HI6026 - Audit, Assurance, and Compliance: Ainsworth Case Study

This report provides an executive summary of corporate governance principles, focusing on compliance with ASX requirements using the case of Ainsworth Game Technology Limited. It details the foundations for management and oversight, board structure, ethical responsibilities, integrity in reporting, timely disclosure, security holder rights, risk management, and fair remuneration. The report includes a risk assessment, analyzing Ainsworth's business strategies and financial performance through ratio analysis, identifying potential risks, and outlining mitigation steps. It also highlights key policies related to work health and safety, company security, and ethical conduct, including whistleblower protection. The document emphasizes the importance of ethical standards, transparent reporting, and effective communication with stakeholders, ensuring alignment with corporate governance best practices. Desklib offers this and many other solved assignments to assist students.

HI6026 - Audit, Assurance, and
Compliance
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Executive summary
In the business corporate governance is very important as there are several policies which are
framed by this which helps in the carrying out of the processes in an adequate manner so that the
objectives are achieved. There is the need to company with the requirements of the ASX and for
that, all the principles which are set in this regard are discussed in the report below in context
with the Ainsworth game technology Limited. All the aspects which are involved in this are
considered and with that, the risk assessment has also been carried. In that, there is the risk
analysis which is performed in addition to the overview of the company and its strategies. The
risks that are involved are identified and also the steps that are taken for resolving all of them in
an appropriate manner.
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Table of Contents
Executive summary.........................................................................................................................2
ASX Corporate Governance Principles...........................................................................................4
Lay solid foundations for management and oversight.................................................................4
Structure the board to add value..................................................................................................4
Act ethically and responsibly.......................................................................................................5
The other policies are also there which deals with the work and health safety and also with the
security of the company...............................................................................................................6
Safeguard integrity in corporate reporting...................................................................................6
Make timely and balanced disclosure..........................................................................................6
Respect the rights of security holders..........................................................................................7
Recognise and manage risk.........................................................................................................7
Remunerate fairly and responsibly..............................................................................................8
Risk assessment...............................................................................................................................9
References......................................................................................................................................11
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ASX Corporate Governance Principles
Lay solid foundations for management and oversight
The management of the company is to be made in such manner that it is able to manage the
company in such manner by which all the goals and targets which have been set by the company
can be achieved (Orionequities, 2017). For this, it is to be ensured that all the board members are
efficient and are dedicated towards their jobs. For this, the roles and responsibilities of them will
have to be identified on time.
The implication for Ainsworth game technology Limited:
In the company, the main role of the board is to maintain the business in such manner by which
the values of the shareholders are protected and improved. For this, there are several activities
which are to be performed by them and they include financial performance monitoring, approval
of capital expenses and planning in the appropriate manner (Ainsworth game technology limited,
2017). The system is established by the board which helps them in the monitoring of the internal
control and also the other business related aspects such as reporting. All of the responsibilities
are clearly specified in the charter.
Structure the board to add value
In order to ensure that the board will be working in a successful manner, there is the need to have
a proper board and this is the main requirement of this principle. In this, it will have to evaluate
that the size is appropriate and also the members that are involved are skilled and have the
desired qualities by which they will be able to manage the company in best possible manner.
The implication for Ainsworth game technology Limited:
Ainsworth comprises of the system in which the composition of the board is reviewed from time
to time so that its adequacy is maintained. The skills, abilities and the experience of them are
also evaluated under this. The development of the company is assured with the help of the skills
which are possessed by them (Ainsworth game technology limited, 2017). All the members who
are included on the board of the company are as follows:
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Chairman: Graeme Campbell
CEO: Danny Gladstone
Executive Director: Leonard Hastings Ainsworth
Non-executive: Harald Neumann
Non-executive (Independent): Michael Yates [B.Com (with merit), LLB]
Non-executive (Independent): Colin Henson [Dip Law- BAB, FCPA, FCIS, FAICD]
Non-executive (Independent): Heather Scheibenstock [GAICD]
In addition to this company is also having some of the committees and they include audit,
remuneration and nomination committee and the last is regulatory and compliance committee
who also work for the overall benefit of the company.
Act ethically and responsibly
In the business there various issues which arise if the work is not performed in an ethical manner
such as conflicts may arise. For this, it is required that proper ethical standards shall be set in
which the manner in which behavior shall be kept is specified. With that, the code of conduct is
to be made so that the company is able to deal with all the ethical considerations.
The implication for Ainsworth game technology Limited:
In Ainsworth, there are several such steps which have been taken in this respect such as
employees have been given the right to report for any issue to the supervisor and they will take
the action for the same. There is a policy identified as Whistle-blower policy in which the
individuals who report for any unethical issue are provided the required protection by the
company (Ainsworth game technology limited, 2017). If there is any kind of conflict of the issue
then the directors will have to disclose the same to the board.
The standards which are to be followed are prescribed in the code of conduct and that shall be
compiled by all. Some of the points which are covered under it are as follows:
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 Professionalism shall be maintained by all.
 Rights of all the individuals shall be respected.
 There shall be no discrimination in the company on any basis.
 All the policies shall be complied with in appropriate manner.
 The unethical behavior shall be reported.
The other policies are also there which deals with the work and health safety and also with the
security of the company.
Safeguard integrity in corporate reporting
Integrity is the essential component and in accordance with this principle that shall be followed
in the business in respect of the reporting made. There shall be a proper system by which all the
facts shall be reported and that too with the proper approval. For this, the process will have to be
developed which will make it possible.
The implication for Ainsworth game technology Limited:
In order to comply with this principle, the company has made the audit committee who will be
responsible for the same. All the members that are involved have the proper understanding of the
business and industry. It is advised to the company by the committee that there shall be a proper
internal financial control that shall be managed. There are regular meetings which are conducted
so that all the aspects are considered and there are no loopholes in the same (Ainsworth game
technology limited, 2017). The assurance in respect of all the reports which are used is provided
by it that they are made in a reliable manner.
Make timely and balanced disclosure
ASX is the main authority and due to this, it is needed that all of the important aspects of the
company shall be reported to them by the company. This has been mentioned in this principle
and will have to be compiled by all with the help of the appropriate policies that are present in
the company in this respect.
The implication for Ainsworth game technology Limited:
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The company is responsible for the making of the disclosure about any kind of information
which will be having the impact of the price and value of the shares. A policy is there in which it
has been stated that there shall be a continuous review of all the practices which are followed so
that balance in the company is maintained. In order to ensure the effective communication, all
the internal and external environment is required to be monitored.
Respect the rights of security holders
This principle states that all the information which is helpful for the shareholders is required to
be provided to them at the proper time. By the help of that, it will be possible for them to take the
decisions. There shall be a proper policy which will ensure that company is following this
principle.
The implication for Ainsworth game technology Limited:
Information in relation to all the directors, annual reports and any kind of meetings or
presentations which are made is provided on the website of the company so that they can be used
by the investors. In order to ensure the two-way communication with the shareholders, there are
tradeshows which are performed in which data about all the activities are briefed (Ainsworth
game technology limited, 2017). The investors are provided with the right to attend the general
meeting in which they can ask all the questions which requires clarification.
Recognise and manage risk
In the company, it is important that there shall be proper management of the risk. All the factors
which are associated with this shall be determined and informed to the responsible authorities
(Cohen, et. al., 2017). They will be taking them into consideration and then will perform such
actions by which they can be eliminated in the coming period.
The implication for Ainsworth game technology Limited:
In the company, there is a proper process which is being performed for the consideration of the
risk. The risk management system which is present is overviewed by the board so that they can
ensure that it is being implemented in an appropriate manner. The audit committee is also
involved in this who will be reporting the board about this through the integrated risk
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management process. A compliance program has been undertaken by Ainsworth so that it can
comply with the AASB 3806 by which improvement will be made. There are various other
standards also which are followed and also the internal process is reviewed so that the assurance
can be obtained about risk management.
Remunerate fairly and responsibly
The principle states that the remuneration policy of the company shall be fair so that there are no
issues which arise due to the unfair treatment. It shall be provided on the basis of the skills and
the responsibilities which are held by the board and other members.
The implication for Ainsworth game technology Limited:
The decisions in respect of the remuneration are taken by the remuneration committee in the
company. The remuneration packages of all are discussed by the CEO and the HR manager and
for this, they are allowed to attend the meetings which are conducted by the nomination and
remuneration committee (Ainsworth game technology limited, 2017). Equity-based remuneration
is provided by the company to the directors and other senior executives. Also, they are not
allowed to trade in the company's securities is they have the price sensitive information available
to them.
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Risk assessment
Ainsworth game technology limited is the company which is dealing in the designing, production
and selling of the gaming machines and other equipment which are related to it and was founded
in 1995 (Ainsworth game technology limited, 2017). This is also involved in the provision of
online games and the main markets in which its operations are performed include Asia, New
Zealand, and Australia, Europe and Unites States.
The main strategy of the company focuses on the expansion of the business by offering new
games in all the fields. The company expands the business in a profitable manner by using the
expertise and experience which is held by it so that the benefits can be provided to shareholders.
The company can use the techniques which are available under the analytical procedure and by
that it will be possible to evaluate the performance of the company and also the risk will be
determined (Putra, 2018). It helps in risk assessment so that company can deal with this in an
appropriate manner. The calculations which are made for the performance of ratio analysis are
provided below.
Information needed for calculations:
Particulars 2017(in
$'000)
2016(in
$'000)
Sales 282,080.0 285,477.0
Current assets 237,000.0 208,062.0
Current liabilities 49,811.0 47,706.0
working capital 187,189.0 160,356.0
EBIT 54,881.0 67,783.0
Retained earning 152,867.0 133,610.0
Market value of equity 344,636.0 315,887.0
Total assets 464,749.0 435,982.0
Total debt 65,512.0 67,777.0
Calculation of ratios:
Particulars 2017 2016
Working capital/Total assets 0.40 0.37
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Retained earnings/Total assets 0.33 0.31
EBIT/Total assets 0.12 0.16
Market value of equity/Total
debt
5.26 4.66
Sales/Total assets 0.61 0.65
Risk assessment is the procedure which is required to be followed by all the companies as in that
the risk which is involved in the business is determined and then they are informed to all
(Auditinghelp, 2018). By this, it is possible for the company to design such policies which will
be beneficial in the removal of them. If this is done then, the overall process of the company will
be improved which will be good for the company also and also for the shareholders as the returns
of the business will be increased. Some of the risks which are identified in Ainsworth are as
provided below.
 Credit risk
 Liquidity risk
 Market risk
It is essential in the company that all the identified risks shall be considered and there shall be
appropriate steps which are taken for the same. The ones which are undertaken in the given case
include the risk management framework which is established by the board. The policies in
relation to the management of the risk will be framed by audit committee as they are provided
the responsibility of the same. By the help of this, it will be possible to maintain and monitor the
risk appropriately and findings will have to be provided to the board (Ainsworth game
technology limited, 2017). The environment of the company is developed in such manner by
which all the employees are about the obligations which are to be met by them. Internal audit is
also performed for the same purpose.
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References
 Auditinghelp. (2018). Identifying and Assessing the Risks of Material Misstatement
through Understanding the Entity and Its Environment. Auditinghelp. [Online]. Available at:
https://auditinghelp.com/identifying-and-assessing-the-risks-of-material-misstatement-
through-understanding-the-entity-and-its-environment-13914. [Accessed: 25 April 2018]
 Cohen, J., Krishnamoorthy, G., & Wright, A. (2017). Enterprise risk management and the
financial reporting process: The experiences of audit committee members, CFOs, and
external auditors. Contemporary Accounting Research, 34(2), 1178-1209.
 Ainsworth game technology limited. (2017). Annual Report. Ainsworth game technology
limited. 5-65. [Online] Available At:
http://member.afraccess.com/media?id=CMN://2A1045615&filename=20171027/
AGI_01913405.pdf. [Accessed: 25 April 2018]
 Ainsworth game technology limited. (2017). Corporate governance Report. Ainsworth
game technology limited. 2-14. [Online] Available At:
http://www.agtslots.com.au/corporategovernance. [Accessed: 25 April 2018]
 Orionequities. (2017). Corporate governance statement. Orionequities. [Online].
Available at: http://www.orionequities.com.au/sites/default/files/20171018%20OEQ
%20ASX%20Corporate%20Governance%20Statement%20-%202017.pdf. [Accessed: 25
April 2018]
 Putra, L.D. (2018). The Use Of Analytical Procedures In Auditing. Accounting Financial &
tax. [Online]. Available at: http://accounting-financial-tax.com/2010/04/the-use-of-
analytical-procedures-in-auditing/. [Accessed: 25 April 2018]
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