Risk Analysis of Amcor Limited
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...................................................................................4Comparison of the financial ratios with Fortescue Metals Group...................................................5Conclusion.....................................................................................................................................11Reference.......................................................................................................................................12
AUDITING THEORY AND PRACTICE2IntroductionAmcor is recognised as Australia’s one of the leader in providing packaging service. Theimportant form of the manufacturing initiatives is seen in areas of healthcare, food and beverage.The packaging services are included in form of “food, beverage, medical, personal,pharmaceutical and personal care products”. The headquarters of the company is seen to belocated at Melbourne, Victoria and Australia. The different market incidences of the companyare taken into account with “Dow Jones Sustainability Asia Pacific Index, the Carbon DisclosureLeadership Index and the FTSE4Good index”. The primary motive of the study is understoodwith the assessment of the inherent risk factors including specific control measures. The riskcomparison is done with evaluating the financial ratios of Amcor and comparing the same withFortescue Metals Group (Bhattacharjee, Maletta & Moreno, 2015).Risk AnalysisInherent RiskControl MeasuresCompliance and control risks- This risk isseen with the inadequate internal processalong with the awareness of internal controlfailure potentially resulting in financial lossand reputational damage. These risks forAmcor deals with fraud, bribery or any formof insider trading by the co-workers mainlydue to lack of integrity or awareness. Theseare further discerned with failure to adhere tothe regulations relating to “antitrust,competition laws and sanction regimes”(Hsieh & Lin, 2015). The global reach and thediverse activities are included with range ofjurisdictions and specific application of thelaws. The inherent risk is taken into accountwith cyber-attack and loss of information. Inthis case there is significant threat in terms ofintegrity, confidentiality and availability ofkey information systems (Ruhnke & Schmidt,2014).The company’s operating model and Code ofconduct named the ‘The Amcor Way’ isresponsible for providing a definiteframework for all policies across the group.The controlling of the compliance riskincludes various procedures such as “ShareTrading Policy, Sanctions Policy and aCompetition Compliance Program”. These arecommunicated on a periodic basis to the co-workers of Amcor (Rose, 2015). Themaintenance of the awareness for thesefactors are seen to be done by annualcompliance training wherever applicable forthe co-workers. In addition to this, Amcor isseen to maintain a dedicated team for global“Fraud Prevention Policy”. This policy is ableto outline principals and the standards whichare concerned to minimise the risk of fraud.Furthermore, the fraud prevention system ofthe company is supported with globalWhistle-blower service provider and detailedinvestigation procedure (DeFond et al., 2015).Tax Risks- Amcor is recognised to operate in40 countries with dynamic and unique taxThe tax affairs of Amcor are managed as perthe use of tax risk framework which are
AUDITING THEORY AND PRACTICE3environment. The tax affairs of the operationsin the individual country may adverselyimpact on the changes pertaining to theregulatory regime along with the differencesin the interpretations of the local tax laws ofthose countries (Hayes, Wallage &Gortemaker, 2014).agreed and reviewed by Audit andcompliance committee on a regular basis.Moreover, the framework ensures that thesignificant types of the tax risks are taken intoaccount with utilising and monitored theERM methodology. The tax risks areprioritised based on attention and the actionwhich may be taken in the key risk areas.Active approach of the tax risk managementhas pursued the approach with the appropriaterevenue and authority (Krishnan & Wang,2014).Product safety and risk of integrity- Beingthe world’s largest company for packagingand having more than 95% of sales into food,beverage, tobacco and healthcare productsthere is significant risk of integrity (Oktorina& Wedari, 2015).Amcor is committed for responsible and safepackaging practices. The company iscommitted for being partner to its customers,who will be able to rely on the core productsof the company. In addition to this, thecompany is committed towards product safetyand implementation of processes and controls,trained crisis management teams andcontinuous focus on quality (Han et al.,2015).Mergers and acquisition (M&A) risks- Thegrowth opportunities of Amcor are consideredto be dependent on the selection of suitableacquisition targets in correct geographicregions. The failure for being disciplined inthe selection is considered to be effective withthe integration and focusing on capturingvalue which may impact the overalloperations. This may be having an adverseeffect on achievement of the expectedfinancial benefits (Arens et al., 2016).The strategic development team of Amcorworks with the businesses to identify suitabletargets which are aligned with the overallstrategy of Amcor. The implementation of theM&A framework is considered to instil targetselection along with preparation and planningof the value capture (Mohammadi, 2015).Country Risks- The operations at Amcor isconsidered to be spread across 40 countrieswith broad range of selection from legal,regulatory or political systems. Some of thisis subject to rapid changes with civil unrest.The profitability of these operations is able tomaintain and repatriate funds to Amcor whichmay be impacted with the changes associatedto the regulatory regimes, currencydevaluations of compliance from local lawsfrom these countries (BOTEZ, D.2015). Amcor has been able to continuously monitorthe proposed changes in regulatory regimeswhich may affect the operations at Amcor.The company is seen to elect the localoperations environment team which isconsidered with strong customer relationships(Huang, Lin & Raghunandan, 2015).
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