Corporate Governance Principles and Risk Assessment Procedures of AGL Energy Limited

Audit Assurance Compliance

Executive Summary
The report has been developed for providing an understanding of the corporate
governance principles developed by Australian Securities Exchange (ASX). Also, it provides an
analysis of the risk assessment procedures that should be used by the entities listed on ASX to
identify and mitigate the audit risk. The ASX listed entity selected for the purpose is AGL
Energy Limited, an Australian listed public entity involved in development and retailing of
electricity and gas for residential and commercial use. It has been assessed from the overall
report that AGL Energy Limited has developed and established corporate governance statement
in accordance with ASX principle and recommendations. Also, it has implemented effective
strategies for reducing the audit risk to ensure that materialistic information presented to the end-
users is reliable and accurate.

Contents
ASX Corporate Governance Principles.........................................................................................................4
Development of a Solid Framework for Management & Oversight.........................................................4
Maintaining an Effective Board Structuring to Add Value.......................................................................4
Ethical and Responsible Way of Acting....................................................................................................5
Presence of Integrity in Corporate Reporting..........................................................................................5
Timely & Balanced Disclosure..................................................................................................................5
Respect the Rights of Security Holders....................................................................................................6
Recognition and Management of Risk.....................................................................................................6
Fair & Responsible Remuneration...........................................................................................................6
Risk Assessment..........................................................................................................................................7
Nature of Entity.......................................................................................................................................7
Market Overview & Business Strategy.....................................................................................................7
Computation of Income Statement and Balance Sheet ratio..................................................................7
Audit Risk & Potential Steps Taken for Its Reduction..............................................................................8
Conclusion...................................................................................................................................................9
References.................................................................................................................................................10

ASX Corporate Governance Principles
ASX has developed the corporate governance principles and recommendations that the
business entities listed on ASX need to comply for developing their corporate governance
statement. The analysis of the corporate governance statement of AGL Energy in accordance
with ASX rules is carried out as follows:
Development of a Solid Framework for Management & Oversight
As per ASX Corporate Governance Statement (CGS), the business corporations of
Australia listed on ASX need to develop the respective roles and responsibilities of the board and
management. AGL Energy Limited has established a solid framework for management and
Board as analyzed from its corporate governance statement. The role of Board is to be
responsible for the governance of the company and protecting the interests of the shareholders.
The major responsibility of Board is to develop and continually review the strategic direction,
business plan and budget of the long-term goals and objectives of the company. The Board has
assigned the role of the key management personnel (KMP) to monitor and regulate the daily
operational activities of the company. The performance of the Board is continually reviewed and
monitors through assessing the performance of its individual directors by the board itself in
support of an independent consultant. The review process sis carried out in support of the
director’s and members of the executive team of the Board. Board has also developed a
remuneration committee to asses the performance of the management people during the tie of
making decisions over their incentives and rewards (Fleckner and Hopt, 2013).
Maintaining an Effective Board Structuring to Add Value
The business entities listed on ASX need to develop an effective board structure having
diverse skills and competencies by appointing and recruiting a team of qualified personnel’s.
This is required so that Bard members possess high expertise to ensure that its roles and
responsibilities are carried out adequately. AGL Energy Limited has also maintained an adequate
board structure comprising eight non-executive directors, managing director and Chief Executive
Officer (CEO). The Board Skill Matrix provided in the corporate governance statement has
provided a detailed description of the necessary skills and expertise possessed by the Board