Corporate Reporting of Domino's Pizza Enterprises

This report discusses the corporate reporting of Domino's Pizza Enterprises, including the independence of auditors, opinion expressed by the auditor on financial statements, remuneration of auditors, and more. It also includes ratio analysis, role and functions of the audit committee, and directors' and management's responsibilities. The report is relevant for students studying corporate reporting and related subjects.

CORPORATE REPORTING 1
CORPORATE
REPORTING

CORPORATE REPORTING 2
Executive summary:
The company chosen for review is Domino’s Pizza enterprises.
The report talks about the company, the independence of the auditors, the opinion expressed
by the auditor on its financial statements, the remuneration of the auditors, the difference
between the managements and auditors responsibilities etc (ASX, 2018).

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Contents
Introduction:...............................................................................................................................5
Auditor’s Independence Declaration:........................................................................................5
Independent auditor’s report:.....................................................................................................5
Non-Audit services performed by the Auditor:.........................................................................5
Auditors’ remuneration:.............................................................................................................6
Role, functions and composition of the Audit Committee:........................................................7
Independent Auditors report to the members (shareholders):....................................................8
Review all Key Audit Matters noted and the associated audit procedures:...............................8
Directors’ and Management’s responsibilities:..........................................................................9
Material subsequent events:.....................................................................................................10
Assessment of effectiveness of material information:.............................................................10
Under reporting and questions to be asked to auditor:.............................................................10
Conclusion:..............................................................................................................................10
References:...............................................................................................................................12

CORPORATE REPORTING 5
Introduction:
The company is the largest company when it comes to pizzas and it has the largest chain of
networks in the Australia and has a huge number of stores and network sales. It is the largest
franchisee for the domino’s Pizza brand for the world. The company holds an exclusive
number of franchisee rights for the brands and network in many countries (Dominos, 2018).
The company has not appointed any new director during the year 2017.
Ratio Analysis:
The following table shows in the calculated ratios:
Particulars
2017 in
$
2016 in
$ % change
Current ratio: 0.816112 0.69196
0.17941716
5
Current Assets 187825 184235
Current
liabilities 230146 266250
Asset
turnover
ratio: 0.698151 0.6256
0.11596367
8
Net sales 790861 705702
Assets 1132793
112803
3
The current ratio talks about the liquidity position of the company which means that the
ability of the company to pay off its short term debts is good and it has improved when
compared with previous year.
Again, the asset turnover ratio is the ratio which shows the ability of the company to generate
in revenue from employing the fixed assets.
The ratio has improved which is a good sign.

CORPORATE REPORTING 6
Auditor’s Independence Declaration:
As per the section 307C of the Corporations Act of the year 2001, the auditors specified the
following:
 The various different requirements as have been laid down under the corporations Act
2001 has bene fulfilled
 Also, any of the applicable code of the professional conduct has been duly complied
with.
Independent auditor’s report:
As per the section 307C of the Corporations Act of the year 2001, the auditors specified the
following:
 The various different requirements as have been laid down under the corporations Act
2001 has bene fulfilled
 Also, any of the applicable code of the professional conduct has been duly complied
with.
Non-Audit services performed by the Auditor:
In terms of the non-audit services, all of the services have been detailed down in the note 42
of the financial statements of the company. The directors that satisfied that all of the
provisions with relation with the non-audit services by the auditor are very much in line with
all of the general standards of the independence of the auditors that have been imposed in the
various different provisions of the Corporations Act, 2001. The directors are further of an
opinion that the following listed down services as contained in the financial statements are
not capable enough to compromise in the independence of the external auditor which is
somewhat based on the advice which has been received from the Audit Committee of the
company. And this is mainly due to the following listed reasons:
 All of the non-audit services that are being provided by in by the auditors have been
duly reviewed and approved in order to make sure that none of it affects the integrity
and the objectivity of the auditor
 The non-audit services being rendered are not capable enough to undermine in the
general principles of the independence of the auditor as have been laid down in the
ethics code. This includes in the reviewing or the auditing work of the auditor, acting
in the management or working as in the capacity of the decision making for the
company such as an advocate for the company or sharing in the economic risks and
rewards.
Non-audit services being rendered by the auditors:
 Investigating accountants

CORPORATE REPORTING 7
 Other assurance services
 Other advisory services
 Due diligence
Auditors’ remuneration:
The following is the table which shows in the remuneration of the auditor:
Network firm of parent entity auditor
Particulars 2017 in $ 2016 in $
%
change
Audit of the financial
statements:
Europe
3,62,755.0
0
3,19,126.0
0 -13.67%
Japan
1,99,319.0
0
2,52,054.0
0 20.92%
Other non audit
services:
Europe - taxation
compliance services
83,671.0
0
30,922.0
0
-
170.59%
Europe - transaction
services - -
Japan - transaction
services
19,446.0
0
45,698.0
0 57.45%
Total
6,65,191.0
0
6,47,800.0
0 -2.68%
Auditor of the parent entity
Particulars 2017 in $ 2016 in $
%
change
Audit or review of 3,25,149.00 3,65,285.00 10.99%

CORPORATE REPORTING 8
the consolidated
financial statements
Other non-audit
services:
Investigating
accountants - - #DIV/0!
Other assurance
services 35,000.00 10,000.00
-
250.00
%
Other advisory
services 1,17,500.00 1,09,775.00 -7.04%
Due Diligence - -
Total 4,77,649.00 4,85,060.00 1.53%
The above could be concluded in the form that the remuneration which is being paid to the
auditors for their services has reduced as a whole (1.53%-2.68%).
Role, functions and composition of the Audit and risk Committee:
There is an Audit Committee of the company. The committee consist of 3 members and that
are entirely non-executive independent directors of the DPE. It has the Chairman which is not
the chairman of the Board of DPE.
The Charter of the committee is reviewed once in every two years and also updated by the
Board of the directors if required, on the recommendation from the Audit Committee.
With regard to the membership, they are appointed by the Board. As per the charter of the
committee, all of its members have a higher degree of diverseness and have some of the
complimentary skills and are sound when it comes to being liberate. The members of the
committee are Messrs, Adler, Cave and Bourke. The chairman of the stated committee is Mr
Adler who is an independent directors. His qualifications and the degrees that he possess are
stated therein the Corporate Directory section of the Annual Report of the company.
The committee has the following duties and responsibilities:
 It is the duty of the Board to suggest on all of the different aspects of the internal as
well as the external audit
 It is something that gives its views about the adequate of accounting and the various
different procedures involved when it comes to the management procedures, system,
controls and the financial reporting.

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The following are the specific responsibilities that the committee has:
 Making suggestions to the board with regard to the appointment, re-appointment and
the removal of the external auditors
 Keeping in track the degree of independence of the external auditors
 Making suggestions about the work that is being performed by the auditors.
 Making suggestions about the engagement of all of the external auditors and also
monitor in their performance
 Reviewing the effectiveness of the information of the management along with other
systems of the internal controls.
 Review all of the different areas of financial risk that are very much significant for the
company
 Ensuring that all of the significant financial risk along with the different arrangements
are well in place for the ones that are at an acceptable levels.
 Reviewing all of the major transactions that form the day to day part of the business
operations
 Reviewing and monitoring and keeping a track of all of the internal controls and also
ensuring compliance all with the corporations Act along with the ASX Listing Rules
and also review in all of the external audit reports and ensure that there are prompt
remedial actions of the same.
 Reviewing in the full year’s financial statements along with the half yearly statements
of the company before the same are submitted to Board.
For the purposes of carrying out all of the above stated functions, the committee has the
transparent lines of communication which exists between itself, the internal auditors, the
external auditors and the management of DPE.
Independent Auditors report to the members (shareholders):
As per the section 307C of the Corporations Act of the year 2001, the auditors specified the
following:
 The various different requirements as have been laid down under the corporations Act
2001 has bene fulfilled
 Also, any of the applicable code of the professional conduct has been duly complied
with.
Review all Key Audit Matters noted and the associated audit procedures:
The following are the ley audit matters that are reported in by the management:
 In respect of the carrying value of goodwill and the indefinite life of all of the
intangible assets that exists in Japan and Germany’s cash generating units, in line with
the valuation reports from the experts or the audit procedures, the same were carried
out. The appropriateness of the methods that have been applied in by the management

CORPORATE REPORTING 10
when it comes to calculating the recoverable amounts of the cash generating units.
The various assumptions were also challenged when it came to the calculation of the
discount rates and the recalculating of these rates. The various different projected cash
flows along with the various assumptions which relates in with the expected rates of
growth and the operating margins as against the historical performance, the
projections of the management and the data of the observed industries, were duly
tested for adequacy and effectiveness. The categorisation of the cash generating units
of the company. The allocation of the goodwill to the carrying value of the cash
generating units was also considered and tested for adequacy. The mathematical
accuracy of these cash generating units was also cheeked. Sensitivity analysis was
conducted on the recoverable amounts of these cash generating units in and around
the key drivers of the growth rates that were being used in the forecasting of the cash
flows and the discount rates.
 In terms of valuation of the various put options, in line with the valuation of the
experts, many of the audit procedures included the assessment of the appropriateness
of the methods that have been applied in by the management when it comes valuing in
the option and the assessment of the various key assumptions which includes in the
expected future earnings of each one of the components. The expected timing of these
exercises of the put options and the discount rates was also done. The assessment of
these assumptions that were used in the model of valuation for the purposes of
ensuring that these are in as per the terms of the put options that have been prescribed
in the agreement of the shareholder. The independence, competence, objectivity of the
expert of the management was also evaluated. A sensitivity analysis of the various
key assumptions of the valuation model was also done. The mathematical accuracy of
these calculations of the put options was also tested in,
 In terms of valuation of the various put options, the assessment of the methods that
were applied in the group was tested along with the calculation of the liability of the
put option. The various inputs used in by the management was challenged and also,
the calculation which was done for the purposes of arrive in at the liability of the put
option as per the terms that have been prescribed n by the agreement of the
shareholders were checked. The correspondence with the counterparty as being the
part of the completion of the exercise of the put option was inspected. The
appropriateness of the various related disclosures required was also checked.
 In terms of the accounting for the guarantees contingencies and the claims that were
related with the group, the process of the management for the purposes of valuating in
the different guarantees was evaluated. The status of any new and the existing claims
along with the contingencies were assessed. This was done through the inquiry pf the
management and the legal advisors of the group. The confirmation form the legal
visors was sought. The minutes of the board meetings along with all of the relevant
information were inspected thoroughly which was presented to the directors. The
appropriateness of the various disclosures was also checked in the financial
statements.

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Directors’ and Management’s responsibilities:
The main responsibility of the auditor is to plan in and also perform the audit in order to
obtain a reasonable assurance of the fact that the financial statements are free from any
material misstatements whatsoever and that there is no error or any fraud in them. This is
mainly due to the fact that the nature of the audit evidence and the characteristics of the fraud,
the auditor would not be able to obtain an exact assurance that there is no falsified business in
the financial statements (PACOBUS, 2018). The financial statements is the primary
responsibility of the management. The responsibility of the auditor is just to express an
opinion on the truthfulness and the fairness of these prepared financial statements (University
network, 2018). The management is the one that is responsible for the purposes of adopting
in the sound and correct accounting policies. It is the management which is responsible for
the intiation, recording, processing and preparing these financial statements.
Material subsequent events:
The Annual report of the company states that there is as such no matter or circumstance by
the end of the accounting year that could have affected in or could significant affect the
operations of the consolidated entity. There are material subsequent events that could affect
in the results from those operations or the stated of the affairs of the consolidated entity in the
future financial years.
But there is an event after the reporting date which is that on August 14, 2017, the directors
had declared in the final dividend for the financial year which ended on July 2, 2017.
Assessment of effectiveness of material information:
The information as has been contained in the annual report of the company is sufficient
enough to assess the reporting adequacy of the company.
Under reporting and questions to be asked to auditor:
The following questions could be posed in to the auditor:
 Any fraud detection program that the company has?
 The company’s policies to make sure that there is no insider trading?
 Adequacy of the internal controls
 The appropriateness and the adequacy of the internal controls (PWC, 2006).
Conclusion:
The company does have the Audit committee which has the roles and responsibilities of
overlooking all of the business functions of the company and to make sure that the company
is performing properly and that it is disclosing all of the relevant facts correctly and as per the
relevant accounting regulations.
The responsibility of the management sis to prepare in the financial statements.

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As per the Statements of Auditing Standards, the transactions that are entered into during the
course of the events of the company are within the scope and within the knowledge of the
management of the company and hence, they are the right people to prepare the financial
statements. Their knowledge is all about the business that they have been indulging
themselves in. the main responsibility of the auditor is the expression of their opinion on the
truthfulness an fairness of the financial statements. The auditor could give suggestions to the
management with regard to the preparation of the financial statements but the sole
responsibility is still of the company.
Though the facts contained in the annual report are all relevant but then an investor could
pose some questions such as the programs that could test the adequacy of the internal
controls.

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References:
Asx300list.com. (2018). ASX 300 List - Data for ASX Top 300 Companies. [online] Available
at: https://www.asx300list.com/ [Accessed 8 Sep. 2018].
Concernedshareholders.com. (2006). Questions that could be asked at shareholders meetings.
[online] Available at:
https://www.concernedshareholders.com/CCS_ShareholderQuestions.pdf [Accessed 8 Sep.
2018].
Dominos.com.au. (2018). Annual report 2017. [online] Available at:
https://www.dominos.com.au/media/91141/2017.pdf [Accessed 8 Sep. 2018].
Dominos.com.au. (2018). Domino's Corporate - Domino's Pizza. [online] Available at:
https://www.dominos.com.au/inside-dominos/corporate [Accessed 8 Sep. 2018].
Network, U. (2018). Management's Responsibilities | Office of Internal Audit | Nebraska.
[online] Audit.unl.edu. Available at: https://audit.unl.edu/managements-responsibilities
[Accessed 8 Sep. 2018].
Pcaobus.org. (2018). AU 110 Responsibilities and Functions of the Independent Auditor.
[online] Available at: https://pcaobus.org/Standards/Auditing/Pages/AU110.aspx [Accessed 8
Sep. 2018].