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Auditing and Assurance of RFG

   

Added on  2021-06-17

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Auditing and Assurance of the Retail Food Group 1AUDITING AND ASSURANCE OF THE RETAIL FOOD GROUPStudent by (Name)Professor’s (Name)CollegeCourseDate

Auditing and Assurance of the Retail Food Group 2ContentsIntroduction......................................................................................................................................2The evaluation of the 2016 and 2017 audit reports......................................................................3The kind of report auditor that the auditor issued....................................................................4The appropriateness of the audit report issued................................................................................5The internal control environment of RFG.......................................................................................5The assessment of RFG’s internal control environment..............................................................6Ways to overcome the identified internal control weakness........................................................8The business risk associated with the RFG from the auditors’ point of view..........................9RFG’s operations from an ethical perspective...............................................................................10The deficiencies in the practice of RFG’s operations................................................................11Why ethical issues should interest the auditors......................................................................12Conclusion.....................................................................................................................................12

Auditing and Assurance of the Retail Food Group 3Auditing and Assurance of the Retail Food GroupIntroductionThe Retail Food Group (RFG) was established in 1989 and in 2003 incorporated to becomethe most major holding company of the RFG's units. It brands several types of retail foodfranchise. Some of its brands are Donut King, Brumby's Bakery, Pizza Capers, Gloria jeans,Pizza bar, and Michel's Patisserie. It operates under the following pillars; the franchise, theInternational, the Allied beverage and coffee, and the Commercial division. We evaluated theaudit reports for 2016 and 2017. We collected the data from a reliable source and we herebydeclare that all the data and records we are showing here is authentic.The evaluation of the 2016 and 2017 audit reportsThe auditor used the Retail Food Group’s annual reports, financial statements andaccounts to do his auditing. The RFG's annual reports have marked the company's exceptionaldecade of growth. It has shown the company's commitment to offering its shareholdersoutstanding services and investing a distinct global operating platform (Schaper et al. 2014). In2016, the year’s annual reports showed that the group’s NPAT (Net Profit After Taxation) profitamounted to 66.4 dollars, a 20.5% increase over the previous year (Wright and Clarke 2009).The financial statement revealed that the year’s earnings translated per share translated into40.5cps (Cents Per Share) and thus contributing the total year's dividends per share into 27.5cps.This was an 18.5% increase from the previous year. During the year, the final accounting recordsproved that the company marked a 24% EBITDA (Earnings before Interest, Taxes, Depreciation,

Auditing and Assurance of the Retail Food Group 4and Amortization) profit, which amounted to 110.2m dollars. The coffee operations contributedover 50% to the company’s EBITDA result. This result illustrated the company’s growingdiversity of their revenue across its global businesses. It also emphasized the RFG’s ability tosustain its multiple platforms and as well as enhancing its performance in the future. The RFG'saccount records described that the group’s net sales that year was $16.1 billion, and their grossprofit was $2.0 billion. Their net income was 68.3 million, and their adjusted EBITDA was$366,6m. It marked a remarkable growth for the Retail Food group (Hoitash et al. 2009).The 2017’s annual reports indicated that the RFG’s revenue was 349.3m dollars, a 27.0%increase from the previous year’s revenue. The books of accounting clearly revealed that theRFG's EBITDA was 123.5m dollars, a difference of 12.1% from 2016's EBITDA income. Thebooks also demonstrated that the groups' NPAT amounted to $75.7m which marked a 14.0%increment of 14.0% from 2016. The auditing records exhibited that the RFG's EPS (Earnings PerShare) was 43.7cps, and its dividends that year was 29.75cps, which marked a rise of 7.9% and8.2% respectively from the previous year's results. The territories under which RFG operates inthe increase from 69 in 2016 to 81 in 2017 (Dar 2011). This marked a significant growth of17.4%, which showed the RFG’s capacity to grow and expand their licensed territories further.The five pillars' contribution to the EBITDA was highly valued. The records of accounts in eachpillar were used to demonstrate the individual contribution of each sector and their ratio ofcontribution calculated. The Franchise contributed $53.7m dollars which were 43% of the totalEBITDA in 2017. The Franchise contributed the highest EBITDA amount to the company duringthe year. The International pillar and the coffee operations and the beverage allied groupcontributed a total of $15.3m and $42.7m respectively EBITDA result. What it marked was a13% and a 34% individual contribution to the company’s total EBITDA value during the year.

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