The company as per this ASX principle has disclosed relevant information about the board and management objectives. The responsibility of the Board is to provide strategic direction to the company and delegation of responsibilities to managing director, CEO and other key management personnel (ASX Corporate Governance Council, 2014). The management holds the responsibility of carrying out daily business operations and resolving the issues and problems in their context. The role and responsibilities of the Board has also been disclosed adequately in the Board Charter that has defined adequate information about its powers and authorities. The Board reviews the performance of each director on an annual basis by the use of self-evaluation or independent review. The process is also supported by the discussion and feedback of stakeholders. The performance of the executive team is evaluated against the standard key performance indicators developed by the CEO. The board and its committees review the performance of the management team during mid and end-year performance appraisals. The company as per the ASX principle has adequately disclosed the roles and responsibilities of Board and the processes used for evaluation of its performance (GrainCorp Limited: Corporate Governance Statement, 2016).
The corporate governance statement of the company has also provided adequate information in relation to composition, selection and appointment of Board members. Board has maintained a policy of achieving a balance between the skills, experience and diversity among its key executive directors (Plessis, McConvill and Bagaric, 2005) . Also, it has established a committee known as people remuneration and nominations committee for providing recommendations to the board about the size, skills, matrix and composition of the Board. PRNC assesses the potential candidates as per the skills and competencies required to be incorporated into the Board for meeting its roles and responsibilities. The directors and executives are appointed as per a written agreement that provides details about the terms and conditions of the appointment. Also, the board composition consists mainly of independent directors as per the ASX principle and the chairperson of the board is an independent director and is distinct from the CEO of the company (GrainCorp Limited: Corporate Governance Statement, 2016).
The company in order to carry out its activities and processes in an ethical and responsible manner has implemented certain ethical ways to act honestly and fairly in all its business dealings (Nordberg, 2010). The Code of Conduct provides a common framework for all the business leaders and employees about the expected behavior. It has also devised and implemented a trading policy to restrict the directors, executives and other employees of the company to deal in the trade of securities. It has also established a whistleblower protection policy for immediate reporting the suspected breaches of code of conduct developed by the company. Also, all the relevant policies and procedures adopted by the company to promote ethical behavior is listed on its website (GrainCorp Limited: Corporate Governance Statement, 2016).
The company has established a Board Audit Committee (BAC) fro providing assistance to the board in meeting their roles and responsibilities as per the standard financial reporting principles. Also, it has implemented internal control mechanisms to ensure that financial reports are developed in an integrated manner. BAC holds the responsibility of reviewing the overall processes and procedures related with financial reporting of the company to identify and mitigate any risk associated with financial reporting in advance manner. Also, it regularly carries out the audit of its financial reporting process and has implemented an auditor independence policy for ensuring that the results obtained are reliable and accurate (Fleckner and Hopt, 2013). In addition to this, the CEO and CFO of the company have provided a declaration to the Board that its overall financial reporting process is carried out as per the Section 295A of the Corporations Act 2001 (GrainCorp Limited: Corporate Governance Statement, 2016).
It has also developed a policy of continuous disclosure to provide shareholders and other associated parties timely information about the financial results and also other relevant announcements and results (Plessis, McConvill and Bagaric, 2005). The policy is developed as per the Corporations Act 2001 to ensure that all materialistic information impacting the securities prices is provided to the investors. It has also appointed a Company Secretary for complying with the continuous disclosure obligations and releasing all the pertinent information to the shareholders.
The company for protecting the rights of shareholders is provided with timely disclosure of all material matters. The company conducts an annual general meeting with the shareholders where all the relevant information is presented to them and also resolves their key issues and concerns (Bazley, Hancock and Robinson, 2014). The shareholders who are not able to attend the meeting are provided with all the relevant information via e-mail platform. Also, the corporate governance information is disclosed to the shareholders through online facility. This investor relation program is also designed for promoting an interaction between the shareholders and other stakeholders and provides information in relation to business overview, share price information, corporate governance and other investor events (GrainCorp Limited: Corporate Governance Statement, 2016).
The company operations is associated with significant risks as u is involved in production and marketing of oil and petroleum products both the domestic and international level. The risk management framework of the company has disclosed effective policy and guidelines that is largely consistent with the International Standard on Risk Management. This has enabled the company to develop and implement a systematic approach for mitigation of risks and stating the roles of the management personnel in relation to risk control.
The people and remuneration committee is developed for stating eth policies and practices as per the company strategic goals and objectives. The committee ensures that fair and responsible remuneration is provided to the executives and the management people. The significant details relating to the remuneration structure of the key management personnel is provided in the remuneration report (GrainCorp Limited: Corporate Governance Statement, 2016).
Auditor’s responsibility is to provide the auditor opinion on the true and fair view of the financial statements. Before providing any judgment on the fairness of the financial statements it is important to know that is there any material misstatement in the financial statement as prepared by the company. The risk assessment process is carried out to check the integrity and reliability of the financial statements. The purpose to carry out the risk assessment process of any company before giving the audit opinion is to check whether client has provided the financial statements that are free from any material misstatement. The main purpose of the audit is to provide the audit opinion on the true and fair position of the financial statements. It is important to note here that risk assessment is the part of the audit process and it is essential to conduct this process each and every time when the audit has been taken up. The risk assessment process mainly consists of three main activities and these activities are need to undertaken every time the risk assessment has been carried out in any company. The three main activities that are to conduct the risk assessment process are enquires from the management, carrying out the analytical procedure and to conduct observations & inspection (Auditing and Assurance Standards Board, 2009).
The use of analytical procedures in the risk assessment process increases the efficiency of the auditor in carrying out the audit process. Auditor always performs the analytical process before conducting the audit process. Analytical procedures involve the evaluations of financial performance through applying various analytical tools. The performance is evaluated for both financial as well as non financial information so proper analyses can be made. So in short it can be said that risk assessment procedures has an objective of understanding an entity and its related environment that also includes the internal control. Inquiries from management persons include audit committee, internal auditor, accounts department, and lawyers. Observations and inspections are carried out for entity’s activities and operations, inspection of documents and records, study of monthly accounts and minutes of the board of directors, visit to factory and walkthrough test. All this procedure helps the auditors to understand the complete information about the entity and after reviewing the entire information, auditor can make auditor’s judgment on the true and fair view of financial statements (Putra, 2010).
Risk assessment information about the GrainCorp Limited is as follows:
|
Financial Data on Woolworth Group |
||||
|
Particulars |
2016 |
2017 |
||
|
Net profit |
$30.00 |
$125.00 |
||
|
Gross Profit |
$744.00 |
$898.00 |
||
|
Revenue |
$4,148.00 |
$4,564.00 |
||
|
Total Assets |
$3,576.00 |
$3,598.00 |
||
|
Long term Debts |
$783.00 |
$740.00 |
||
|
Shareholder’s Equity |
$1,742.00 |
$1,859.00 |
||
|
Current Assets |
$1,356.00 |
$1,519.00 |
||
|
Current Liabilities |
$868.00 |
$810.00 |
||
|
Income Statement Ratios |
Formula |
Interpretation |
||
|
Net Profit Ratio |
Net Profit/Revenue |
0.72% |
2.74% |
There is increase in profit that shows that risk of profitability will decrease. |
|
Gross Profit Ratio |
Gross Profit/ Revenue |
17.94% |
19.68% |
There is increase in profit that shows that risk of profitability will decrease. |
|
Return on Assets |
Net Profit/Assets |
0.84% |
3.47% |
There is increase in profit that shows that risk of profitability will decrease. |
|
Balance Sheet Ratios |
||||
|
Debt Equity Ratio |
Debt/Equity |
0.45 |
0.40 |
Capital Structure has been improved. |
|
Fixed Assets Turnover |
Revenue/Total Assets |
1.16 |
1.27 |
Efficiency has been reduced that shows lower utilization of resources |
|
Current Ratio |
Current Assets/Current Liabilities |
1.56 |
1.88 |
Liquidity risk has been reduced as current ratio is increased |
The company activities have been exposed to variety of financial risks that can impact the materialistic information presented to the auditors for review purpose. These are discussed as follows:
References
ASX Corporate Governance Council. 2014. [Online]. Available at: https://www.asx.com.au/documents/asx-compliance/cgc-principles-and-recommendations-3rd-edn.pdf [Accessed on: 1 May 2018].
Auditing and Assurance Standards Board. 2009. Auditing Standard ASA 520 Analytical Procedures. [Online]. Available at: https://www.auasb.gov.au/admin/file/content102/c3/ASA_520_27-10-09.pdf [Accessed on: 1 May 2018].
Bazley, M., Hancock, P. and Robinson, P. 2014. Contemporary Accounting PDF. Cengage Learning Australia.
Fleckner, A. and Hopt, K. 2013. Comparative Corporate Governance: A Functional and International Analysis. Cambridge University Press.
GrainCorp Limited. 2016. Corporate Governance Statement. [Online]. Available at: https://www.asx.com.au/asxpdf/20161116/pdf/43cxzxhrzbjhr2.pdf [Accessed on: 1 May 2018].
GrainCorp: Annual Report. 2017. [Online]. Available at: 20171121+GrainCorp+Annual+Report+FINAL+FOR+RELEASE.pdf [Accessed on: 1 May 2018].
Nordberg, D. 2010. Corporate Governance: Principles and Issues. SAGE.
Plessis, J., McConvill, J. and Bagaric, M. 2005. Principles of Contemporary Corporate Governance. Cambridge University Press.
Putra, L. 2010. The Use Of Analytical Procedures In Auditing. [Online]. Available at: https://accounting-financial-tax.com/2010/04/the-use-of-analytical-procedures-in-auditing/ [Accessed on: 1 May 2018].
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