Audit Assurance & Compliance Assignment

Audit Assurance & Compliance

Executive Summary
This report is developed for providing an analysis of the corporate governance principles
and risk assessment framework used by a business entity listed on ASX (Australian Securities
Exchange). The standard corporate governance principles and recommendation developed by the
ASX Council need to be adopted by all the business companies that are listed on the stock
exchange within Australia. As such, the report has examined the corporate governance statement
of OZ Minerals, listed on ASX, to identify whether it effectively comply with the standards or
not. It has been identified after the analysis that the company has effectively complied with all
the governance policies and framework of ASX. Also, as per ASA 50 it ha been found out that
there are some audit risk present within the company that it has effectively mitigated with the
implementation of suitable strategies.

Contents
ASX Corporate Governance Principles.........................................................................................................4
Developing Solid Framework for Management & Oversight...................................................................4
Structure of Board to Add Value..............................................................................................................4
Ethical and Responsible Way of Acting....................................................................................................5
Safeguard Integrity in Corporate Reporting.............................................................................................5
Making Timely and Balanced Disclosure..................................................................................................6
Protection of Rights of Security Holders..................................................................................................6
Risk Identification & Management..........................................................................................................6
Fair & Responsible Remuneration...........................................................................................................7
Risk Assessment Procedures.......................................................................................................................7
Nature of Company.................................................................................................................................7
Market Overview.....................................................................................................................................7
Business Strategy.....................................................................................................................................8
Computation of Income Sheet & Balance Sheet Ratios...........................................................................8
Audit Risk & Its mitigation.......................................................................................................................9
References.................................................................................................................................................11

ASX Corporate Governance Principles
The development of sound and effective corporate governance policies is very essential
for the sustainable growth and success of a business entity. This is because the policies provide
guidelines to all the people working within the entity about the type of business processes and
practices. The directions for carrying out the business processes are provided with the help of
corporate governance policies and frameworks. As such, the ASX Corporate Governance
Council has developed an effective corporate governance statement on the basis of some
standard principle and recommendations (Nordberg, 2010). The corporate governance statement
developed by Council need to be followed by all the business entities listed on ASX. OZ
Minerals, listed on ASX, also need to develop its corporate governance statement as per the
Council principles and recommendations that are analyzed as follows:
Developing Solid Framework for Management & Oversight
The Council has stated that business entities listed on ASX need to provide an adequate
disclosure about the roles and responsibilities of Board and management in its corporate
governance statement. OZ Minerals, in its corporate governance statement has adequately stated
about the Board and management roles (ASX Corporate Governance Council, 2014). The Board
is held responsible for managing the overall strategic actions of the company. Board Charter, has
provided a detailed explanation regarding the roles and responsibilities of the members and also
that of Executive Management Committee (EXCO). The values, principles, belifes and
orgnaistional culture are established by the Board while EXCO carries out is roles as per the
guidance of Board and its committees. Board has also specifically developed a Delegated
Authorities Manual for providing a disclosure regarding the scope of board and the management
committee. Directors also hold the responsibility of being updated about the pertinent issues
facing the company such as regulatory compliance so that it does not impact its sustainable
growth and development.
As per ASX principle, the company has also disclosed the procedures adopted for
reviewing the performance and management. Board develops a monthly performance report and
submits it to the directors for reviewing the performance of the board members on yearly basis.
The review process is led by the Chairman and is carried out in consultation with the external

advisors. The performance of the management committee is reviewed by the Board on the basis
of standard set out in their employment contracts. The performance review is initiated after a
year and the details are disclosed in the remuneration report developed by the company. The key
performance indicators and the performance assessed against each of the indicator are stated in
the remuneration report to provide complete disclosure of information to the stakeholders (OZ
Minerals: Corporate Governance Statement, 2017).
Structure of Board to Add Value
ASX listed entities need to develop an effective structure of Board composed of qualified
team members possessing diverse range of skills and competencies. OZ Minerals corporate
governance statement has provided adequate disclosure about the composition, skills, expertise
and knowledge of the board members to provide an analysis of its effectiveness in creating value
for the stakeholders. As provided in the corporate governance statement, the board is composed
of seven directors out of which one is executive director and other six are non-executive
directors. Also, the company places high emphasis on maintaining an adequate proportion of
women participation in the Board to achieve genetic diversity. The board skills matrix provided
in the statement has adequately listed out the skills, experience and diversity of the Board that
infers that it is highly effective in achieving out its stated roles and responsibilities (Bazley,
Hancock and Robinson, 2014).
Ethical and Responsible Way of Acting
The development of a strong corporate culture based on the code of ethics and values
ensures that OZ Minerals as per council principles and recommendations carry out its business
functions ethically and responsibly. The Code of Conduct established by the company has
described the ethical standards and professional behavior of all directors, employees and
contractors. The breach of the code of conduct by anyone is taken seriously and is reported to the
higher management with the use of whistleblower program. The adequate knowledge of the code
of ethics developed by the company is providing to all the employees during their training and
development program. In addition to this, the company has also developed and maintained its
Ethics and Human Rights policy and anti-bribery and corruption standards for ensuring that all
employees work as per the professional standards of ethics.

The policies and principles established by the company have developed a strong
governance culture within the organization. The principles are developed to support the strategic
action of the company and ensure that the strategies are developed as per the ethical standards
and practices. The principles help in developing a culture focusing on partnerships and delivering
superior results through effective planning. The plan is developed to act with integrity and
engaging with the stakeholders effectively. The company is committed to prevent the occurrence
of illegal conduct such as harassment and discrimination as per the ethics and human rights
policy. Therefore, the presence of such ethical policies and programs within the company
ensures that it carries out its activities in an ethical and responsible manner (Plessis, McConvill,
and Bagaric, 2005).
Safeguard Integrity in Corporate Reporting
The selected company should have the presence of a structured approach in order to
ensure integrity in corporate reporting. The company as per the principle of integrity in corporate
reporting provided by the ASX Council has disclosed the information about its governance
policies. The governance policies are developed fro ensuring that employees uphold the highest
level of integrity and professional behavior in maintaining their relationship with the
stakeholders. Therefore, the management people hold the highest level of responsibility for
ensuring that all required and relevant information is disseminated to the shareholders. The
selected policies and rules are also available on the corporate governance section on the website
of the company. The code of conduct ad principles established by the company also ensures that
the company prepares and discloses the financial and non-financial reports as per the principle of
integrity and honesty. The financial reports are prepared as per the AASB and Corporations Act
2001 standards for ensuring that relevant and required information is provided to the
shareholders. The non-financial information is provided in the sustainability report of the
company and it is also prepared as per the ethical standards and principles OZ Minerals:
Corporate Governance Statement, 2017).
Making Timely and Balanced Disclosure
ASX Council has also maintained that all the business companies within Australia that
are listed on ASX need to disclose all the relevant information on timely basis that can impact
the price of securities. OZ Minerals, as per this corporate governance principle has adopted

policy of continuous disclosure as stated in the company’s governance framework. The policy is
maintained for ensuring that all required and latest information reaches to the shareholders as per
the Corporations Act 2001. It has developed and established a market and dividend policy as per
the continuous disclosure standard that has provided the processes for providing the required
information to the shareholders. The policy specifically aims to provide timely and adequate
information to the shareholders and market participants. Disclosure committee holds the
responsibility that company provides all the required information to the shareholders in a timely
manner which is also provided on the governance section on its website.
Protection of Rights of Security Holders
OZ Minerals has adopted several policies for ensuring effective communication with the
shareholders so that they possess the latest information about its activities. The initiatives
adopted by the company for interacting effectively with the shareholders are its online website
that provides an e-mail platform to the shareholders for gaining inquiry about any issue. Also,
the annual report is available on its website that contains all its general purpose financial
statement to provide relevant financial information toe the shareholders. Shareholders are also
provided the option to gain access to the annul report as an electronic copy via mail. The
company also declares its financial results on the ASX and is published on its website after ASX
release. The results gained from the annual meetings and other relevant material is also provided
on its website. In addition to this, the company also provides a telephonic way of communication
to the shareholders to resolve their queries and issues OZ Minerals: Corporate Governance
Statement, 2017).
Risk Identification & Management
The company as per ASX principle has also established an effective risk management
framework to identify and mitigate the risk in advance. The Audit Committee is responsible for
monitoring the economic and financial risk and implementing effective internal controls to
prevent the occurrence of any uncertain condition (Fleckner and Hopt, 2013.). The framework
has provided the respective responsibilities of the management personnel in identification,
measuring and controlling the risks. The company due to its operational nature faces various
types of risk that are common in the mining industry. It discloses the type of risk impacting the
company activities in the Operating and Financial Review. The Audit Committee reviews the

risk framework and the systems and processes for risk management on a timely basis. This helps
in reviewing the risk effectiveness to address the material risks so that ant weakness in the risk
management framework can be identified and mitigated in advance OZ Minerals: Corporate
Governance Statement, 2017).
Fair & Responsible Remuneration
The total remuneration paid to the non-executive directors should not exceed a limit
determined by the shareholders. The remuneration of the non-executive directors is fixed rather
then being variable. The full detail of the director and executive remuneration is provided in the
remuneration report. The company ahs also established Human Resources and Remuneration
Committee developed for over-viewing the remuneration policies developed for deciding over
the matters related to compensation of executive and non-executive directors and key
management personnel OZ Minerals: Corporate Governance Statement, 2017).
Risk Assessment Procedures
The risk assessment procedures undertaken by auditors need to identify and mitigate the
material risk in the financial information presented to them for review. The Auditing and
Assurance Standards Board has developed an auditing standard 50 for determining the analytical
procedures to be adopted by business entities listed on ASX for mitigation of the risks (Putra,
2010). The main objective of the use of risk assessment procedure is to gain an analysis of the
nature of an entity and its internal control environment (O'Donnell and Perkins, 2011). In
addition to this, it also helps in assessing the risk of material misstatement present within an
entity and the measures adopted by it for their subsequent elimination (Auditing and Assurance
Standards Board, 2009). The analytical procedure that can be applied by the OZ Minerals to
identify and mitigate the audit risk can be described as follows:
Nature of Company
OZ Minerals is a mining company of Australia that is established after the merger of
Oxiana Limited and Zinifex in the year 2008. The company at present has developed strong
brand recognition within Australia in mining sector. The company strong governance policies
have enabled it to create value for the stakeholders by promoting trust and transparency within

the business operations. The company at present is not having any dealing with the international
related parties for the purpose of Taxation voluntary tax transparency code.
Market Overview
The company at present carries out its operations across Australia and is having a market
capitalization of $2,676 million.
Business Strategy
The company strategic aim is to become a global modern mining company of copper-ore
having a multiple base of operating assets and a diverse exploration. It aims to achieve its
strategic aims and objectives by delivering continuous value to its stakeholders. The company
places special emphasis on simplifying its business process and systems for improving its
productivity and resource efficiency (OZ Minerals 2017 Annual and Sustainability Report,
2017).
Computation of Income Sheet & Balance Sheet Ratios
Financial Data on OZ Minerals Group
Particulars 2016 2017
Amount in $ million
Net profit
$
108.00
$
231.00
Gross Profit
$
737.00
$
881.00
Revenue
$
823.00
$
1,023.00
Total Assets
$
2,631.00
$
2,826.00
Long term Debts
$
102.00
$
83.00
Shareholder's Equity
$
2,354.00
$
2,516.00

Current Assets
$
944.00
$
1,148.00
Current Liabilities
$
175.00
$
227.00
Income Statement
Ratios Formula Interpretation
Net Profit Ratio
Net
Profit/Revenue 13.12% 22.58%
It measures the
profitability position of
a company by
analyzing the profits
earned after meeting
the operating expenses.
The company net profit
ratio is increasing
depicting its potential
of positive growth
Gross Profit Ratio
Gross Profit/
Revenue 89.55% 86.12%
The company gross
profit has decreased
which is not good sign
for future growth
Return on Assets
Net
Profit/Assets 4.10% 8.17%
It is having high return
on assets as indicated
from the results of its
return on asset ratio
Balance Sheet
Ratios
Debt Equity Ratio Debt/Equity 0.04 0.03 The company debt is
also decreased which
indicates that there is

less financial risk
present within the
company
Assets Turnover
Revenue/Total
Assets 0.31 0.36
The company is also
have less operational
risk as its ability to
realize revenue from
assets have increased
Current Ratio
Current
Assets/Current
Liabilities 5.39 5.06
There is a liquidity
risk present within the
company as its ability
to meet the liabilities
with its current asset
base has declined (OZ
Minerals 2017 Annual
and Sustainability
Report, 2017).
Audit Risk & Its mitigation
The significant risks as analyzed from the financial review of the company that can have
a material effect on the information disclosed to the auditors are identified as follows:
 Credit Risk: The risk arises due to the possibility of a counterparty to default on meting
its financial liabilities in the future period of time. The credit risk can occur due to sales
of metal on normal terms of trade, cash deposits and finance leases receivables. The
company manages the credit risk on cash equivalents by only managing the financial
transactions to banks. The credit risk management policy of the company has also
determined the maximum exposure to credit risk for trade receivables as per the
geographic region.
 Foreign Currency Exchange Risk: The Company is exposed to high foreign currency risk
due to possession of assets and liabilities that are held in currencies other than Australian
dollar. The company translates its foreign currency transaction into a functional currency

with the use of exchange rates that is present at the date of transaction. The functional
currency is regarded to be the currency in the primary economic environment in which an
entity carry out its operations. It takes into account several factors such as revenue,
production costs, competitive forces, regulation that have impact on the functional
currency determination. This is done by the company to mitigate the impact of the
foreign currency risk on its financial results.
 Liquidity Risk: The risk arises due to difficulty that can be faced by a company in
meeting the obligations of its financial liabilities. It regularly reviews the liquidity risk by
managing the cash outflows for ensuring that sufficient financial resources are present to
meet the obligations (OZ Minerals 2017 Annual and Sustainability Report, 2017).

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: 29 April, 2018].
Auditing and Assurance Standards Board. 2009. Auditing Standard ASA 520 Analytical
Procedures. [Online]. Available
at: http://www.auasb.gov.au/admin/file/content102/c3/ASA_520_27-10-09.pdf [Accessed on: 29
April, 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.
Nordberg, D. 2010. Corporate Governance: Principles and Issues. SAGE.
O'Donnell, Ed and Perkins, D. 2011.
Assessing Risk with Analytical Procedures: Do Systems-Thinking Tools Help
Auditors Focus on Diagnostic Patterns? Auditing; Sarasota 30 (4), pp. 273-283.
OZ Minerals 2017 Annual and Sustainability Report. 2017. [Online]. Available at:
https://www.ozminerals.com/uploads/media/OZMinerals_2017_Annual_and_Sustainability_Rep
ort.pdf [Accessed on: 30 April 2018].
OZ Minerals. 2017. Corporate Governance Statement. [Online]. Available at:
https://www.ozminerals.com/uploads/docs/180222_ASX_Release_Corporate_Governance_State
ment.pdf [Accessed on: 30 April 2018].
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: http://accounting-financial-tax.com/2010/04/the-use-of-analytical-procedures-in-auditing/ [Ac
cessed on: 29 April, 2018].