Auditing Report: Amcor Limited, Corporate Governance & Financial Risk

This report provides a comprehensive analysis of Amcor Limited, focusing on its adherence to the ASX Corporate Governance Council's principles and recommendations. The study examines Amcor's compliance with each of the eight principles, evaluating its board structure, ethical decision-making processes, financial reporting integrity, disclosure practices, shareholder rights, risk management strategies, and remuneration schemes. Furthermore, the report delves into a financial risk assessment of Amcor, utilizing key financial ratios such as debt-to-equity, quick ratio, receivable turnover, operating margin, and net profit margin to evaluate the company's financial health and identify potential risks. The analysis also includes a trend evaluation of Amcor's financial performance, highlighting changes in net income, sales revenue, total assets, and liabilities. The report aims to offer insights into Amcor's corporate governance practices and financial risk profile.

Running head: AUDITING
Auditing
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Authors’ Note

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Table of Contents
Executive Summary...................................................................................................................2
Examination of conformation with the 8 Principles of Corporate Governance.........................2
Evaluation of Risk of Amcor Limited........................................................................................8
References................................................................................................................................11

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Executive Summary
This study helps in assessing degree of commitment of the corporation Amcor Limited
towards attainment and expression of high standards of corporate governance principles. In
essence, this section analytically evaluates overall nature along with extent of conformation
with the principles issued by the ASX Corporate Governance Council. Also, this study sheds
light on evaluation of risk by using chief financial ratio and study of trend over a certain time
period. Furthermore, this analytical assessment of financial state of affairs can assist in the
process of identification along with comprehension of risk of audit and present ways of
mitigation of identified concerns.
Examination of conformation with the 8 Principles of Corporate Governance
Analysis of the declarations released by the firm Amcor Limited reveals the fact that the
company Amcor Limited complies with the stipulations laid under the ASX Corporate
Governance Council’s Corporate Governance Principles along with recommendations of the
3td edition. Also, the assertion also incorporates different disclosures necessary for
conformation with the principles laid down by ASX (Simpson et al. 2016).
Principle1: Groundwork for appropriate management together with oversight
Analysis of declarations presented by the firm replicates that directors of the firm Amcor
Limited is responsible for corporate governance of the entity. The directors in the company’s
Board direct and all at once track diverse business interaction of the corporation chiefly for
the shareholders of the firm (Rezaee et al. 2018). Accountabilities that are particularly
delegated to the managing directors, chief executive as well as executives in the management
are aligned with the Delegated Authority Policy of the entire Group. Also, these entrustments
are also tracked on a daily basis.

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Accountabilities of the management comprise of the following:
 Formulation of plans of business, development of business strategies for presentation
of budgets validated by the board and execution of designed plans
 function of business within the set parameters established by the entire board and
keeping the firm’s board well notified as regards diverse material developments of the
business
 recognition, classification and administration of business risks that can materially
have an effect on operations of the business
 administration of financial as well as other systems of reporting for ensuring that
these systems are working effectively to contain all relatable information
 Taking on all reasonable steps to ascertain that board is presented with all the accurate
information with regard to functioning of the corporation in a timely way
 Implementation of diverse policies, measures in conjunction with codes of conduct
endorsed by the firm’s board
Responsibilities of Amcor’s board comprise of the following:
- Supervision of management on the whole (Vasarhelyi et al. 2018).
- Presenting all deliberate direction for strategies of the business
- Presenting oversight with regard to occupational health plus safety
-Monitoring operational together with financial arrangement
-Making certain that reporting methods are passable and fitting
-Recognizing all risks faced by the corporation and carrying out corrective actions for
alleviation of the same (Vasarhelyi et al. 2018).

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Principle 2: Framework of the Board for addition of value
Examinations of declarations of the firm helps in understanding the fact that the firm Amcor
presents report specifying all the requisite details of firm’s board, skills as well as experience
of board members, qualifications of board members, independence status in conjunction with
their terms of office. Details of all these are mentioned in the profile of the director and is
said to conform to the principle mentioned in ASX CGS. The table presented below shows
the profile of the directors in the board of the corporation:-
In addition to this, this current segment also illustrates overall composition of Amcor’s board
that explains varied factors regarding composition of the firm that are established in
Constitution of the Company and the Charter of the Board

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Principle 3: Presentation of ethical as well as responsible decision making
Handling Conflict of interests in the firm Amcor Limited
Report presented by the company outlines the need of the directors to keep board of the firm
informed on a regular basis concerning any sort of interests that in sequence can be in conflict
with interests of the corporation (Simpson et al. 2016).
Principles of Code and ethics
The principles of integrity, fairness plus integrity are honesty are encapsulated in particularly
Amcor’s Corporate Code of Conduct. In addition to this, this firm also has a whistleblower
strategy along with a Whistleblower Committee Charter that can inspire their workforce to
report regarding any kind of misconduct or else wrong doing principally in good faith
(Simpson et al. 2016). In addition to this, Amcor Limited also has a anti-bribery rule and a

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corruption policy in place that essentially prohibits bribery plus corruption in regular business
connections and dealings. Moreover, Amcor Limited has a Share Trading Policy that sketches
directives of trading according to ASX Listing convention to prevent insider trading.
Principle 4: Protection of integrity in pecuniary reporting of the firm
Amcor Limited has committee for Audit as well as Compliance that prepares and presents a
charter endorsed by the firm’s board and is in effect put through regular appraisal. Also, the
charter pronounces that every one of this committee has the need to be non-executive
affiliates and satisfy necessities of independence. In addition to this, the committee also aids
the board in meeting the liabilities of examining quality with integrity on the whole with
respect to accounting processes, auditing along with financial reporting processes of the firm.
Furthermore, this Committee is also legally responsible for appointment of external auditors,
their retention plus compensation and supervise status of independence of assessors
(Vasarhelyi et al. 2018).
Principle 5: Presentation of timely and at the same time fair disclosure
Amcor Limited has established guiding principles with procedures that include a Policy of
Disclosure. In essence, this Disclosure Policy contains acknowledgment of diverse affairs
that might possible have a material effect on securities prices of Amcor. Also, the policy of
disclosure also states the need to notify affairs of business affecting stock prices to the Stock
Exchange, present significant and relatable information on official website of the corporation
and provide media releases (Simpson et al. 2016). Furthermore, Amcor Limited also
considers Shareholder Communication Policy that acknowledges the need of the following:

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- Presenting annual report that takes in all requisite information as regards functionalities of
the complete consolidated business, economic information and adjustment in business state of
affairs (Rezaee et al. 2018).
- Presenting Half along with full year results Australian Stock Exchange to shareholders
through official websites
- Delivering ASX declarations, financial information along with media releases
- Presentation of Live webcast of speech of the Chairman of the company during AGM-
(Annual General Meeting) of the firm
Principle 6: Respect to rights of shareholders
Amcor Limited delivers due respect to firm’ shareholders by inspiring their involvement in
company’s annual general meeting. Essentially, this can make present superior level of
liability of director to firm’s shareholder and recognition of shareholder with firm’s strategy
along with goals (Omar et al. 2014)
Principle 7: Detection plus management of recognized risks promptly
The firm Amcor has in place a Risk Management Committee that presents an conventional
approach that integrates different principles of effective management of risk. In particular,
this is set according to the necessities of specifically Standards of International Risk
Management. Specific standards of risk management that are considered in this case include
ISO 31000, COSO criterion of Internal Control (Messier et al. 2015). Risk management
structure of the corporation takes in three diverse components explicitly Appetite, level of
Tolerance plus Strategy as well as Policy. Also, the Business Continuity of Amcor together
with Crisis Management Program has the intent to augment overall buoyancy of the firm to
varied exceptional and uncertain occurrences and put in steady performance of the

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corporation. In addition to this, the firm also has internal audit that assists the Board to be in
no doubt with Internal Control along with programmes of management of risk (Christensen et
al. 2015)
Principle 8: Presentation of Remuneration Scheme that is both Fair as well as responsible
Amcor Limited has a Human Resource Committee that critically evaluates and delivers
recommendations to the board of the firm on mainly remuneration packages. This committee
has the responsibility to monitor remuneration packages together with policies that are
appropriate for Managing Directors along with CEO of Amcor, plus non-executive directors
of the firm. In addition to this, this committee is also answerable for overseeing policies as
well as measures for retention of senior management of the firm, format of incentive,
programmes for leadership skills of executives together with succession planning (Chou
2015).
Evaluation of Risk of Amcor Limited
Background Information
Amcor Limited is recognized Australian-based conglomerate Packaging firm. Essentially,
this company manufactures stretchy along with inflexible packaging, mainly for food as well
as beverages, products for health care, tobacco sections and many others. Also, products of
Amcor’s preserves diverse pharmaceutical instruments, tools as well as equipments, various
personal products, medical equipments, food as well as beverage along with home and
personal care products.
Regulators
The regulators of the company include the Australian Stock Exchange that is the Corporate
Governance Council of ASX.

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Business Strategies of the firm Amcor Limited
- Development of growth prospective of the corporation sustainably
-Maintenance of Differentiation by undertaking the strategy of “standing out and at the same
time standing ahead”
Analysis using important financial ratio
Debt equity ratio of the firm Amcor is recorded to be 4.35 during the year 2016 that
decreased to approximately 4.23 during the year 2017. Nevertheless, the yardstick debt equity
ratio stands at 1. Thus, the figure for debt equity of Amcor reflects greater debt financing,
high leverage signifying concerns regarding interest of the corporation. Even though the
enumerated figure has decreased during the financial year 2017, this is much over and above
1 reflecting unfavourable financial circumstances.
-Amcor Limited’s Quick ratio is enumerated to be 0.14 and 0.13 during FY 2016 and FY
2017 respectively. Essentially, it can be hereby mentioned that the corporation has
comparatively low quick ratio signifying lower potential of the firm to pay out to satisfy
payment necessities of the corporation especially during short term (Cheung 2014)
-Receivable turnover of Amcor Limited is registered to be approximately 7.88 during the
financial year 2016 that necessarily enhanced to 8.00 during the financial year 2017.
Therefore, an increasing trajectory is manifested from the enumerated figure for receivable
turnover. In this context, it can be said that higher ratio replicates favourable financial
condition since this divulges that credit sales of the corporation are more prone to be gathered
than a particular corporation with lower ratio (Chan and Vasarhelyi 2018)
- Again, Amcor’s Operating margin is observed to be negative figure since the operating
income of the business is negative. Nevertheless, the situation is observed to enhance during

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the period 2017 with comparatively lesser negative figure of the firm on operating income.
On the other hand, Amcor’s net profit margin is observed to have increased from around
2.5% in financial year 2016 to approximately 6.5% in the financial year 2017 signifying
pleasing financial circumstances. In addition to this, return on equity of Amcor’s is registered
to have enhanced from roughly 31.15% in the financial year 2016 to approximately 72.59%
in the financial year 2017, representing increased potential of the corporation to get hold of
returns from equity of firm’s shareholders.
Risk assessment by means of scrutiny of trends
Evaluation of trend of the corporation replicates that net income of Amcor has enhanced by
roughly 132% during the financial year 2017 in comparison to the previous year’s figure,
even though figure on sales revenue of the corporation has declined by roughly 6.7%. In
addition to this, a total asset of Amcor reflects an increasing trajectory and is observed to
have enhanced by approximately 1.009% during the financial 2017. Again, liabilities of the
Amcor have augmented by 0.9%.
Procedures of Audit for alleviation of acknowledged risks:
-Assessment of liquidity ratio of the corporation and scrutiny of cash register for maintenance
of firm’s cash and cash reconciliation with bank report
- Receivables of the firm Amcor can be substantiated with particularly the days that are
permitted for disbursements, evaluating probability of bad debt (Armstrong et al. 2015)
- Documentation or maintenance of report on Debt that can be examined again and again for
appropriate understanding of sources of fund and endeavour to lessen payment pressure for
debt

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-For the purpose of enhancing profit, expends figure of the firm can be lessened and different
vouchers that are relatable to firm’s expends can be scrutinised and confirmed in a regular
basis (Baylis et al. 2017)
References
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governance, incentives, and tax avoidance. Journal of Accounting and Economics, 60(1),
pp.1-17.
Baylis, R.M., Burnap, P., Clatworthy, M.A., Gad, M.A. and Pong, C.K., 2017. Private
lenders’ demand for audit. Journal of Accounting and Economics, 64(1), pp.78-97.\
Chan, D.Y. and Vasarhelyi, M.A., 2018. Innovation and practice of continuous auditing.
In Continuous Auditing: Theory and Application (pp. 271-283). Emerald Publishing Limited.
Cheung, B., 2014. trading in treasury Bond Futures Contracts and Bonds in australia. The
RBA’s Business Liaison Program 1 Unemployment and Spare Capacity in the Labour Market
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Chou, D.C., 2015. Cloud computing risk and audit issues. Computer Standards &
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Christensen, J., Kent, P., Routledge, J. and Stewart, J., 2015. Do corporate governance
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Messier, W.F., Glover, S.M. and Prawitt, D.F., 2015. Auditing & Assurance Services: A
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