ACCT20075 Auditing and Ethic: Analysis of New Hope Corporation Report

This report provides an in-depth analysis of the auditing process applied to New Hope Corporation Limited's annual report. It begins by determining the level of materiality used for the audit, referencing ISA 200 and considering both quantitative and qualitative aspects. The report then undertakes a preliminary analytical review, examining the company's assets, liabilities, and equity over several years to assess its financial health and performance, including profit and loss trends. A detailed review of the statement of cash flow is conducted to assess the company's cash inflows and outflows. The report also reviews the 2017 financial report, highlighting key metrics such as revenue, EBITDA, and production figures, and comparing them to the previous year. The analysis covers disclosure reviews related to the annual report, including insurance policies and fair value estimations, concluding with an assessment of the company's overall financial position and the effectiveness of the auditing procedures. The report also analyses the annual report of the firm to understand the auditing process and the financial condition of the firm within the market.

ACCT20075 Auditing and Ethic
New Hope Corporation Limited – Annual Report Auditing
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ACCT20075 Auditing and Ethic
Table of Contents
Introduction.................................................................................................................................................2
Section 1: Determination of the level of materiality used for audit and draft notes.....................................2
Determination of the level of materiality.................................................................................................2
Annual report draft and disclosure review...............................................................................................3
Section 2: A Preliminary analytical review.................................................................................................3
Section 3: Statement of cash flow and financial report review....................................................................5
Cash flow statement review.....................................................................................................................5
Review of the audit report of the 2017 financial report...........................................................................5
Conclusion...................................................................................................................................................6
References...................................................................................................................................................7
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ACCT20075 Auditing and Ethic
Introduction
Auditing is the process of conducting the official financial inspection for the firm to understand
the financial condition of the firm. For performing the auditing the organisation New Hope
Corporation Limited is being selected. The organisation was founded in the year 1952 and on
2003 they were listed on the ASX Company. The paper will focus on the analysis of the financial
and annual report of the firm to understand the auditing process and the financial condition of the
firm within the market.
Section 1: Determination of the level of materiality used for audit and draft notes
Determination of the level of materiality
Materiality is the primary concept within the process of auditing to the importance of the amount
than the transaction within the annual report. The level of materiality that could be utilized for
the analysis of the group annual report of the firm is considered to be ISA 200 (Pucheta‐
Martínez, & García‐Meca, 2014). This is generally utilized for providing the view on the
development process of financial statement with the help of proper material aspect. It also shows
that misstatements are generally considered as the material if it could reasonably be expected in
influencing the economic decision of the users that are usually taken on behalf of the financial
statement. The fact is clear that the concept of materiality is the fundamental activity for the
auditing process. During the planning stage the materiality is being set as the whole (Bepari, &
Mollik, 2016). This is due to the fact that New Hope Corporation Limited annual report auditing
process needs to be performed in the term of materiality to understand that if the financial
reporting is free from material misstatement.
In the determination of overall materiality in the annual report of NHC help the auditor for
understanding the misstatement within the report. The balance sheet along with the income
statement and the profit and loss of the firm clearly provides the effective view on the materiality
of the organisation. These are the material that is being utilized within the auditing process for
providing effective analysis and auditing for the annual report of the firm (Gaynor, Kelton,
Mercer, & Yohn, 2016). The quantitative estimate of the materiality for New Hope Corporation
limited are the balance sheet and the income statement of the firm along with their profit and loss
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statement. The amount of transaction related to the business process and other activity provides
effective materiality for auditing within the organisation.
Annual report draft and disclosure review
The annual report of NHC provides the effective disclosure in the term of insurance policy that is
performed for the insurance of liability of the firm. The liability insurance is performed against
and the amount of the premium. The annual report also provides the view that other immaterial
coal mining as well as the related operation which does not need the threshold generally required
separate disclosure in the AASB 8 operating system (Abbott, Daugherty, Parker, & Peters,
2016). It can be seen from the disclosure that the sales within the segment are performed out at
the support length and also they are eliminated on the consolidation. From the annual report, it
can be also seen that the fair value estimation is the financial tools that are used to determine the
valuation techniques.
The draft of this report is clearly shown within the balance sheet of the firm where it provides an
effective view on the forward exchange. It can be seen that the fair value of the financial
statement is based on the quoted market price that also at the reporting date. In this case of NHC,
the quoted market price is considered to be 3.364 million dollars on the equity security. The
remuneration disclosure of the company also provides the view on their wages and their
compensation factor for the staff members (Darmadi, 2016). The performance of the
stakeholders along with the executives are verified in the most effective way to provide valuable
remuneration policy for the firm. Auditing is the most effective process for analysing the
performance level of the firm and for this process, the existence testing along with the valuation
testing is highly effective.
Section 2: A Preliminary analytical review
New Hope Corporation Limited is having the effective and valuable working function regarding
their assets and their liabilities. It can be seen that the year 2015 in the term of the asset was
better as compared to that of 2016. The fact is clear that for the year 2015 the current asset was
1,166,178 whereas, for the year 2016 it was 231,849. In the case of a non-current asset, the
organisation has a higher value for the year 2016 as compared to 2015. The total asset of the firm
in 2016 was 2,018,549 and for the year 2015, it was 2,075,158 (New Hope Corporation Limited,
2018). The difference can clearly understand that the asset of NHC has decreased over the year.
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It is clear that in the year 2017 again the value of asset increased within the firm where the total
asset was 2,181,645. Total equity of the firm for the year 2015, 2015 and 2017 are 1,852,625,
1750412 and 1853428 respectively (Salehi, & Shirazi, 2016). It clearly provides the view that the
financial health of the firm for the year 2015 was quite good and they faced profit in the firm. In
the year 2016, their financial health decreased as compared to that with the previous year.
The financial health of the firm again increased in the year 2017 which clearly show they retain
profit to be 1721118 and their total equity to be 1853428. The balance sheet and the financial
health of the firm clearly show that the company faces a profit of 56735 for the year 2015 but in
the year 2016 they faced the loss of 69378. The organization has to travel through a huge
transformation for the year 2017 to make change within the amount for gaining profit (Dumay,
2016). For the year 2017, the profit was 3670 which indicates the slow growth of the company
after they faced a loss for the financial year of 2016. The analysis of profit and loss statement of
the company show that for the year 2015 and 2016 the organisation faced the total
comprehensive loss of 42431 and 35834 respectively. The year 2017 is quite positive and good
for the company as compared to that of the previous year (Nguyen, & Truong, 2017). This is due
to the facts that in the year 2017 the organisation has the total comprehensive income or the
profit of 152555. The deeds of cross guarantee provide the effective view of the consolidated
statement of the comprehensive income.
The organisation NHC is having the suitable and valuable position within the market in term of
their profit and loss for the years 2015, 2016 and 2017. For example; the consolidated statement
of the comprehensive income shows that the organisation faced the profit after the income tax for
the year 2015 which was 60265. On the other hand for the year 2016 the company faced the loss
of 85882 after the calculation of income tax. Again for the year 2017, the organisation has faced
profit of 79436 calculation after income tax for the year (Annual report NHC, 2018). For the year
2015 the changes in the fair value regarding the cash flow hedges is considered to be in loss of
33790 but for the year 2016, it is in the profit of 2455 for the firm. This is the fact that the
business has the increased value for the development of working function within the field. In the
year 2017 again they face loss for the fair value of cash flow hedges of 4031 which indicates the
ups and downs of the company for the years (Shimeld, Williams, & Shimeld, 2017). The balance
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sheet and the profit and loss statement show that the New Hope Corporation limited is having a
quite improvised working function within the market.
Section 3: Statement of cash flow and financial report review
Cash flow statement review
The cash flow statement of the company shows that the organisation is having the valuable
aspect in term of the business and provides the view on the health of the company. It can be seen
that net cash inflow within the firm for the year 2017 was from operating activities. The net cash
flow of this activity was 284531. On the other hand, the greatest outflow of the net cash from the
company is regarding the process of investing activity and the financing activity. For the
investing activity, it can be seen that net cash outflow was 79101 and for the financing activity
the amount is 52136 (Sethi, Martell, & Demir, 2017). The primary cash receipt along with the
cash payment for the year 2017 was considered as the receipt from the customers that involve
GST and the amount was 914625.
The payment performed by the firm in the year 2017 is done for the suppliers and also to the
employees which even involve the GST and the amount of payment was 601621 (Pearson,
2014). The organisation performed various non-cash financial as well as the investing activities
that imply on the financial health and the cash flow of the firm. The non-cash investing activity
within the organisation for the year 2017 is paid for the property, then the payment for the
intangible assets along with the dividend received then the payment for the acquisition of the
business (Home | New Hope Group, 2018). The activity that is being performed by the firm in
term of financing is the repayment of finance leases and the dividends payment which depicts the
amount of 52136 as the cash outflow from the financing activities. Audit planning is the best
process for the identification of risk that is being associated with the company in their cash flow
statement. This is one of the best and the effective way for the improvement of risk associated
within the firm.
Review of the audit report of the 2017 financial report
The organisation New Hope Corporation Limited financial report for the year 2017 share the
view that the firm faced a net profit after the tax as well as before the non-regular items of
around 128.7 million dollars. The financial report of NHC also provides the view that the
revenue of the firm was 844.1 million dollar that is almost 59% more than the revenue of the
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financial year 2016 (Christ, Masli, Sharp, & Wood, 2015). The cash generating of the firm
remains strong with the EBITDA of around 283.1 million dollar that is almost 248% more than
the previous year. It can be also seen that the company produce the positive cash operating
surplus that is of the amount of 313 million dollars that also before the tax and the interest.
The total non-regular goods after the tax resulted within the net increase of the group tax is
considered to be the amount of 11.9 million dollars. The production of the company for the year
2017 was almost 8.6 million tons of the saleable coal which is the increment of around 30% from
the year 2016 (Basu, Hicks, Krivokapic-Skoko, & Sherley, 2015). The company also performed
the total amount of coal sale for the year 2017 was 8.5 million tons and it is much more than the
6.9 million tons of coal sale that were performed within the year 2016. The financial condition of
the company for the year 2017 was much favourable as compared that with the previous years.
The annual report did not face ant type of issues that are directly impacting the delivery of
financial report for the company. The organization is providing the healthiest financial condition
for the company in the year 2017.
Conclusion
The paper eventually concludes the fact that the organisation NHC have the profit for the year
2017 and also for the year 2015. The paper also concludes the fact that for the year 2016 the
organisation did not face profit and for that their sales and their investors face a huge drawback
within the market. In the year 2017, they again have the profit in their sales and the working
function within the market. The balance sheet along with the cash flow statement and the income
statement clearly shows the improvement process of the firm within the market. The financial
report of NHC for the year 2017 show that the organisation is having a positive and high growth
rate within the market.
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References
Abbott, L. J., Daugherty, B., Parker, S., & Peters, G. F. (2016). Internal audit quality and
financial reporting quality: The joint importance of independence and
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Annual report NHC, (2018). Asx.com.au. Retrieved 31 August 2018, from
https://www.asx.com.au/asx/share-price-research/company/NHC
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corporate social responsibility: A case study of a large gold mine in regional
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Home | New Hope Group. (2018). Newhopegroup.com.au. Retrieved 31 August 2018, from
http://www.newhopegroup.com.au/
New Hope Corporation Limited, (2018). Newhopegroup.com.au. Retrieved 31 August 2018,
from http://www.newhopegroup.com.au/files/files/2017%20Annual%20Report.pdf
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Nguyen, N. N. H., & Truong, T. P. (2017). Regulatory enforcement, financial reporting quality,
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