged by ANZ are listed inAppendix 2.
These services may, or may be perceived to impair or impact the independence of the External
Auditor, and are therefore prohibited under this engagement model and may be prohibited byapplicable law. This is not an exhaustive list of services that may not be provided by the External
Auditor. Management must apply the independence principles listed in Section 1 above to any
proposed engagement of the External Auditor.
C) Participation by ANZ in the appointment of the External Auditor as
part of a syndicate of lenders
This section applies to situations where ANZ or a syndicate of banks appoint KPMG to undertakeand engagement for a client of the syndicate.
A syndicate of banks may at times appoint an accounting firm to undertake a specificengagement for a client of the syndicate.
In these situations, if ANZ makes the appointment or has significant influence over theappointment, the External Auditor may not be appointed.
ANZ may not participate in or influence the selection or appointment of the External Auditor tosuch an engagement, or participate in setting the scope and terms of the engagement where:• ANZ has control or significant influence over the syndicate including when ANZ is a memberof the agent bank group or creditors’ committee; or• ANZ has a significant stake in the outcome of the transaction (for example, where theamount due to ANZ from the third party is material to ANZ); or• ANZ has primary responsibility for reviewing the External Auditor’s advice and for making
decisions based on that advice; or• ANZ pays more than its proportionate share of fees for that advice.
D) External Auditor Appointed by an ANZ client
Where the External Auditor is engaged by an ANZ client (including the client of a banking
syndicate of which ANZ is a member) to prepare a report, for example a report on the state of
the client’s business or cash flow position, and the client pays the External Auditor for theprovision of this service, a copy of the External Auditor’s report may be provided to ANZ and may
be relied upon by ANZ subject to the following and approval by GFP:• the client is not on the ANZ watch and control list;• the report is not the sole source of reliance by ANZ for any subsequent decisions made; and1

GFP or the Group General Manager Finance or the Group CFO.

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•the report will make reference to the fact that the scope of work is limited to the terms ofreference and the engagement is not an audit or a review.

2. RECRUITMENT OF EXTERNAL AUDITOR STAFF
ANZ requires a two year “cooling off” period before any partner or professional staff of the External
Auditor, who was a member of the ANZ external audit team, is appointed as a Director or Senior
Executive of ANZ. In addition, where a current Director or Senior Executive of ANZ was previously apartner of the External Auditor at a time when the External Auditor was auditor of ANZ, ANZ requires
a five year “cooling off” period before any other former partner of the External Auditor is appointed
as a Director or Senior Executive of ANZ.
In addition, potential appointments to a senior ANZ Finance role must be approved in advance of theappointment if the candidate, their immediate family member/close relative (i.e. spouses, spousal
equivalents, related or unrelated dependants, parents, siblings and non-dependent children) is apartner of the External Auditor (irrespective of whether they worked directly on the ANZ audit) or asenior manager of the External Auditor who provides services to ANZ. Such approval must be
granted by the Chairman of the Audit Committee for appointments at a Group 2 level or higher andby the Chief Financial Officer for appointments at a Group 3 level.
3. EXTERNAL AUDITOR STAFF ROTATIONANZ requires that the lead and engagement quality control review partners involved in the external
audit should not remain in a key audit role beyond a period of 5 years and should not return to theaudit team for a further five years.
In addition, ANZ requires that other audit partners, who have responsibility for decision making on
significant auditing, accounting or reporting matters or maintain regular contact with management or
the Audit Committee, should not remain in a key audit role beyond a period of seven years andshould not return to the audit team for a further two years. This does not apply to specialist partners
such as tax partners and actuarial partners unless they are also engagement partners.
The Audit Committee oversees the application of the Key External Audit Staff Rotation practices.
The current lead audit Partner’s tenure is due to expire at the end of the 2025 financial year
reporting process (having been appointed for the 2021 financial year) and the engagement quality
control review Partner’s tenure is due to expire at the end of the 2024 financial year (having been
appointed for the 2020 financial year).
4. AUDIT FIRM ROTATIONThe Audit Committee assesses the independence and effectiveness of the External Auditor as part ofan annual assessment on whether or not to reappoint the External Auditor or to commence anexternal audit tender process.
5. NON-BUSINESS RELATED INTERACTIONS WITH THE EX ERNAL AUDITORAll ANZ Directors or management who receive gifts or entertainment from the External Auditor shallreport the type of gift or entertainment and its approximate value, in accordance with the ANZ AntiBribery and Anti-Corruption Policy.
For Directors, the above requirements only apply to gifts or entertainment received as a result of
their role at ANZ; they do not apply to gifts or entertainment received as a result of otherdirectorships held in respect of organisations with the same external auditor.

APPLICATION OF THIS ENGAGEMENT MODEL TO ASSOCIATES
Associates are entities over which ANZ has significant influence rather than control. Generally significant
influence exists where ownership interests are between 20% and 50%. As associates are not controlled
by ANZ the requirements of this engagement model do not apply, except in the circumstances described
below:•ANZ is paying directly, in full or in part, for the service provided by ANZ’s External Auditor; or•

ANZ is signing the engagement letter for the service being provided.

In either of these circumstances the requirements of this engagement model should apply.

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APPENDIX 1:
CATEGORIES OF SERVICES THAT MAY BE PROVIDED BY THE EXTERNAL
AUDITOR (Subject to Pre-Approval)
AUDIT SERVICES
Audit or Reviews of financial statements of ANZ and its subsidiaries.
Principles for classifying as Audit Services - A reasonable assurance engagement where the External
Auditor expresses an opinion on whether historical financial information presented in ANZ financial
statements (including those of subsidiaries and affiliates of ANZ) are prepared and presented in allmaterial respects to give a true and fair view, in accordance with an applicable financial reporting
framework. This is restricted to work performed as part of statutory audits and reviews.
Categories of services which are pre-approved by the Audit Committee include:
1) Statutory financial statement audits and interim reviews for the Consolidated Group and eachsubsidiary.
2) Attestation reports on internal controls over financial reporting.
AUDIT-RELATED SERVICES
Engagements other than the statutory audit or review of financial statements which involve the External
Auditor:• attesting whether ANZ’s opinion, processes or policies associated with the recording of transactions
or account balances are consistent with an external standard or requirement.
• leveraging a significant portion of the work performed on a statutory audit or review.
• being required, by an external statutory or regulatory authority, to be engaged by ANZ.
Principles for classifying as Audit-Related Services – Audit-Related Services are engagements other than
the statutory audit or review of financial statements where:
1) The External Auditor attests/confirms/provides assurance/presents findings to either ANZ
management or external parties that account balances, transactions, processes or ANZ work
performed/views are consistent and comply with, an external statutory or regulatory standard or
requirement.
2) A significant portion of the scope of work to be performed can be leveraged by the External Auditor
from work they have already performed as part of the statutory audit/review. These engagements
are restricted to the Audit-Related categories mentioned below.
Categories pre-approved by the Audit Committee include:
1. Opinions for APRA under tripartite arrangements with the External Auditor.
2. Comfort letters, consent letters, agreed upon procedures and other forms of attestation provided
by the External Auditor in connection with debt, equity or hybrid capital raisings.
3. Accounting advice on the appropriateness of ANZ’s proposed accounting treatment.
4. General training on the impact of new and revised accounting and regulatory standards.
5. Assurance over reports containing financial or non-financial information prepared to meet the
ANZ Group governance objectives, such as the Annual Sustainability and Environment Reports.
3) There is either a regulatory or statutory requirement to engage the External Auditor or where theExternal Auditor is required to report to a statutory or regulatory authority.
For the sake of clarity where:-

The External Auditor provides a service that would be considered as advice or recommendations for
management action, irrespective of whether management has sole discretion or responsibility foractioning those recommendations or advice, the engagement in its entirety would not be AuditRelated.

-

The External Auditor provides additional assurance to management on previously audited/reviewed
account balances, transactions, processes or ANZ work performed/views, in the absence of any
change in reporting standards, statutory or regulatory requirements or a significant ANZ businessrestructure, would not be considered Audit-Related.

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NON-AUDIT SERVICES
Non-Audit services include all services other than those classified as Audit or Audit-Related and are notprohibited under Appendix 2. Non-audit services are subject to a dollar cap per year as determined by
the Audit Committee Chair. Prior to submitting a request for approval of Non-Audit related services,
please check capacity under the annual fee cap with GFP.
Outlined below is a listing of possible categories of non-audit services. These are NOT considered preapproved and are listed for reference only:
1) Any training that is not accounting or prudential or regulatory related.
2) Presentations/research on industry or business or financial market or risk insight/developments.
3) Review of operational effectiveness of ANZ business activities and recommendations regarding
potential areas of improvement, provided that such services do not involve the design or
implementation of internal controls over financial reporting.
4) Any benchmarking services.

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APPENDIX 2:
CATEGORIES OF SERVICES THAT MAY NOT BE PROVIDED BY THE
EXTERNAL AUDITORSThe following categories of services or activities are prohibited and cannot be provided by the External
Auditor to ANZ.
1) Accounting, administration, project management, HR, payroll and tax services. Examples include:a) Bookkeeping, preparation/compilation of accounting records or financial statements or regulatory
or tax returns.
b) Recruitment services (including recommending ANZ appointments and/or advising on
remuneration and terms of employment) or acting in the capacity of an ANZ employee, or
secondments to ANZ.
c) Corporate Secretarial Services.
d) Acting in a project management capacity on any ANZ project or project implementation or
related post implementation review.
e) Any internal audit services, including monitoring of controls on an on-going basis. ANZ should
place no reliance on the External Auditors as the primary basis for determining the adequacy ofinternal controls over financial reporting systems.
f)

The marketing, planning or positively opining on the tax treatment of confidential transactions2 oraggressive tax position transactions.3g) Personal income tax services, including compilation of tax returns to an employee or contractor ina financial reporting oversight role4 in ANZ or any ANZ legal entities. This prohibition extends toany immediate family members of that employee or contractor.
h) Interpretation of tax legislation and its application to ANZ.
2) Any design and implementation work involving:a) Financial information systems, risk management and financial procedures or controls; orb) Hardware or software that aggregates source data underlying financial statements or generates
information that is significant to the financial statements.
3) Actuarial, valuation or legal services. Examples include:a) Determination of the amounts recorded in the financial statements and determination of actuarial
valuation. Actuarial services in respect to the appropriate actuarial methods and assumptions aswell as attestations required by regulators are permitted but not pre-approved.
b) Appraisals or fairness opinions and valuations to support business acquisitions.
c) Any legal services including providing an expert opinion or other expert services for the purposeof advocating the interests of ANZ in a regulatory or administrative proceeding or investigations.
d) Acting in an advocacy role for ANZ in resolving a dispute or litigation before a tribunal or court.
4) Services where the external auditor would be considered to be acting in management’s interests,
irrespective of whether the appointment would be made by ANZ as sole lender or as a member of a
syndicate. Examples include receiver, and agent for mortgagee in possession.
In addition, where ANZ is the sole lender to a client, the External Auditor may not be appointed by
ANZ as the investigating accountant, administrator or liquidator to that client.
Appointments of the External Audit firm by the Court or another creditor as liquidator to a customer
need not be objected to by ANZ on the condition that the auditor’s actual or perceived independence
is not impaired.

2

3

4

A Confidential transaction for the purposes of applicable PCAOB independence rules is a transaction that is offered by an advisor underconditions of confidentiality and for which the taxpayer pays the advisor a fee. Confidentiality refers to a limitation on disclosure of the
tax treatment or tax structure of the transaction that protects the confidentiality of that advisor’s tax strategies.
An Aggressive Tax Position for the purposes of applicable PCAOB independence rules is a transaction where tax avoidance is asignificant purpose of the transaction and where the proposed tax treatment is not “likely” to be allowable under applicable laws.
“Likely” is defined in terms of a transaction being more likely than not to be allowable under applicable tax laws.
A Financial Reporting Oversight Role is a role in which a person is in a position to, or does, exercise influence over the contents of thefinancial statements, or exercises (or is in a position to exercise) influence over anyone who prepares them. The restriction also applies
to persons serving in a financial reporting oversight role in any ANZ controlled entity.

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5) Broker-dealer, investment advisor or investment banking services. Examples include:a) Serving as a promoter or underwriter or making investment decisions, or executing transactions
on behalf of ANZ.
b) Have custody of ANZ assets.
c) Advice on deal structuring and assistance in deal documentation or fairness opinions.
d) Promoting, dealing in, or underwriting shares in ANZ.
e) Any due diligence on potential acquisition or disposals (except as outlined in Appendix 1).
f)

Providing corporate finance services that involves promoting, dealing in or underwriting shares,
debt or other financial instruments issued by ANZ or providing advice on investment in suchshares, debt or other financial instruments.

6) Services linked to financing, capital structure and allocation (except those outlined in Appendix 1).
7) Custodianship/hosting of ANZ data. Examples include:•

Serving as a host of financial or non-financial data.

•

Acting as custodian of data.

•

Providing disaster recovery and business continuity support services.

8) Acting as an expert witness in a matter unless appointed by a tribunal or court or engaged in relation
to a class action (group litigation) provided that:a) the auditor’s audit clients including ANZ constitute less than 20 percent of the members of theclass or group (in number and in value),b) none of the auditor’s clients including ANZ is designated to lead the class or group, andc) none of the auditor’s clients including ANZ is authorized by the class or group to determine thenature and scope of the services to be provided by the audit firm or the terms on which suchservices are to be provided.

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Administration
Document Title

External Auditor Engagement Model

Version No.

14.0

Engagement Model Owner

Group General Manager Finance – Richard Hayes

Framework Administrator

Senior Manager Financial Policy - Sam Henderson

Related policies

Stakeholder Engagement Policy – Global

Date of publication/effective date

1 March 2024

Date of last review

February 2024

Next scheduled review

February 2025

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