Page 120 - Loomis Annual Report 2017

116 Auditor’s report
Loomis Annual Report 2017
Materiality
The scope of our audit was in uenced by our application of materiality. An audit is designed to obtain reasonable assuran- ce whether the nancial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to in uence the economic decisions of users taken on the basis of the nancial state- ments.
Based on our professional judgement, we determined cer- tain quantitative thresholds for materiality, including the over- all materiality for the nancial statements as a whole. These, to- gether with qualitative considerations, helped us to determine
the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the e ect of misstatements, both individually and in aggregate on the nancial statements as a whole.
Key audit matters
Key audit matters of the audit are those matters that, in our professional judgment, were of most signi cance in our audit of the annual accounts and consolidated accounts of the cur- rent period. These matters were addressed in the context of our audit of, and in forming our opinion thereon, the annual accounts and consolidated accounts as a whole, but we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the Key audit matter
Routines and procedures related to the Cash Management Services and valuation of cash stock
The cash management services/cash processing business (CMS) is described on page 59 in the Administration report. Risk management further described in the Corporate Governance report on pages 36-38. Disclosure and speci cation of funds within the cash processing operations are speci ed in Note 23. Cash as such is liable to be stolen. If a di erence exist between
amounts deposited and amount which can be physically identi- ed, Loomis may be forced to reimburse the di erence regard- less if it is Loomis stock or consignment stock. Loomis has detai- led routines and procedures to reduce the risk of di erences. Among other things the routines stipulate that all value should be subject to a physical count on a daily basis and that the count should be performed “blind” by two people. The risk manager in each respective country is responsible for the compliance in this area. The risk organization in the respective country includes so called “cash auditors” who audit compliance to routines and pro- cedures and who performs a full cash stock count at least twice per year per each cash processing center. The compliance to rou- tines and procedures is monitored and thereby also the risk for di erences/valuation errors in cash processing operations. The main risk is operational; a risk for nancial reporting impact ho- wever exists should routines and controls fail. Cash stock di e- rences can lead to signi cant costs for Loomis. Due to this it is of importance that routines and procedures are followed and that all signi cant di erences are identi ed and accounting for cor- rectly in each closing. Loomis follow up as per December 31 2017 show that no signi cant di erences remain unaccounted for.
We have in our audit performed for example the following key audit activities:
• On a sample basis visited a number of cash processing cen-
ters. During these visits we have participated in cash stock inventory counts, tested compliance to routines and pro- cesses, examined cash stock reconciliations and followed up on the reporting of identi ed cash stock di erences.
• Performed walkthroughs and discussions with the risk ma- nager and Loomis cash stock auditors in the respective country regarding the compliance to routines and procedu- res, observations made in connection to cash counts and their action plans to handle observations made.
• Followed up on the central reporting of cash stock balances and identi ed di erences.
• On a sample basis reconciled cash stock owned by Loomis versus an external con rmation (for example a bank state- ment)
• Collected and analysed documentation from Loomis cen- tral follow up through the system Stars which include infor- mation about di erences as per the closing date.
• Examined the accounting treatment applied with regards to identi ed cash stock di erences.
Loomis implements remedial measures to strengthen routi- nes and procedures when this is deemed needed. No obser- vations of signi cance has been reported to the Audit Com- mittee as a result of our audit in this area.