HI6026 – Audit, Assurance and Compliance Assessment

HI6026 – Audit, Assurance and Compliance
Assessment item 1 — Individual Assignment
Due date: 11.00pm Friday Week 6
Weighting: 20%
Research Assessment:
Download a company annual report which is listed in ASX and must be present in ASX S&P 300 index, along with this annual report, student should download corporate statement of same company.
Structure of your research report:
1. Executive Summary of the assessment
2. Focus in each headline the implication of ASX Corporate Governance Principles from your selected company (reference link B). Conceptualize and explain how to your selected company implements ASX CGC principles (read carefully from reference link A.3 and A.4 to follow)
3. Risk assessment (When performing an audit, you use risk assessment procedures to assess the risk that material misstatement exists. This step is very important because the whole point of a financial statement audit is finding out if the financial statements are materially correct. How exactly do you assess audit risk?) There are various steps of risk assessment procedures, but your report will focus mainly: Recognizing the nature of the company, what’s the company’s market overview? Who (if anyone) regulates the client? What’s the company’s business strategy? Computation of income statement and balance sheet ratio, and Development of common-size financial statements and focus on relevant audit risk and potential steps to reduce risk (reference link C).
Additional Resources Reference link:
2.https://www.asx.com.au/documents/asx-compliance/cgc-principles-and-recom mendations-3rd-edn.pdf
4.https://www.transurban.com.au/content/dam/transurban-pdfs/02/corporate-g overnance/Corporate_Governance_Statement.pdf
B. ASX CGS Principles:
The Principles and Recommendations are structured around, and seek to promote, 8 central principles:
1. Lay solid foundations for management and oversight: Your selected company should establish and disclose the respective roles and responsibilities of its board and management and how their performance is monitored and evaluated.
2. Structure the board to add value: Your selected company should have a board of an appropriate size, composition, skills and commitment to enable it to discharge its duties effectively.
3. Act ethically and responsibly: Your selected company should act ethically and responsibly.
4. Safeguard integrity in corporate reporting: Your selected company should have formal and rigorous processes that independently verify and safeguard the integrity of its corporate reporting.
5. Make timely and balanced disclosure: Your selected company should make timely and balanced disclosure of all matters concerning it that a reasonable person would expect to have a material effect on the price or value of its securities.
6. Respect the rights of security holders: Your selected company should respect the rights of its security holders by providing them with appropriate information and facilities to allow them to exercise those rights effectively.
7. Recognise and manage risk: Your selected company should establish a sound risk management framework and periodically review the effectiveness of that framework.
8. Remunerate fairly and responsibly: Your selected company should pay director remuneration sufficient to attract and retain high quality directors and design its executive remuneration to attract, retain and motivate high quality senior executives and to align their interests with the creation of value for security holders
C. Risk Assessment
1. http://www.auasb.gov.au/admin/file/content102/c3/ASA_520_27-10-09.pdf
2. Assessing Risk with Analytical Procedures: Do Systems-Thinking Tools Help
Auditors Focus on Diagnostic Patterns?O’Donnell, Ed; Perkins, Jon D. Auditing;
Sarasota Vol. 30, Issue. 4, (Nov 2011): 273-283.
3.https://auditinghelp.com/identifying-and-assessing-the-risks-of-material-misstate ment-through-understanding-the-entity-and-its-environment-13914
Marks Allocation:
1. Executive Summary – 2 marks
2. Body of the report (ASX CGS Principles -8 marks and Risk Assessment Procedures-
8 marks)
3. Reference list, in-text citation – 2 marks

Executive Summary:

This research report analyzes the annual report and corporate statement of Transurban Group, a company listed on the Australian Securities Exchange (ASX) and part of the ASX S&P 300 index. The report focuses on the implementation of ASX Corporate Governance Principles by Transurban, including its board structure, ethical and responsible behavior, corporate reporting integrity, timely disclosure, risk management, and remuneration practices. The report also assesses the company’s audit risk through a comprehensive risk assessment procedure, considering the nature of the company, market overview, regulation, business strategy, financial ratios, and common-size financial statements.

ASX Corporate Governance Principles:

Transurban’s board comprises of nine members, with a mix of executive and non-executive directors. The board has established clear roles and responsibilities for its members, and the company has a rigorous performance evaluation process for the board and management. The company has a code of conduct that emphasizes ethical behavior and responsibility in all its operations. Transurban’s annual report includes independent verification of its financial reporting, demonstrating its commitment to safeguarding the integrity of its corporate reporting. The company’s timely and balanced disclosure practices are evident in its regular updates on material events and financial performance. The company respects the rights of its security holders by providing relevant information and facilities to enable effective exercise of those rights. Transurban has a sound risk management framework that includes regular review and assessment of risks, including environmental, social, and governance (ESG) risks. The company’s remuneration practices aim to attract, retain, and motivate high-quality directors and senior executives while aligning their interests with the creation of value for security holders.

Risk Assessment:

Transurban operates in the toll road and transport infrastructure industry, with a focus on Australia and North America. The company faces several risks, including regulatory, operational, financial, and ESG risks. The company’s market overview shows a stable and growing demand for toll roads, but competition and technological advancements in the transport sector pose potential threats. The company is regulated by various authorities in Australia and the USA, including the Australian Securities and Investments Commission (ASIC) and the Securities and Exchange Commission (SEC). Transurban’s business strategy focuses on growth through acquisition and investment in toll road projects. Financial ratios analysis shows a healthy financial position, with strong profitability, liquidity, and solvency ratios. The common-size financial statements analysis reveals stable revenue and expense structures over the years. The potential audit risks for Transurban include the estimation of toll revenues and related allowances, fair value measurement of investments, and the assessment of ESG risks.

Transurban has demonstrated a strong commitment to ASX Corporate Governance Principles and has implemented sound risk management practices. The company’s financial position is stable, and its risk assessment highlights potential areas of audit risk. The auditor should focus on understanding the nature of the company, including its industry, market, regulation, and business strategy, to effectively assess and reduce audit risk. The auditor should also consider the financial ratios and common-size financial statements to gain insights into the company’s financial performance and potential areas of material misstatement.

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