Audit Assurance and Compliance

This report discusses the implementation of ASX CGC principles for Woolworths Group, including risk assessment and potential steps to reduce risk. It also evaluates the income statement and balance sheet ratio for the last two years. The report highlights the inherent risks in online business and retail, financial risks, and compliance issues. The report also discusses the initiatives taken by the group to mitigate these risks.

Running head: AUDITING & ASSURANCE SERVICES
Audit Assurance and Compliance
Name of Student:
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Author’s Note:

1AUDITING & ASSURANCE SERVICES
Executive Summary
The discussions of the report aim to address the impacts of “ASX Corporate Governance
Principles for Woolworths Group”. The relevant scope of discussion has considered the audit
risk and various types of potential initiatives which can be applied to reduce such risks. The final
section of the study has calculated the balance sheet ratios and evaluated income statement for
the last two years. The findings on Implementation of ASX CGC principles is seen with the
compliance of with “ASX Corporate Governance Council’s Corporate Governance Principles
and Recommendations (ASX Principles)”. The full board committees supporting the exercising
responsibilities and recommendation are depicted with the “nomination committee, Audit, Risk
Management and Compliance Committee (ARMCC), People Performance Committee and
sustainability committee”. The various areas of risk assessment are inherent in the areas of online
business and retail including “food, liquor, petrol, general merchandise” as well as
“accommodation, bar, dining and gambling operations”. The failure to successfully responding
to these factors and competitors have adversely affected the performance and market share of the
business. Financial risks are further seen with lack of availability of the funds and management
of capital required for the groups operation and growth. It needs to be discerned that the failure
of the company to turn around the general merchandise in the previous year may negatively
impact the profit of the business. The evictions based on "income statement and balance sheet
ratio" have revealed that in terms of revenues and profit the company has been depicted with the
positive trend. However, there has been a shortage of liquid assets in the recent times. The risk
mitigation strategies are identified with “Digital, Loyalty and Data businesses into WooliesX”
which is focused on customer strategy. The initiatives of risk mitigation in terms of financial
perspectives is considered with prior approval from treasury policies required for managing the
financial risks related to the group. The important nature of the initiatives taken for various types
of risk mitigation is recognized with “group’s financial risks, including liquidity, interest rate and
foreign currency risks”.

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Table of Contents
Introduction......................................................................................................................................3
Implementation of ASX CGC principles.........................................................................................3
Risk Assessment..............................................................................................................................5
Computation of income statement and balance sheet ratio, and Development of common-size
financial statements.........................................................................................................................6
Potential steps to reduce risk.........................................................................................................14
Conclusion.....................................................................................................................................15
References......................................................................................................................................17

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Introduction
“Woolworths Group” is recognized as one of the leading Australian data manufacturer
with its operations in both New Zealand and Australia. The company is known for being the
second largest in terms of its revenue ranking next to “Perth-based retail-focused conglomerate
Wesfarmers”. The group is further identified for being the largest retail player in terms of “liquor
retailer, hotel and gaming poker machine operator in Australia”. “Woolworths Group” is often
recognized as 19th largest retailer globally. The most prioritized strategy is considered with
focusing on a diverse customer base, along with “store led culture and team”. The main priorities
of the company include generation of sustainable sales in food, enhancing the drinks business for
providing greater convenience, value to the customers along with empowering the overall
“portfolio of the business to pursue strategies for delivering shareholder value”. It needs to be
further discerned that the objective of the company is considered with becoming a leading
retailer by adopting “systems excellence and end to end process approach”
(Woolworthsgroup.com.au. 2018).
The important discussions of the study aim to address the impacts of “ASX Corporate
Governance Principles for Woolworths Group”. The relevant scope of discussion has considered
the audit risk and various types of potential initiatives which can be applied to reduce such risks.
The last part of the study has calculated the balance sheet ratios and evaluated income statement
for the last two years.
Implementation of ASX CGC principles
“Woolworths Group” has prioritized corporate governance with prime importance which
has significantly contributed to create value to long-term shareholders. The group for the strives
to “act ethically and responsibly at all times”. The main functions of “Woolworths Group” CG is
seen to be in compliance with “ASX Corporate Governance Council’s Corporate Governance
Principles and Recommendations (ASX Principles)”. The duty of the board is observed in terms
of presenting and acting in terms of the interest of the shareholders. The company is further seen
to be responsible and accountable for formal “delegation of authority to the CEO”. Some of the
other responsibilities of the board has been recognized with “financial oversight, effectiveness of

4AUDITING & ASSURANCE SERVICES
risk management framework, financial reporting, performance evaluation, performing regulatory
function, social responsibility, material transactions and corporate governance”. The overall
review of the performance of the board is considered with several external factors
(Woolworthsgroup.com.au. 2018).
As discussed by the chairman the feedback is received by the individual directors of the
company. It is further discerned that individual senior executives and the CEO has maintained a
written contract with the group. This contract has presented the “terms and conditions of his/her
appointment inclusive of the remuneration entitlements and performance requirements”. The
significance of the relationship between management performance and remuneration assessment
is clearly depicted with companies approach of performance management. The depictions made
from the “reporting period of 2017”, it needs to be understood that “the Board reviews the
performance and approves the remuneration for the CEO and Group Executive Committee
members” and “people performance committee reviews”. In addition to this, the performance of
the group executives along with the CEO is also reported in the remuneration entitlements. It
needs to be understood that the directors are not involved in any decision taking which may
imply “conflict of interest or material personal interest”. In such cases, the incidences of conflict
of interest is immediately informed the company. The board, do that along with the individual
directors are free to exercise their powers and responsibility on the matters which are solely
reserved to the board. In addition to this, the committee charters on the board are reviewed
thoroughly during the reporting period and such charters are also included in the website of the
company (Woolworthsgroup.com.au. 2018).
As for the relevant information the company secretaries are seen to be directly
accountable to the board via chairman on all matters concerning proper functioning. The full
board committees supporting the exercising responsibilities and recommendation are depicted
with the “nomination committee, Audit, Risk Management and Compliance Committee
(ARMCC), People Performance Committee and sustainability committee”. In addition to this,
the directors are seen to receive a letter of appointment which has been able to set the company’s
expectation, duties along with several terms and conditions for appointment. It is understood that
the direct induction program has included site visits, meetings with the CEO, companies edited

5AUDITING & ASSURANCE SERVICES
and senior management on matters of board practices and procedures (Woolworthsgroup.com.au.
2018).
Risk Assessment
“Woolworths Group” is identified as an intricate business entity which is susceptible to
several risks such as “strategic, financial, operational and compliance”. The risk dimensions are
seen to be inherent in the online business and retail including “food, liquor, petrol, general
merchandise” as well as “accommodation, bar, dining and gambling operations”. The different
types of enterprise risk management framework of the group and corporate governance structure
has provided adequate support for handling the risks in conducting business. The various
dimensions of the risk management framework have included the standards which are following
“ASX Corporate Governance Principles and Recommendations and the Australian/New Zealand
standard AS/NZS ISO 31000:2009 Risk management – principles and guidelines”. It has been
further discerned that the risk management policy has been able to reflect on the overall
philosophy of groups approach towards risk management and setting out important roles and
responsibility in “identifying, monitoring and reporting” of the risk areas affecting the
operational plan and strategic objectives (Woolworthsgroup.com.au. 2018).
“Woolworths Group” assistance for the risk management and opportunities for the
overall risk management framework is conducted by ARMCC during the reporting period. Some
of the main material business risks include “economic, environmental and social sustainability
risks”. In addition to this, the redecorating environment and the strategic risks is seen to be
competition driven with the technology disruption, changing customer expectation, new entrants
along with several types of other Internet on external risk factors. The failure to successfully
respond to these factors and competitors have adversely affected the performance and market
share of the business. Financial risks are further seen with lack of availability of the funds and
management of capital required for the groups operation and growth (Ya-Mei, G.U.A.N. and
Xiang 2017). It needs to be discerned that the failure of the company to turn around the general
merchandise in the previous year may negatively impact the profit of the business. Based on the
policy of the group various types of operational events are exposed to the risk factors such as
“product safety standards, information technology, security asset, data breaches and business

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disruptions” caused by cyber-attacks. The different types of operational risks are further
evaluated inefficiency in meeting the “product safety standards, security asset, business
disruption and unforeseen weather conditions”. Additionally, the different types of industrial
disputes caused by interruptions in the supply chain may also need to several failures of
distribution process. The most noted compliance issues are taken into account with “applicable
laws, regulations and contractual arrangements” which are largely exposed regulatory or
legislative changes”. In case of breach or any instance of changes in the contract may lead to
adverse result on groups reputation and profitability including various types of other penalties
(Woolworthsgroup.com.au. 2018).
Computation of income statement and balance sheet ratio, and Development of common-
size financial statements
The predictions of the income statement have shown that both profit and revenue of the
company have significantly improved in 2017 compared to the previous year. This is noted with
a total revenue of “55475 in 2017 and 53473 in 2016”. Moreover, the significant improvement in
profit has been evident with “$ 726.3 in 2016 to $ 1422.1 in 2017”.
Comparison of Consolidated Income Statements
Particulars
Woolworths
Group 2017
Woolworths
Group 2016
Percentage
of the total
income
Revenues 55475 53473 104%
Profit for the
Period 1422.1 726.3 196%
Comparison of Statement of Financial Position
Particulars
Newcrest
Mining
2017
Newcrest
Mining
2016
Percentage
of the total
income
Total Assets 22915.8 23502.2 98%
Capital
Expenditure 1840.5 1797.5 102%

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Percentage of the total income
0%
50%
100%
150%
200%
250%
104%
196%
Comparison of Income Statements
Revenues Profit for the Period
Percentage of the total income
95%
96%
97%
98%
99%
100%
101%
102%
103%
98%
102%
Comparison of Statement of Financial
Position
Total Assets Capital Expenditure

8AUDITING & ASSURANCE SERVICES
The predictions on “profitability analysis ratio” has been able to state that the overall net
profit margin has bumped up from “1.36% in 2016 to 2.56% in 2017”. Additionally, “return on
equity” has significantly improved from 58.8% in 2016 to 92.74% in 2017. Some of the various
types of other positive indications in the report is seen with increasing “return on assets” which is
evident with “ROA of 3.09 in 2016 and 6.21 in 2017”.
Profitability Ratio Analysis: -
Woolworths Group
Particulars 2017 2016
Revenue (A) 55475 53473
Net Profit/Loss after Tax (D) 1422.1 726.3
Ordinary Equity(H) 1533.5 -1234.8
Total Assets (G) 22915.8 23502.2
Net Profit Margin (D/A) 2.56% 1.36%
Return on Equity (A/H)) 92.74% -58.82%
Return on Assets (G/D) 6.21% 3.09%
2017 2016
-80.00%
-60.00%
-40.00%
-20.00%
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00% 92.74%
-58.82%
Return on Equity
Woolworths Group

9AUDITING & ASSURANCE SERVICES
2017 2016
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
2.56%
1.36%
Net Profit Margin
Woolworths Group
Some of the significant assessments on “efficiency ratio analysis” have implied that the
stock clearance has significantly increased compared to the previous year which is evident with
“inventory turnover ratio of 9.74”. In addition to this, the total asset ratio has also improved from
“2.28 in 2016 to 2.4 in 2017”.
Efficiency Ratios Analysis
Woolworths Group
Particulars 2017 2016

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Cost of Goods
Sold(A) 39739.7 38538.6
Inventory (H) 4080.4 4558.5
Revenue (A) 55475 53473
Total Assets
(G) 22915.8 23502.2
Inventory
Turnover
Ratio (A/H)) 9.74 8.45
Total Asset
Turnover
Ratio (A/G) 2.42 2.28
2017 2016
2.20
2.25
2.30
2.35
2.40
2.45 2.42
2.28
Total Asset Turnover Ratio
Woolworths Group

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2017 2016
7.50
8.00
8.50
9.00
9.50
10.00 9.74
8.45
Inventory Turnover Ratio
Woolworths Group
The various types of evaluation on short-term liquidity has been performed with the
depiction off quick ratio and current ratio. Based on the significant evaluation the current ratio
has dropped from “0.83 2016 to 0.79 in 2017”. This decreasing trend of short-term liquidity
indicator has implied that Woolworths Group has been not able to maintain a sufficient amount
of liquid cash for supervising day to day business transactions.
Short-Term Liquidity Ratio Analysis: -
Woolworths Group
2017 2016
Total Current Assets (A) 6994.2 7427
Receivables (D) 744.7 763.9
Cash and equivalents (B) 909.4 948.1
Total Current Liabilities (F) 8824.2 8992.7
Current Ratio (A/F) 0.79 0.83
Quick Ratio [(B+D)/F) 0.19 0.19

12AUDITING & ASSURANCE SERVICES
2017 2016
0.77
0.78
0.79
0.80
0.81
0.82
0.83
0.79
0.83
Current Ratio
Woolworths Group
2017 2016
0.19
0.19
0.20
0.19
0.19
Quick Ratio
Woolworths Group
The various types of discussions on debt ratio evaluation have implied that Woolworth
Group has been successful in minimizing the overall “debt obligation from 2016 to 2017”. That
trend is seen with “debt equity ratio of 8.57 in 2017” and -11.92 in 2016. Furthermore, “debt to
total assets ratio” have shown significant improvement from “0.63 in 2016 to 0.57 in 2017”.

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Debt Equity Ratio
Woolworths Group
2017 2016
Total Liabilities (A) 13039.7 14720.3
Total Assets (B) 22915.8 23502.2
Total Equity (C ) 1533.5 -1234.8
Debt-to-total Assets Ratio (A/B) 0.57 0.63
Debt to Equity Ratio (A/C) 8.50 -11.92
2017 2016
0.54
0.55
0.56
0.57
0.58
0.59
0.60
0.61
0.62
0.63
0.64
0.57
0.63
Debt-to-total Assets Ratio
Woolworths Group

14AUDITING & ASSURANCE SERVICES
2017 2016
-15.00
-10.00
-5.00
0.00
5.00
10.00 8.50
-11.92
Debt Equity Ratio
Woolworths Group
Potential steps to reduce risk
“Woolworths Group” is seen to take various types of approvals from board in order to
ensure customer first culture and investment growth enablers in order to mitigate the various
types of strategic risks. The investment growth enablers have been depicted with store “network,
digital channels and other technologies”. “Woolworths Group” is further strived to establish the
greatest types of delivery offices which has promoted the transformation initiatives. As per the
present strategies the company has combined the “Digital, Loyalty and Data businesses into
WooliesX” and focused on linking it with the customer strategy (YANG 2017). In addition to
this, the various forms of “short-term and long-term incentive plans” are designed to be aligned
with the initial strategy taken by the customer. The “corporate social responsibility” strategy is
recognized with the aim of improving sustainability and bringing about environmental reforms of
the business operations (Crowley, M., 2016).
The initiatives of risk mitigation in terms of financial perspectives is taken into account
with prior approval from treasury policies required for managing the financial risks related to the

15AUDITING & ASSURANCE SERVICES
group. The important nature of the initiatives taken for various types of risk mitigation is
recognized with “group’s financial risks, including liquidity, interest rate and foreign currency
risks”. Woolworth is for the depicted with a turnaround plan which is approved by the board and
applicable to the general merchandise which are monitored on a regular basis for anticipating
sale of petrol, which would further enhance the capital position (Griffiths 2016).
The company had established established “policies, training, standards and business
operation along with safety of health and wellbeing, food and product safety” being the most
noted standards”. The important nature of the investments is seen in operational capability across
“cyber security, processes and technology”. It needs to be noted that the company has taken
several measures for improving the “Business Resilience Framework” which is required for
managing the operational incidents and preventing business disruptions. Some of the main
policies of the group has included “legal, regulatory compliance and internal protocols”. The
training regime under the “Woolworths Group Code of Conduct” is recognized with creating
alertness of “legal, regulatory and internal policy requirements” (Luiz 2016).
The elimination of the auditing risk is done by the external auditor the group- “Deloitte
Touche Tohmatsu”. ARMCC is identified to make the important recommendations for
“selection, appointment, re-appointment or replacement” of the external auditor. The different
types of internal auditing services are for the same to be responsible for performing “internal
audit function (Group Internal Audit)” which is supervised by “Risk and Assurance team”. These
regulatory frameworks ensure that give assurance services and independence is brought in
relation to “internal control, risk management framework and corporate governance of
Woolworths Group”. The significant nature of the Internet audit functions has been seen with in
accordance of “internal audit plan” which are formulated by using risk-based approach approved
annually by the ARMCC (Bryce, Ali and Mather 2015).
Conclusion
The main findings on Implementation of ASX CGC principles have implied
“Woolworths Group” has prioritized corporate governance with prime importance which has
significantly contributed to create value to long-term shareholders. The group for the strives to
“act ethically and responsibly at all times”. The main functions of “Woolworths Group” CG is

16AUDITING & ASSURANCE SERVICES
seen to follow “ASX Corporate Governance Council’s Corporate Governance Principles and
Recommendations (ASX Principles)”. The significant areas of risk assessment are seen to be
inherent in the online business and retail including “food, liquor, petrol, general merchandise” as
well as “accommodation, bar, dining and gambling operations”. The strategic risks is seen to be
competition driven with the technology disruption, changing customer expectation, new entrants
along with several types of other Internet on external risk factors. The failure to successfully
respond to these factors and competitors have adversely affected the performance and market
share of the business. Financial risks are further seen with lack of availability of the funds and
management of capital required for the groups operation and growth. Significant findings on the
financial ratios have revealed in terms of income statement the company has significantly
improved the profit and revenue which is evident with total revenue of “55475 in 2017 and
53473 in 2016” and total profit of “$ 726.3 in 2016 to $ 1422.1 in 2017”. However, the short-
term liquidity analysis has illustrated decreasing trend of short-term liquidity indicator has
implied that Woolworths Group has been not able to maintain a sufficient amount of liquid cash
for supervising day to day business transactions. Potential steps to reduce risk is seen to be
evident with customer first culture and investment growth enablers to mitigate the various types
of strategic risks. The initiatives of risk mitigation in terms of financial perspectives is
considered with prior approval from treasury policies required for managing the financial risks
related to the group. The important nature of the initiatives taken for various types of risk
mitigation is recognized with “group’s financial risks, including liquidity, interest rate and
foreign currency risks”.

17AUDITING & ASSURANCE SERVICES
References
Bryce, M., Ali, M. J. and Mather, P. R. (2015) ‘Accounting quality in the pre-/post-IFRS
adoption periods and the impact on audit committee effectiveness - Evidence from Australia’,
Pacific Basin Finance Journal, 35, pp. 163–181. doi: 10.1016/j.pacfin.2014.12.002.
Crowley, M., 2016. Is the level of sustainability reporting an indicator of future value of a
company? (Doctoral dissertation).
Griffiths, P., 2016. Risk-based auditing. Routledge.
Luiz, J., 2016. Woolworths South Africa.
Woolworthsgroup.com.au. (2018). [online] Available at:
https://www.woolworthsgroup.com.au/content/Document/Woolworths%20Group%202017%20-
%20Corporate%20Governance%20Statement.pdf [Accessed 22 Apr. 2018].
Woolworthsgroup.com.au. (2018). [online] Available at:
https://www.woolworthsgroup.com.au/icms_docs/186036_woolworths-group-corporate-
responsibility-strategy-2020.pdf [Accessed 22 Apr. 2018].
Woolworthsgroup.com.au. (2018). [online] Available at:
https://www.woolworthsgroup.com.au/icms_docs/188795_annual-report-2017.pdf [Accessed 22
Apr. 2018].
Woolworthsgroup.com.au. (2018). Strategy and objectives - Woolworths Group. [online]
Available at: https://www.woolworthsgroup.com.au/page/about-us/our-approach/strategy-and-
objectives/ [Accessed 22 Apr. 2018].
Woolworthsgroup.com.au. (2018). The Woolworths Story - Woolworths Group. [online]
Available at: https://www.woolworthsgroup.com.au/page/about-us/The_Woolworths_Story/
How_We_Were_Founded/ [Accessed 22 Apr. 2018].

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Ya-Mei, G.U.A.N. and Xiang, S.U.N., 2017. Research on the Identification, Evaluation and
Response of Low Carbon Audit Risk of Resource-based Enterprises. DEStech Transactions on
Economics, Business and Management, (iceme).
YANG, L.L., 2017. Risk-based Audit Model Construction Based on Big Data Age. DEStech
Transactions on Engineering and Technology Research, (apop).