Elders Limited: Services, Governance, And Audit Risk

Overview of Elders Limited

Discuss about the Risk Management of Elders Limited.

The company Elders Limited is a public entity that holds the 266th rank of the top 2000 companies working in Australia. The company usually have conducted the basic business of wholesaling of the materialistic objects. The company has generated huge profits of $1,660,526,000 including the sales figure and all another basis of revenue. There were about 1977 employees working hard for the accomplishment of the goals and objectives of the Elders Limited Company. There have been many directors, executive of assigned who been assigned to their field of work.

The elder limited had various services and products that it provides the customers. They divide them by making seven major decisions. Farm decisions help the company to decide the range of the agricultural products like the seeds, fertilizers, pesticides and the animal healthcare products. Livestock’s data can be analyzed to find the amount of the food grains required and also it will help to find the real value of the cattle’s for the services of import and export (Elder, 2017). Wool also tends to affect information like the market concepts managerial reports. The business of selling grain should only be taken into account if there are successful marketing strategies (Needles Powers, 2010). Real estate business requires a proper property management and leasing services. Financial services like providing the loans, evaluating livestock and financial planning process are also being offered by the firm (Merchant, 2012).

The elder limited had various services and products that it provides the customers. They divide them by making seven major decisions. Farm decisions help the company to decide the range of the agricultural products which may be used by the firm (Elder, 2017). There have been many laws and corporate governance closing company’s management. The main principles required for the deals:

1. Assessment of oversight management and performance.

The company’s composition of the employees must be reviewed on an annual basis that their expertise and knowledge in the particular file can be checked. In the company Elders limited, the company structure has been divided into many different levels, like the director will have three years of tenure and can stand for re-election after the completion of that period. The directors need to learn new and innovative things every day and time. Directors are needed to be defined on the basis of the industry, technicality and legislative issues impacting the group. The directors are bound to have one meeting in a year where the conjunction with one of the Elders operations. The nonexecutive officers are also bound to do the work and then check that their work is complete or not.

1. Structuring of board toad value

Services Offered by Elders Limited

The company has two different bodies of the committee in the place of the board of directors and the committee. The main target goal set by the company and the committee is to help the board of directors in carrying out their job in an easier manner so that the shareholders can be made happy. The board also looks after the nominations and the recruitment of the people with the right amount of balance and skill. The independence of the nonexecutive officers can also be checked. The board evaluate the position of the committee members and thus try to fix the vulnerabilities by identifying them. The board also uses the good qualities of the directors so that the opportunities of the future are not regarded by the firm in future.

1. Acting ethically and responsibly

The board has a code of conduct which states that the details and the standards which have been accepted by the Elders limited and its employees of the proper time to time practice of work and the behavior responsibilities expected of them. The employees mean all the people including the directors, employees, agents, contractors, and consultants who are in no difference in relation to the seniority of the group. This code was established to ensure that the elder limited firm will touch high ends of success in the future. The employees are needed to act in accordance with the present situation and also in accordance to their colleagues. The business should also remain clean and all the important safety and precautions must be taken into account. The board is also needed to report the issues which are related to the improper management of the account and the irresponsible and ineffective investigation. Also, the policy that relates to the fraudulent activities is unacceptable and encourages the reporting of the whistleblower policy.

1. Protecting the honesty of the financial reporting

The company is entitling to approach in a transparent manner for the reporting and auditing of the performance. The board has also prepared a risk committee for these kinds of purposes. It is also needed by the firm to educate its directors about the necessary skills to enhance the working of the firm and the quality of the account which further helps the stakeholders to make decisions in accordance to the firms working progress. Also, the approval of the board is required while [passing the financial statements of the firm. The board needs to attain a declaration from any of the CFO or CEO about their vision regarding the matter. Thus maintained and equipped financial records are kept which can further be used for the purpose of generating the true and fair view of the company’s official financial performance and position.

Corporate Governance of Elders Limited

 

1. Make a balanced and timely disclosure

The company has also decided to have taken into force various practices and policies that can help with the disclosure of the significant matters which are directly associated with the honesty, punctuality, and balance that can ensure the perfect and value-based materialistic information for the assessment of the company’s governance, performance, ownership and position (Leo, 2012), 200eo, 200eo, 200eo, 200eo, 200. Also, the firm needs to make a cautious and integrated approach towards the theme of the disclosure policy programme and is reflected in the official website of the firm wherein the stakeholders can use the same for the attainment of the relevant tasks and decision making. Also, timely disclosure will help the investors to have a better view of the firm’s financial statements. The financial information will help the investors to know where they should invest and where they should keep calm. And thus make the dealing profitable for both them and the firm (Laux, 2014). Timely disclosure is also necessary for the attainment of the self-trust and the public trust which will help the company to gain the expertise of good deed in the near future.

1. Respecting shareholders’ rights

The company board has been attentive towards its rule and so the interacting plan of the company has been working well with the shareholders of the company. The External Disclosure and Market Communications Policy are c0nstyructed in such a way that it will share all the financial and market related sensitive information with its shareholders and also with the new one so as to help them in taking their decisions wisely.  (Elder, 2017) The function of the policy includes the fact that the board is attentive towards its work and is doing it wisely. Elders communicate with its shareholders and the investment markets through a number of channels, including the ASX announcements platform and its website. The advantages of the provided website to the shareholder are as follows:

• Explanations on Elders’ developments and events.
• Historical market announcements.
• Information released to the ASX in the form of an announcement.
• Annual reports and explanations of half and full year results for a limited number of years.
• It also provides the interested one to gather information about the ASX and other media announcements.

1. Manage and recognize the risk

For the Elders increment in the performance and to achieve all its aims, the board is very attentive in analyzing the company’s policy and the entire framework annually. Because of such attentiveness, it is seen that the company is well protected in case of financial losses and all the loopholes in the business defect with instantaneous action on it by the Board (Gay & Simnet, 2015). It is the Board’s responsibility to see that the all the threats are well captured by the company which will develop the reports which are in accordance with the risk management, resilience planning, crisis management and an impartial utilization of the important internal control systems Elder, et. al, 20101).

1. Remunerate responsibly and fairly

Audit Risk and Compliance

The main purpose of A People and Remuneration Committee is to make a diversified and yet brilliant plan for the payments made by the company which will have a positive impact on the same and also on its shareholders. The company is serious in making payments to its customers and so the company wants that this policy should be paid utter attention to as it will enhance the both the company’s performance and performance of its shareholders.

Corporate governance plays a key role in detecting and reporting all the major loopholes and threats to the Board of the company like crisis management, risk management. It is known that the employees of the Elders are to maintain and the responsibility of the elimination of all the threats is on them. The Audit Risk and the Compliance Committee have the duty to see that all the internal function are up to the mark and are in accordance with the World Health and Safety Committee which will ensure that no WHS risks arise  (Elder, 2017).

The company Elders Ltd comprises of various dealings in seeds, fertilizers, pesticides and the animal healthcare products. In altogether, it has a huge enterprise and operates the business on a grand scale (Carmichael and Graham, 2012). Moreover, the group functions in a market that is prone to various kind of risks that is financial, operational, strategic and risks related to compliance. Therefore, the group has a strong risk management system framework that stresses upon material risks (Benabou & Tirolee, 2008).

Further, Elder Ltd is governed and managed by the country’s applicable laws, the agreement of contractual nature and the regulations that prevail. In altogether the group as a whole is bound by legislative changes and any breach of norms shall deplete the reputation and image of the group (Elder, 2017).

Audit risk can be accessed through the following methods :

1. Enquiring from the management and the personnel hired within the organization.
2. Use of audit procedures and analytical procedures.

GP ratio =GP/ net sales *100	19.71067	19.14446	19.54937	18.25397	20.52566
Net profit = net profit. Net ales *100	-30.44	0.210379	2.518224	3.174603	7.259074

iii.    Observations and inspection.

In the first method, the auditor can make inquiries from the management, internal auditors, lawyers, accounts section and audit committee of the organization regarding the accounting policies and methods used, risks of misstatement involved, the risk mitigation factors, application and effectiveness of risk reduction methods, etc (Merchant, 2012).

In the second method, the auditor uses his audit procedures outlined in audit program to understand the risk attached to the business. Some risks may be inherent in nature while other risks may be arising due to business operations. There are various analytical ratios that provide a sound explanation regarding the company (Needles and Tirolee, 2008).

Risk Management in Elders Limited

In case of observations and inspection, the auditor observes the activities of the organization, does an inspection of the records and account books maintained, studies the reports prepared by the management, takes sample testing in the client workplace, etc.

ASA-570 is concerned with the use of analytical procedure by the auditors. The standards provide a proper explanation of the use of analytical mechanism by the auditor. Opinion can be framed with the help of this procedure and an overall judgment can be provided for the financial statements (Francis et.a l, 2013). Further, the auditors can investigate the fluctuation and differences from the values that are expected.

Current ratio = Current assets/ current liabilities	0.914573	1.011211	1.087527	1.130785	1.078505
Quick ratio = Quick assets /CL	0.658291	0.7287	0.868709	0.909457	0.871028

 

Conclusion

Potential steps to reduce or mitigate risk can be hiring and appointing of independent statutory and internal auditors, Hiring of experts in case of valuation, merger or starting of new ventures etc, Implementation of High end digital technology and use of digital media to store and recover data in case of any data loss, hiring fund managers and experienced accountants for regular MIS and reporting from time to time. The auditor of Elders Ltd should carefully audit the financial transactions and its implications. He should not believe in any assertions but he should himself acquire the underlying documentation of each transaction. There is also a risk to fulfill environmental and social responsibility so the auditor should try to fulfill the statutory responsibilities.

References

Benabou, R. and Tirole, R. (2010) Individual and Corporate Social responsibility. Ecnomica. [online]. 11, pp. 1-19. Available from: https://doi.org/10.1111/j.1468-0335.2009.00843.x [Accessed 28 April 2018]

Elder Ltd. (2017) Elder  annual report and accounts 2017 [online]. Available from: https://www.blackmores.com.au/about-us/investor-centre/annual-and-half-year-reports [Accessed 27 April 2018]

Carmichael, D.R. and Graham, L. 2012. Accountants Handbook. Financial Accounting and General Topics, John Wiley & Sons.

Elder, J. R, Beasley S. M. and Arens A. A. (2010) Auditing and Assurance Services. Person Education, New Jersey: USA

Francis, R. N., Harrast, S., Mattingly, J. and Olsen, L. (2013) The relation between accounting conservatism and corporate social performance: An empirical investigation. Business and Society Review. [online]. 118 (2), p. 193 – 222. Available from: doi: 10.1111/basr.12008 [Accessed 26 April 2018]

Gay, G. and Simnet, R. (2015)  Auditing and Assurance Services. McGraw Hill

Laux, B. (2014) Discussion of The role of revenue recognition in performance reporting.  Accounting and Business Research. [online]. 44(4),  380-382. Available from: https://doi.org/10.1080/00014788.2014.897867

Leo, K. J. (2011). Company Accounting. Boston:McGraw Hill

Peirson, G, Brown, R., Easton, S,   Howard, P. and Pinder, S. (2015) Business Finance, 12th ed. North Ryde: McGraw-Hill Australia.

Lapsley, I. (2012) Commentary: Financial Accountability & Management. Qualitative Research in Accounting & Management. [online]. 9(3), pp. 291-292. Available from https://doi.org/10.1111/1468-0408.00081

Bauer, R. and Hann, D. (2010) Corporate environmental management and credit risk. Maastricht University.

Benabou, R. and Tirole, R. (2010) Individual and Corporate Social responsibility. Ecnomica. [online]. 11, pp. 1-19. Available from: https://doi.org/10.1111/j.1468-0335.2009.00843.x [Accessed 26 April 2018]

Elder. (2017) Elder annual report and accounts 2017 [online]. Available from: https://investors.elderslimited.com/FormBuilder/_Resource/_module/hmGBziN_d0SZypG-M7oDFg/docs/Annual-Reports/Elders_2016_17_Annual_Report_Digital_1511.pdf [Accessed 27 April 2018]

Carmichael, D.R. and Graham, L. 2012. Accountants Handbook. Financial Accounting and General Topics, John Wiley & Sons.

Elder, J. R, Beasley S. M. and Arens A. A. (2010) Auditing and Assurance Services. Person Education, New Jersey: USA

Francis, R. N., Harrast, S., Mattingly, J. and Olsen, L. (2013) The relation between accounting conservatism and corporate social performance: An empirical investigation. Business and Society Review. [online]. 118 (2), p. 193 – 222. Available from: doi: 10.1111/basr.12008 [Accessed 26 April 2018]

Gay, G. and Simnet, R. (2015)  Auditing and Assurance Services. McGraw Hill

Laux, B. (2014) Discussion of The role of revenue recognition in performance reporting.  Accounting and Business Research. [online]. 44(4),  380-382. Available from: https://doi.org/10.1080/00014788.2014.897867

Leo, K. J. (2011). Company Accounting. Boston:McGraw Hill

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Merchant, K. A. (2012) Making Management Accounting Research More Useful. Pacific Accounting  Review. [online]. 24(3), 1-34. Available from: https://pdfs.semanticscholar.org/6ccf/f78a452763f17ed5e4f4ddc6b96703801403.pdf Needles, B.E. &  Powers, M. (2013) Principles of Financial Accounting. Financial Accounting Series: Cengage Learning.