AUDITING AND COMPLIANCE 11 Auditing and Compliance University Name

ASX Corporate Governance Principles: The corporate governance framework of Boral limited is outlined in the corporate governance statement that is committed for ensuring the practices and policies reflecting high standard corporate governance. The Corporate Governance policy structure of Boral limited is as follows: Enforcing an efficient foundation for oversight and management: The management of Boral limited operates in accordance with the approved policies of the board and delegated restrictions of authority set out in accordance with the management guidelines of Board.

Running head: AUDITING AND COMPLIANCE
Auditing and Compliance
University Name
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Authors’ Note

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Table of Contents
Executive Summary:..................................................................................................................3
ASX Corporate Governance Principles:....................................................................................3
Risk Assessment:.......................................................................................................................7
References list:.........................................................................................................................11

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Executive Summary:
In the present study, a methodological and ordered approach of conducting audit is
considered that helps in understanding and evaluation of associated control and procedures.
The study takes into consideration the compliance that is necessitated for augmentation of
business of value of business. The particular task is about explanation of ASX and corporate
governance principles of Boral limited and explanation of its risk management procedures.
Risk faced by business has been analyzed using the financial ratio computation and later part
depicts the several steps taken for reducing the risks associated with audit.
ASX Corporate Governance Principles:
The corporate governance framework of Boral limited is outlined in the corporate
governance statement that is committed for ensuring the practices and policies reflecting high
standard corporate governance. Arrangements of governance throughout year 2017 were
consistent with the corporate governance recommendations and principles outlined by ASX
corporate governance council (Baldauf et al. 2015).
The Corporate Governance policy structure of Boral limited is as follows:
Enforcing an efficient foundation for oversight and management:
The management of Boral limited operates in accordance with the approved policies
of the board and delegated restrictions of authority set out in accordance with the
management guidelines of Board. Board of Boral is responsible for guiding the development
of strategy and monitoring the implementation. It is actively ensured by the board that it has a
proper mix of diversity, experience, skills and expertise that would enable them to discharge
their responsibilities in an effective way and facing any challenges by being well equipped

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for assisting organizations to navigate through available opportunities. Moreover, the key
management recommendations such as divestments, acquisitions, funding and restructuring
by making and considering decisions. Skills matrix is utilized by board that provide
assistance in identifying areas of maintaining and focusing on a diverse and appropriate mix
in its membership (Decaux and Sarens 2015).
Value addition by way of board structuring:
The constitution of board provides that there will be maximum twelve directors and a
minimum of three directors on board. Board of directors of Boral comprises of one executive
director being the managing director and CEO and seven non executive directors. It is
provided by the constituent that the same individual cannot exercise role of managing
director, CEO and chairman. Chairman on the board is selected from the non executive
independent directors. In addition to this, the independence of non executive director in light
of positions, interest, relationship and associations are assessed by the board. The
combination of individual director, experience, skills and expertise benefits the board along
with the varying insights and perspective that arises from the director’s interaction having
varied background (Lenz and Hahn 2015).
Acting in a responsible and ethical way:
An ethical and legal standard of behaviour is expected by the people of Boral limited
that are laid out by supporting policies and code of business conduct and the company
adheres to ethical and legal standards seriously. 35 employees in Boral North America and
Boral Australia were dismissed during financial year 2017 for seriously breaching the
policies mainly for breaching the rules of safety. People of Boral are able to report on illegal
acts, possible frauds and any misconduct by accessing to independent and external whistle

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blowing service such as FairCall that helps in investigation of potential misconduct (Gaynor
et al. 2016).
Upholding integrity in corporate reporting:
The integrity of corporate reporting of Boral limited is safeguarded by collaboration,
endurance and integrity. Audit and risk committee of the company has the responsibilities of
oversight and review of quality and integrity of disclosures and financial statements of entity.
Management guideline of Boral incorporates the code of business conduct along with policies
and other guidelines setting out ethical and legal standards for employees. Assessment of
employees as a part of performance management is done against the integrity, excellence and
values of Boral (Chambers and Odar 2015).
Making a balanced and timely disclosure of reporting elements:
Boral limited make use of a recommended framework set out by task force of
International financial stability board on climate related financial disclosures. The importance
of adequate and timely disclosure to market is appreciated by company as they have the
commitment of making balanced and timely disclosure of all material matters. This helps in
maintaining effective communication with investors and shareholders for giving them ready
access to understandable and balanced disclosures. A mechanism is designed by company for
ensuring compliance with requirements of ASX listing rules and all relevant disclosure laws
that helps in ensuring accountability at senior level executive (Schmidt et al. 2016). In respect
of continuous disclosure, organization takes efforts for meeting such obligations. Specific
disclosures made by the group helps in understanding the financial information.
Respecting the security holder’s rights:

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The board of Boral limited intends to shield safeguard the rational interest of
shareholders whilst taking efforts to promote the sustainable value creation. Some of the
significant pronouncements are approved by the board of group by complying with the
suggestions of Corporation Act and recommendations of ASX. Share trading policy of
company precludes executive from entering into derivative and hedging activities relating to
share rights or options granted to security holders whether the share rights or options have
been invested or not (Boral.com 2018).
Managing and recognition of risks:
The board of Boral limited through risk and audit committee is responsible for
satisfying itself through a sound system of management and risk oversight for making
internal control effective. Assurance is sought by the board in assessing, monitoring and
managing whether the systems are in place and reporting on such risks. Board also intends to
identify the operational, principle strategic, compliance and financial reporting risk.
Management and identification of risks is the responsibility of managers of business of Boral.
Implementation and designing of the risk management is done under the supervision of the
board (Griffiths 2016).
Remunerating employees in a responsible and fair manner:
The remuneration practices and policies of Boral are designed for motivating,
attracting and retaining high quality people. There are several principles surrounding the
policies remuneration of executives has an appropriate balance of fixed and risk at reward. It
is ensured by such principles that the composition and level of remuneration is reasonable
and sufficient so that the relationship between individual and corporate performance is
defined. The board of Boral comprises of remuneration and nomination committee that
comprises of three independent non executive directors and the arrangement and

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recommendations of remunerations for senior executive, managing director and CEO is made
by the committee (Boral.com 2018).
Risk Assessment:
Organization background:
Boral limited is the largest building products and construction material suppliers
having operations in all territories and states. Organization operates with three strong
divisions that is well positioned material business, high performing and fast growing Boral
interior linings joint venture in Middle East, Australia, Boral North America and Asia
(Nelson et al. 2015).
Details of regulation:
The organization complies with the Corporation Regulations 2001 and Australian
accounting regulations. Some regulatory authorities involve the Australian taxation
authorities as validated and authorized by law (Short and Toffel 2015). In addition to this,
business deals with maintaining lower hazardous waste according to regulations of
government.
Market overview in which organization operates:
Boral operates in markets of critical part of constriction supply chain and the
organization deals with any disruptions and changes by responding and finding effective
ways of doing business. In most of the market, Boral has built leading positions with a market
capitalization of $ 9132 million.
Boral business strategies:

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The business strategies of Boral limited helps in recognizing the shareholder
responsibility in terms of generating long term sustainability and help in delivering value
creation. Future of company is dependent upon having and socially responsible and robust
supply chain by enduring a reliable and engaged workforce, environmental impacts and
sustainable community. The business strategies for the past five years have been to move
away from manufacturing that is energy efficient to producing some lighter products. It is
believed by the group that a diverse workforce is essential for implementation of strategy for
success and growth of business (Elbardan et al. 2015).
Risk analysis using trend analysis and key financial ratio:
In addition to the above procedures for assessing the risk associated with the business
of Boral limited, different financial ratios have been computed. Analysis of risks has been
done by income statement and balance sheet ratio. For the income statement ratio, three ratios
have been computed that is operating profit margin, net profit margin and return on
shareholders’ equity. Under the balance sheet ratio, three ratios that have been computed are
current ratio, quick ratio and debt to equity ratio.
It can be seen that current ratio of Boral Limited is computed at 1.2 and this particular
figure is indicative of the fact that current ratio is sufficient for meeting the short term
obligations. The current ratio value depicts that Boral limited has considerable current assets
for meeting short term liabilities.
Quick ratio is regarded as more reliable measure of testing the short term solvency
position of company as it indicate the ability of organization to make immediate payments of
its short term debts. Value of quick ratio stood at 0.788 which depicts that it is less than one.
Value of quick ratio lower than one is indicative of the fact that company has fast moving
inventories. Therefore, it is require taking into consideration the individual assets nature.

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Now, looking at the value of debt to equity ratio, it can be seen that computed value
stood at 0.711. Debt to equity ratio is regarded as long term solvency that depicts the
soundness of long term financial policies of company. Value of ratio less than one is
indicative of the fact that proportion of assets provided by creditors is lower than proportion
of assets provided by stockholders. A low debt to equity ratio is preferable by creditors as it
illustrate that the credit worthiness of company is protected. Therefore, in terms of leverage,
financial condition of Boral limited is considered favourable.
The standard liquidity ratio is observed to be 2:1 and it can be seen that value of all
liquidity ratio computed for Boral limited is lower than one. Moreover, Boral limited has
lower value of quick ratio that reflects that firm has lower potential for making repayment of
its short term obligations by making use of current assets such as inventories.
Now, looking at figures of income statement ratio such as return on shareholder’s
equity, it can be seen that the computed value stood at 5.46%. On other hand, value of
operating profit margin and net profit margin stood at 7.07% and 5.86% respectively. The
figures of return on equity depicts that Boral limited gas generated favourable return to its
equity holders. In addition to this, it can also be seen that operating profit margin is
significantly higher than return on shareholder equity and this is reflective of the fact that
company has generated sufficient profits from its operations. On other hand, net profit margin
of Boral limited stood at 5.86%. Value of net profit margin is higher than operating profit
margin and this depicts that firm has generating more net profits.
Furthermore, trend analysis helps in evaluating the performance of various accounts
such as revenue, expenses, assets, liabilities and earning per shares. It can be seen that
revenue has increasing trend as revenue increased by 7.92% in current year. Basic earnings
per share has also increased by 0.7 as against diluted earnings per share where value

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decreased by 0.9%. Increasing trend has been witnessed in trade payables and other financial
liabilities by 251.7% and 49.35%. On other hand, total value of equity has also increased by
35.55% in year 2017.
Some of the relevant steps for mitigating the audit risks are as follows:
 The Documents pertaining to debt and loan amount needs to be verified and checked
for mitigating the risks associated with uncertainty of payment by third parties.
 Quick ratio needs to be reviewed by reconciling the account with the bank and
checking registration with cash.
 Expenses should be reduced as there is increasing trend; this is because reduction in
expenses will help in increasing the overall profit of organization (Elsayed 2017).
 The probability of bad debt can reduce by substantiating the receivables amount
within the days that is accepted for disbursement.

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References list:
Baldauf, J., Steller, M. and Steckel, R., 2015. The Influence of Audit Risk and Materiality
Guidelines on Auditors’ Planning Materiality Assessment. Accounting and Finance
Research, 4(4), p.97.
Boral.com. (2018). [online] Available at:
https://www.boral.com/sites/corporate/files/media/field_document/Boral-Annual-Report-
2017.pdf [Accessed 29 Apr. 2018].
Chambers, A.D. and Odar, M., 2015. A new vision for internal audit. Managerial Auditing
Journal, 30(1), pp.34-55.
Decaux, L. and Sarens, G., 2015. Implementing combined assurance: insights from multiple
case studies. Managerial Auditing Journal, 30(1), pp.56-79.
Duncan, B. and Whittington, M., 2014, September. Compliance with standards, assurance
and audit: does this equal security?. In Proceedings of the 7th International Conference on
Security of Information and Networks (p. 77). ACM.
Elbardan, H., Ali, M. and Ghoneim, A., 2015. The dilemma of internal audit function
adaptation: The impact of ERP and corporate governance pressures. Journal of Enterprise
Information Management, 28(1), pp.93-106.
Elsayed, A.A., 2017. The Audit Risk Model, the Signal Detection Theory, and the
Information Manipulation Theory.
Gaynor, L.M., Kelton, A.S., Mercer, M. and Yohn, T.L., 2016. Understanding the relation
between financial reporting quality and audit quality. Auditing: A Journal of Practice &
Theory, 35(4), pp.1-22.

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Graham, L., Bedard, J.C. and Dutta, S., 2018. Managing group audit risk in a
multicomponent audit setting. International Journal of Auditing, 22(1), pp.40-54.
Griffiths, P., 2016. Risk-based auditing. Routledge.
Lenz, R. and Hahn, U., 2015. A synthesis of empirical internal audit effectiveness literature
pointing to new research opportunities. Managerial Auditing Journal, 30(1), pp.5-33.
Nalewaik, A. and Mills, A., 2016. Project Performance Review: Capturing the Value of
Audit, Oversight, and Compliance for Project Success. CRC Press.
Nelson, M.W., Proell, C.A. and Randel, A.E., 2015. Team-oriented leadership, audit risk and
auditors’ willingness to raise audit issues. Working paper available at SSRN: http://ssrn.
com/abstract= 2512262.
Schmidt, P.J., Wood, J.T. and Grabski, S.V., 2016. Business in the Cloud: Research
Questions on Governance, Audit, and Assurance. Journal of Information Systems, 30(3),
pp.173-189.
Short, J. and Toffel, M., 2015. The integrity of private third-party compliance monitoring.
Visvanathan, G., 2017. Intangible assets on the balance sheet and audit fees. International
Journal of Disclosure and Governance, 14(3), pp.241-250.