Dulux Group Limited Risk Analysis
Added on 2020-05-28
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Running head: AUDITING THEORY AND PRACTICEAuditing Theory and Practice Name of Student:Name of University:Author’s Note:
AUDITING THEORY AND PRACTICE1Table of ContentsIntroduction......................................................................................................................................2Risk Analysis...................................................................................................................................2Evaluation of risks and control environment...................................................................................5Comparison of the financial ratios with Fortescue Metals Group...................................................5Conclusion.....................................................................................................................................11References......................................................................................................................................12
AUDITING THEORY AND PRACTICE2IntroductionDulux Group Limited is considered as one of the leading manufacturer and marketer ofthe products pertaining to enhance, protect and maintain the interest of the common people. Theproducts are used to transform the household rooms with the use of latest designer colours,industrial coatings to protect the landmark infrastructure like bridges and using constructionchemicals to reinforce the same. Dulux Group Limited has employed more than 4000 employeesacross “Australia, New Zealand, Papua New Guinea, South-East Asia and China” (Chen et al.,2016).Some of the various types of the operating segments of the company are discerned withPaints and Coatings, Garage Doors & Openers and Lincoln Sentry. The important discussion ofthe report includes inherent risks and the control measures. The latter apart of the report hasfurther evaluated the risks and control environment and Comparison of the financial ratios with“Fortescue Metals Group” (Contessotto & Moroney, 2014).Risk AnalysisInherent RiskControl MeasuresRisk factors associated to growth of thecompany- This factor is depicted in terms ofsustainable growth opportunities and pursuingthe other risk factors which may have animpact on the long-term profitability.The different types of the “internal growth”issues and the “M&A capability” is supportedby the involvement of the external auditadvise. The board is able to oversight thevarious types of the growth activities (Miran,2017).Key customer relationships- Dulux group isconsidered as the largest form of the retailcustomer to depict a substantial share of thetotal revenue. Any form of loss of incomefrom the key customers may adversely impacton the profitability of the company.Dulux Group Limited’s ongoing investment isconsidered with the iconic brands to drive theconsumer activity along with the importantretail channels to assist the customers forsucceeding. The main customer relationship isfurther depicted with key retail channels forassisting the customer’s success. This isfurther seen with the emphasizing inproviding superior service to the customers.The company has also maintained the broadbase of retail and trade activities maintainedwith the customers (Yoon, Hoogduin &Zhang, 2015).Continuity of business and catastrophicThe disaster recovery plan is in the
AUDITING THEORY AND PRACTICE3event of hazards in the manufacturing andIT systems- The group’soperations may getimpacted with accidents, natural disaster,failure critical to the IT systems and othercatastrophic event which may hamper themateriality aspect or disrupt the operations. appropriate compliance with the major sitesand critical IT systems. The company hasgiven an augmented in addressing the cybersecurity threats. The rigorous safety andhazards are identified with the auditprevention system at key sites with significantongoing investment. Dulux has introducedrelevant insurance policies which includes thenecessary provision for interruption cover(Lang & Soled, 2017).Competitive threat and market disruption-The risk associated to the Dulux Group’stransnational competitors or new disruptiveEntrants may introduce the innovations alongwith the lesser cost to the Australian Market.The threatening of the market share of DuluxGroup’s market share and operating margins. Dulux has been able to establish the brandssupported with ongoing marketinginvestment. The important investmentactivities are discerned with local innovationand product formulation to make sure that theamenities are well suited with the markets.The use of multinational suppliers for thedecorative paint raw materials is able toreduce the potential exposure to thetechnology. Moreover, it is also with theinternational product benchmarking(Visvanathan, 2017).Erosion of brand equity- The iconic brandhas been able to rely on the excellence andpremium performance. The important loss ofthe brand equity may have an adversativeeffect on the “revenue and profit”.The plans to initiate active stewardship is ableto be depicted with stewardship focus. Theregular superiority guarantee and testingprocess is also evident with erosion of brandequity (Wainman et al., 2017).Product litigation and liability- Thelitigation factors are related to the “productliability, product recall, regulatory controlsor environmental practices”. The loss of theany of the aforementioned aspect may lead toadverse financial impact.The company is able to take appropriateinitiative for the quality assurance aspect andgovernance practices. The well-developedcomplaints with appropriate responses is seenas the mitigation initiative. The insurancepolicy is also seen as the main factor to avertthe risk of product liability (Garnett et al.,2015).Key Input Volatility- The risk of supplydisruption is seen with the non-availability ofthe key input associated to the materialswhich may influence revenue or the valuevolatility including effect on foreignexchange.The company is able to utilise the range ofsuppliers and robust selection of the suppliers.Dulux has shown robust supplier selectionprocesses. It has also been able to make thenecessary arrangement for the contingencysupply arrangements. The insurance policymeasures include business interruptions.Some of the different types of the otheraspects are seen with the foreign exchangehedging program (Rakhmanova, Nagumanova& Naumova, 2016).
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