Auditing is one of the most vital tasks for the companies. It supports in measuring the mistakes in the financial reports of the companies. The auditing tasks help the companies in measuring the efficiency of the internal financial controls. Besides this, it supports in measuring the internal and external audit functions. Therefore, auditing helps in protecting the integrity of the financial reports and thus contribute to improving the trust of the customers. The key reason of the auditing is to support the management of the companies in verifying the integrity of the company as well as its financial reports. Apart from this, the auditors are accountable for assessing the incorporated Report of the company (Britton & Waterston, 2013). The inspecting of the financial report is the main responsibility of the auditing team. The reason behind this is that the financial report shows the current situation or current financial position of a company. For this report, the Australian retailer Coles supermarket has been taken as a company. Many users of the financial report, who regularly follow the financial report such as the investors, and shareholders, use this report to evaluate the investment option within the company (Helbæk, Lindset & McLellan, 2010). It takes any important investment decision after they satisfied that the company is doing well and in future, the company can deliver significant profit to them. It helps them to make a confident investment decision.
The Coles group limited is a retail company in Australia, and the organization has built its reputation in the market. In Australia, the retail business is developing, and the competition in this industry has increased. The retail companies in the market are trying to increase their market share and profitability. Many big organizations are carrying out their businesses in this particular industry that has led to the competitive environment. The competition in the market is increasing in the global market (Alexander, Nobes & Ullathorne, 2016). Thus, it has become very much important for the organizations to adopt new and innovative strategies and techniques that can enhance their productivity and efficiency. The financial statements provide significant information to the stakeholders which help to make investment decisions. There are many companies in the retail industry who are facing stiff competition and taking steps to increase their profitability. The risk for the companies are increasing, and they have to focus on providing the fair and true value of the financial statements. The risk of misstatement can occur while in the preparation of the financial report of the company (Appannaiah, Reddy & Putty, 2010). The stakeholders are the one who contributes their efforts in order to develop the company in the market. It is important for the accountants and auditors to provide the fair value of the company’s position. The Coles Supermarket has maintained its position and focused on providing a fair representation of the financial statements. The auditors play a significant role in the representation of the financial statements in front of the stakeholders. The management plays a significant role in managing all the operations of the company as well as assisting auditors in their audit process. The audit risk can be there if there is errors or omissions in the financial statements and it is not identified.
The income statement shows income and expense; balance sheet shows assets and liabilities and cash flow statement shows inflow and outflow of cash. The misstatement in the current assets leads to the increase or decrease in the asset value. The misstatement in the current liabilities can lead to the increase or decrease in the liabilities of the company (Beechy & Conrod, 2008). The accounting rules and regulation should be followed by the accountants and auditors. The assessment of risks and management of risk is very much important for the auditors. The corporate governance provides guidelines that need to be followed by the management team of the company. The value of the company can increase or decrease with the increase or decrease in the value. The auditors have the responsibility present the fair value of the company. The adequacy and effectiveness of the company can be reviewed by the management team. The process of the work can be improved with the internal control procedures. The fraud and errors need to be determined in order to provide a fair representation of the financial statements of the company (Besley, 2016). There should be specific rules and regulations for the preparation of the financial statements.
The review of the policies can be made by showing the appropriate structure can be made by showing the enhancement of the work. The effectiveness and the adequacy must be appropriately reviewed by showing the enhancement of the work and also the structure of the administrative operations, and the accounting structures can be easily considered (Parrino, 2015). The effectiveness can be appropriately conducted by showing the improvement of the structure which is being constructed by showing the management of the work and also the governance statement can be recognized by showing the management of the material statements of the business risks.
In the case of compliance, the effectiveness can be easily achieved by monitoring the activities regarding the regulations of the Coles supermarket. The essential management of the activities can be made by depicting the enhancement in the process of executing the activities and also the strengthening of the situation with the effectiveness can be easily determined (Welch, 2014). The policies also play a crucial role for showing the current practices that are crucial in nature. Therefore, the structure of the activities conducted by the Coles supermarket is depicted to be consisting of the measurement which is compliance in nature and also the essentiality on the regulations can be made by showing the laws and the standards of accounting (Powers and Needles, 2012). The monitoring of the activities is also identified to be the reason for the creation of impact on the organization and also the vital changes are requisite by implementing the accounting standards, laws and the regulations. The essentiality can be easily determined by showing the purpose of monitoring the impacts and also it can be easily made by showing the appropriate structure of the work.
After showing the review of the financial reports of the company, the company must collect the financial report on the half yearly and the one yearly basis which will enable the organization to have an appropriate presentation of the situation to its stakeholders. The improvement of the appropriate recommendations can be easily made by showing the appropriate structure of the work by showing the appropriate estimations that are enabled by providing the proper execution of the justifications by showing the evaluations and the judgments. The improvement or the changes can be easily made by the help of identifying the issues of the management and also the enhancement in the workplace can be made by showing the appropriate conduction of the work (Rahman, 2015). The structure is being provided by showing the reliability, and the enhancement of the structure of the activities will enable to gather a competitive environment which is appropriately structured by showing the consideration of the change for the activities as pursued by the organization. The structure of the work is being shown by demonstrating the structure of the work which is being shown by showing the enhancement of the work (Spiceland, 2010). This will also establish an appropriate environment for the work and also the reformation of the strategies, and the policies can be made for the organization.
|
Profitability |
2015-12 |
2016-12 |
|
Net Margin % |
17.61 |
17.63 |
|
Asset Turnover (Average) |
0.09 |
0.09 |
|
Return on Assets % |
1.5 |
1.56 |
|
Financial Leverage (Average) |
2.09 |
2.23 |
|
Return on Equity % |
2.86 |
3.36 |
|
Return on Invested Capital % |
1.61 |
1.67 |
|
Liquidity/Financial Health |
2015-12 |
2016-12 |
|
Current Ratio |
1.93 |
0.94 |
|
Quick Ratio |
1.67 |
0.78 |
|
Financial Leverage |
2.09 |
2.23 |
|
Debt/Equity |
0.94 |
1.08 |
The net profit margin of the company has increased slightly and the asset turnover is equal. The return on equity has increased which shows increase in the returns. The current ratio has decreased from 1.93 to 0.94 in the year 2015 and 2016. The ratio shows decrease the performance of the company. The current ratio shows the ability to pay the obligations and the quick ratio has also decreased. The inherent risk of the company has increased which shows increase in the risk. The debt to equity ratio has also increased which increase in the debts. The inherent risk is associated with the company.
Conclusion
Auditing is an important task for the organization as it provides important information about the condition of the company and effective auditing also recognizes the prospect of the company in their present business. It helps in recognizing the strength and weakness of the company. Hence, in devising effective strategies for the company the auditing is important. It supports in vital management decisions that support the business growth and the development of the business organization. Coles supermarket is one of the leading Australian retailers, which have a significant global presence. With the efficient management, decision supports the improvement of the business operation that helps in the growth and development of the company. It helps in increasing the trust and reputation of the company so that the investors and shareholders are attracted to invest in the company’s key project that helps in the growth and development of the company (Weil, 2017). The company has faced substantial issue because of erroneous external auditing, which forces the management to revise the auditing procedures of the organization.
References
Alexander, D., Nobes, C., & Ullathorne, A. (2016). Financial accounting. Harlow, England: Pearson.
Appannaiah, H., Reddy, P., & Putty, R. (2010). Financial accounting. Mumbai [India]: Himalaya Pub. House.
Beechy, T., & Conrod, J. (2008). Intermediate accounting. Toronto: McGraw-Hill Ryerson.
Besley, S. (2016). Corporate finance. [Place of publication not identified]: Cengage Learning.
Britton, A., & Waterston, C. (2013). Financial accounting. Harlow: Financial Times Prentice Hall.
Helbæk, M., Lindset, S., & McLellan, B. (2010). Corporate finance. Maidenhead, Berkshire: Open University Press/McGraw-Hill Education.
Parrino, R. (2015). Corporate Finance. Singapore: John Wiley & Sons.
Powers, M., & Needles, B. (2012). Financial accounting. [Mason]: South-Western, Cengage Learning.
Rahman, N. (2015). Corporate Finance. North Ryde: McGraw-Hill Australia.
Spiceland, J. (2010). Intermediate accounting. Toronto, ON: McGraw-Hill Ryerson.
Weil, R. (2017). Financial accounting. [Place of publication not identified]: Cengage Learning.
Welch, I. (2014). Corporate finance. Los Angeles: Ivo Welch.
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