To the Board of Directors, Executive Team of bankmecu Limited:

bankmecu Limited commissioned Net Balance Management Group Pty Ltd (Net Balance) to provide independent assurance over the community banking and greenhouse gas emissions related content of the 2012- 2013 Annual Report (the Report). The Report presents bankmecu’s financial and non-financial performance over the period 1 July 2012 to 30 June 2013.

bankmecu was responsible for the preparation of the Report and this statement presents our opinion as independent assurance providers. Net Balance’s responsibility in performing its assurance activities is to the Board and Management of bankmecu in accordance with the terms of reference agreed with them. Other stakeholders should perform their own due diligence before taking any action as a result of this statement.

Assurance Standard and Objectives

The assurance engagement was undertaken in accordance with AccountAbility’s AA1000 (2008) Assurance Standard (AA1000AS). This standard allows for the evaluation of an organisation’s management, performance and reporting on sustainability issues. This was undertaken by evaluating the organisation’s adherence to the AA1000 AccountAbility Principles (2008) of:

Inclusivity: How does the organisation include stakeholders in developing and achieving an accountable and strategic response to corporate responsibility and sustainability?

Materiality: How does the organisation include in its reporting the material (most important) information required by its stakeholders to make informed judgements, decisions and actions?

Responsiveness: How does the organisation respond to stakeholder concerns, policies and relevant standards and adequately communicate these in its reporting?

Assurance of the accuracy and quality of selected community banking performance information was guided by the Australian Standard on Assurance Engagements ASAE3000 Assurance Engagements other than Audits or Review of Historical Financial Information (ASAE3000) issued by the Australian Auditing and Assurance Standards Board.

Assurance Type, Level, Scope and Limitations

Net Balance provided Type 2 moderate level of assurance over the topics of community banking and greenhouse gas emissions in accordance with the AA1000AS. The review of adherence to the Principles was undertaken using the criteria outlined in the AA1000 Assurance Principles Standard (2008), while assessment of the accuracy and quality of selected community banking performance information was undertaken using the criteria outlined in Table 1 below. A third-party level check of the Report against the Global Reporting Initiative (GRI) G3.1 Guidelines was also provided.

Table 1: Community banking and greenhouse gas performance information selected for assurance (2012-13 data only)
Performance Area Assessment Criteria Report Reference

Political lobbying and contributions

GRI indicators: SO5, SO6

 Political lobbying and contributions

Banker for community and government

GRI indicator: EC9

 Banker for community and government

Community Investment Program

GRI indicators: SO1, EC1, EC8, SO1

 Community Investment Program

Financial inclusion

GRI indicators: FS13, FS14, SO1

 Financial inclusion sector

Community infrastructure investments

GRI indicators: EC1, EC8, SO1

 Community infrastructure investments

Customer insights survey

GRI indicators: PR5, FS5

 Customer insights survey

Complaints and sensitive issues

GRI indicator: PR8

 Complaints and sensitive issues

Customer financial education and advice

GRI indicator: FS16

 Customer financial education and advice

Anti-bribery and corruption

GRI indicator: SO2, SO3

 Anti-bribery and corruption

Card fraud

GRI indicators: SO2, SO3

 Card fraud

Greenhouse gas emissions & energy

GRI indicators: EN16, EN17, EC2, EN3 – EN7, EN18

 Greenhouse gas emissions & energy

Supply chain management system

GRI indicators: FS3, FS5, EN18, HR2

 Supply chain management system

Value of social and environmental loans

GRI indicator: FS11

 Value of social and environmental loans

 The following limitations in scope are noted:

  • The scope of work did not involve assurance of financial data, other than that relating to environmental, social or broader economic performance data (as specified in Table 1) where applicable.
  • The head office was visited as part of this assurance engagement with any non-head office data being reviewed remotely.
  • Net Balance was engaged to undertake assurance over bankmecu’s disclosures in the area of community banking and greenhouse gas emissions. This assurance is part of a three year program which aims to focus on one key strategic topic each year. bankmecu, as a mature reporting organisation, has decided that this focused approach to assurance will deliver the business and their stakeholders with value.

Assurance Methodology

The assurance engagement was undertaken from June through to September 2013, and involved:

  • Interviews with selected members of the bankmecu Executive and Management team.
  • A review of the bankmecu’s materiality determination process.
  • Interviews with key personnel responsible for collating and writing various parts of the Report to substantiate the reliability of selected claims
  • A review of Report content for any significant omissions and anomalies, particularly in relation to claims as well as trends in data.
  • Testing of selected data points and statements relating to the subject matter outlined in Table 1.
  • A Global Reporting Initiative (GRI) G3.1 application level assessment.

Our Independence

Net Balance was not responsible for preparing any part of the Report. During the period, Net Balance undertook benchmarking and an independent evaluation of bankmecu’s Community Investment Program. This project was undertaken by a separate team and was not complete at the time of the assurance engagement. A member of staff at bankmecu is also a board member of the Net Balance Foundation, a not-for-profit entity which draws it resources from the Net Balance Management Group. This position was determined not to be in conflict with Net Balance’s role as the independent assurance provider by both bankmecu and Net Balance. In accordance with our Independence Policy, Net Balance confirms that we are not aware of any other issue that could impair our objectivity in relation to this assurance engagement. Our Independence Policy can be viewed on our website: http://www.netbalance.com/services/assurance.

Our Competency

The bankmecu assurance engagement was carried out by an experienced team of professionals led by a Lead Sustainability Assurance Practitioner (Lead CSAP), accredited by AccountAbility in the UK. The project included personnel with expertise in environmental, social and economic performance measurement across a range of industry sectors. Net Balance is a global leader in the use of Accountability’s AA1000AS, having undertaken over 200 assurance engagements in Australia in the past seven years. The project team also has demonstrated experience in the application of the ASAE3000.

Findings and Conclusions

Adherence to AA1000 Principles

Inclusivity:

bankmecu was found to have a variety of different approaches in place to engage with key internal and external stakeholders on the organisation’s community banking material issues. Members of the senior management team were interviewed on topics that encompassed the bank’s approach to community banking, managing community perceptions, providing services and products to the community, responding to community feedback and engaging with the broader community. bankmecu’s stakeholder engagement processes were found to be comprehensive and robust in relation to engaging proactively with a wide range of relevant stakeholders. bankmecu’s emission profile was also found to include all relevant and material emission sources.

Materiality:

During the assurance engagement, Net Balance reviewed the process that bankmecu applied to identify material issues for inclusion in the Report. A workshop, involving a cross section of the bankmecu management team was held to cross check and update the material issues identified in last year’s assessment. The confirmed list of material issues were mapped against the bank’s key strategic business objectives and GRI indicators. The material issues identified through this determination process were found to reflect key issues that are currently managed by bankmecu. This year’s assurance engagement focused on the testing of bankmecu’s management of material issues related to the topics of community banking and greenhouse gas emissions. bankmecu was found to have policies, strategies and management systems in place to assist the business manage performance in both of these areas.

Responsiveness:

Net Balance tested the responsiveness of bankmecu to the management of community banking and greenhouse gas material issues through a series of interviews with management, the review of performance management systems and supporting documentation. The report was found to provide a fair and balanced account of how the organisation is responding to these material issues. In particular it was noted that bankmecu had placed significant effort and resources into community banking strategies and approaches during the year. This work, along with the significant engagement with community stakeholder groups, has resulted in both the improvement of services offered to the community and enhanced socio-economic performance for the bank.

Reliability of Performance Information

Based on the scope of the assurance process, the following was observed with regard to performance information:

  • The findings of the assurance engagement provide confidence in the systems and processes used for managing and reporting the community banking performance information included in the scope of this assurance engagement.
  • The level of accuracy of selected performance information was found to be acceptable.
  • Data trails selected were identifiable and traceable, and the personnel responsible were able to reliably demonstrate the origin and interpretation of data.
  • The GRI application level check found that the reporting was classified as A+ in accordance with the GRI 3.1.

Based on our assurance procedures, nothing has come to our attention that causes us to conclude that the selected community banking performance information and greenhouse gas data has not been prepared, in all material respects, in accordance with the criteria as presented in Table 1.

The Way Forward

Overall, it is Net Balance’s opinion that nothing came to our attention to indicate that the Report was not a fair representation of bankmecu’s community banking and greenhouse gas performance during the reporting period.

bankmecu continues to play a leadership role in the use of strategic socio-economic approaches to inform business development activities. The bank was also observed to be proactively engaging and sharing learnings with both the industry and external stakeholder groups. To ensure bankmecu continues to improve its performance, Net Balance has provided a number of recommendations which broadly relate to improving report data systems, the materiality process in alignment with GRI G4 and further enhancing internal policies. Further detail on these recommendations has been provided in a report to bankmecu’s Board, Executive and Management.

 

On behalf of the assurance team
16 September 2013
Melbourne, Australia

 

Kirsten Simpson
Associate Director, Net Balance
Lead CSAP (AccountAbility UK)