ASX Corporate Governance Principles and Audit Implications: HI6026

This report explores the critical role of auditors in upholding corporate governance, particularly within the Australian context, focusing on the ASX Corporate Governance Principles and Recommendations. It examines how the adoption of these principles by a client company, such as Santos Limited, influences the auditor's risk assessment process, audit approach, audit strategy, and the gathering of audit evidence. The report delves into each of the eight ASX principles, analyzing their implications for audit procedures and the overall reliability of financial reporting. Furthermore, it highlights the significance of corporate governance in safeguarding stakeholder interests and promoting investor confidence. The report also provides insights into how the implementation of these principles strengthens the corporate governance framework in Australia.

AUDIT ASSURANCE AND
COMPLAINCE

INTRODUCTION
• The auditors plays vital role in the protection of the interests of the shareholders. They helps
in reporting the state of the finance of the company and attests the validity of the financial
reports, which have been released.
• Corporate governance is defined as oversight of the policies, practices as well as procedures
of the corporation.
• The auditor of the company is not having direct responsibility for the corporate governance
rather it helps in providing the check on the aspects of the information of the system of
governance.
• In Australia, Corporate governance is gaining great importance. It is interacting with the
auditing as well as it is useful for understanding the way corporate governance as well as
auditing is affecting the companies (Lama and Anderson 2015).
• The large collapses of the corporate has resulted into commencing the program of the
reform that is designed for strengthening of the corporate governance in the Australia.
• Santos is predominantly one of independent prominent producers of oil as well as the gas in
region of the Asia-Pacific that supplies energy needs all across Australia as well as Asia. It is

CORPORATE GOVERNANCE
• The concept of corporate governance is explained as the framework of the rules, systems,
processes as well as relationships within and by the help of which the authority is being
exercised as well as controlled in the organization.
• This helps in encompassing the mechanism with the help of which the companies as well as
those in the control are held to the account.
• The good corporate governance is crucial as it helps in promoting the confidence of the
investor that is important for the ability of the organizations that are listed on ASX for
competing for the capital.
• The major objectives of corporate governance include motivations of the value-maximizing
decisions, protections of the assets from the unauthorized acquisitions or the uses as well as
production of the proper financial statements (Nadeem, Zaman and Saleem, 2017).

CONTINUED…
• In case of auditing, the audit committee plays the indispensable role in challenging
of the practices, which is having the potential for undermining financial re
• Auditors are the significant part of the monitoring system of firm and therefore it is
considered as the essential component of the corporate governance. porting
quality.
• Auditors’ works with the other actors in corporate governance for ensuring that the
stakeholders receive highest levels of the financial reports quality and they helps
for protecting the interests of the investors as well as future and current
shareholders (Asx.com.au. 2019).

ASX CORPORATE GOVERNANCE PRINCIPLES AND
RECOMMENDATIONS
• The principles and the recommendations helps for setting out the recommended practices of corporate
governance for the entities listed on ASX.
• It likely helps in the achievement of the outcomes of the good governance and meeting of reasonable
expectations of most of the investors in many conditions.
• The council has recognized that various organizations might legitimately strives for adopting the different
practices of the governance that are based on the ranges of the factors that includes corporate culture, sizes,
history as well as complexity (Chan, Watson and Woodliff 2014).
• The approach of principles and recommendations ensures that market should receive the significant level of the
information of the governance arrangement of the organization so that the investors as well as the other
stakeholders can have the meaningful dialogue with the board as well as management on the matters of
management.
• It helps to factor the information provided into the decisions regarding whether or not for investing in the
organizations as well as for voting on the particular resolutions (Miglani, Ahmed and Henry 2015).

CONTINUED…
• Laying solid foundations for oversight and the management- In this
principle ASX CGU principle, the listed organization should have as well as
discloses the board charter. It helps in setting out respective roles and the
responsibilities of board and the management and those matters that is explicitly
reserved to the board as well as those who are delegated to the management
(Xu, How and Verhoeven 2017).
• Structuring the board for effective and adding value- This principle
requires the listed entity for having regard of their board and their sizes,
composition as well as their commitment, which enable for discharging their
duties effectively.

CONTINUED…
• Instilling the culture to act ethically, lawfully and responsibly- This principle requires the listed
organization for acting ethically as well as responsibly. It includes having as well as disclosing the
code of the conduct for the directors, senior executives as well as employees and ensuring that the
board or the committee is informed regarding material breeching of code (Klettner 2016).
• Safeguarding Integrity of the Corporate Reports- The principles requires the listed entity for
having appropriate processes for verifying of their corporate ethics.
• Making balanced and timely disclosures- This principle requires the listed organization for
making timely as well as balanced disclosures on all the matters that concerns that the reasonable
person should expect for having material effect on values or prices of securities.
• Respecting Rights of the Security Holders- This principle requires that the listed organization
should be providing their security holders with the appropriate information as well as facilities to allow
for exercising their rights as security holders effectively.

CONTINUED…
• Recognizing and Managing Risk- This principle requires the listed
organization for establishing the framework of sound risk management as
well as periodically reviewing effectiveness of the framework.
• Remunerating Fairly as well as Responsibly- This principle requires
the listed organization for paying remunerations to the director that is
sufficient for attracting as well as retaining the high quality directors and
motivating the high quality senior executives as well as aligning the
interests with value creation for the security holders and the risk appetite
(Wu and Patel 2014).

EFFECT OF FULL ADOPTION OF EACH CORPORATE
GOVERNANCE PRINCIPLE AND RECOMMENDATIONS
• The ASX corporate governance council’s adoption of corporate governance principles as well as recommendations helps to
analyze Australian companies to see how it has been approached to the recommendations in first full year of reporting since it
has been released.
• The recommendations provided by ASX has covered the role of board with their composition and the responsibilities,
communication of shareholders, continuous disclosures, social, economic and environment sustainability risks as well as risk
management (Chang and Wee 2016).
• This adoption of ASX CGU principles and recommendations will enhance independent services of audit for helping in the
enhancement of the information reliability that is prepared by the clients that would be useful to stakeholders, investors as well
as creditors.
• Adoption of the principles of the corporate governance strengthens corporate governance in Australia in responses to the
concerns of the community over the causes of the corporate collapses (Klettner, Clarke and Boersma 2014).
• These collapses have resulted for providing emphasis on the directors that is not only concerned with organizational financial and
managerial performance but also with the own performance.
• The ASX principles and recommendations application helps to add value to the structure of the company (Young and Thyil 2014).

CONTINUED…
• In case of Santos Limited, their board as well as management of organization is committed
towards highest standards of the corporate governance.
• The company believes that vision is achieved by them as the prominent company of energy
for Asia and Australia, which is necessary for meeting highest standards of the personnel
safety as well as the environmental performances, business conduct and the governance all
across the operations of Santos in the Australia as well as internationally.
• The international operations of the company are conducted according to the countries laws
and regulations of the countries in which it is operating (Seamer 2014).
• Santos Limited board operates in the set of the well-established policies of the corporate
governance, which helps in reinforcing the responsibilities of all the directors according to
the requirements of Corporation Act 2001 as well as ASX Listing Rules.
• The Board of the company reviews regularly as well as updates their policies of corporate
governance for ensuring that they continue for reflecting the best practices including the
compliance with ASX Corporate Governance Principles and Recommendations and with the

INFLUENCE OF EIGHT ASX CORPORATE GOVERNANCE
PRINCIPLES ON AUDITING
• Risk Assessment Process- The principles and ASX corporate governance helps in provide the
principle for the listed company of Australia for the system of reviewing as well as ratifying the system
of the risk management and the internal control and compliance, legal compliance as well as codes of
conduct. In case of Santos Limited, the company is committed towards managing the risk in the
proactive, effective as well as structured manner for achieving the objective of the business
(Balachandran and Faff 2015).
• Audit Approach- The principle of ASX on corporate governance helps in providing the listed company
for choosing to adopt the fundamental matter for their boards of director who is the body charged up
with legal responsibility to manage their operations of business with the due care as well as diligence
and ensures appropriate arrangements of governance in place. In case of Santos Limited, the company
conducts the audit according the applicable standards for giving the true as well as the fair view of the
consolidated financial position of the Group (Klettner, Clarke and Boersma 2014).

CONTINUED…
• Audit Strategy- ASX corporate governance principles helps the audit committee or board for
setting out the timing, directions as well as scope of the audit. These strategies are used as the
guideline for developing the plan of audit. In case of Santos Limited, the company makes
professional judgements on the key matters of audit that are most significant in auditing of
financial report in current year. Auditing of financial report is designed for responding to the
assessment of the risks of the material misstatement of the financial report (Swan 2014).
• Audit Evidence- The ASX corporate governance provides the principles that help in audit process
to be transparent enough. It helps in enhancing the audit evidence. It means that the auditors can
obtain evidences during the financial audit as well as it is recorded in working papers of audit. In
case Santos Limited, the company believe that evidences of audit are obtained by them is
appropriate as well as sufficient for providing the basis for the opinion (Christensen et al. 2015).

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