Audit Assurance and Compliance Report: TPG Telecom Financial Analysis

This report provides an in-depth analysis of TPG Telecom's audit, assurance, and compliance practices. It evaluates the company's corporate governance principles, assessing the roles and responsibilities of board members and the effectiveness of their risk management framework. The report examines the nature of the company, its market overview, and relevant risks, including both internal and external factors. It includes a detailed computation of balance sheet and income statement ratios, along with a common-size financial statement analysis to assess financial performance. The report also identifies potential steps TPG Telecom can take to reduce its operational risks and improve its overall financial standing. The report concludes with a summary of findings and recommendations for improvement.

Running head: AUDIT ASSURANCE AND COMPLIANCE
Audit Assurance and Compliance
Name of the Student:
Name of the University:
Authors Note:

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Table of Contents
Executive Summary:..................................................................................................................2
Introduction:...............................................................................................................................3
Evaluating the corporate governance principle of TPG Telecom:.............................................3
Evaluating the risk assessment of the organisation:...................................................................5
Nature of the company:..............................................................................................................5
Market Overview:......................................................................................................................5
Relevant Risks:...........................................................................................................................6
Computation of balance sheet and Income statement ratios, while formulating the common
size financial statement:.............................................................................................................6
Identifying the potential steps in reducing risk of the organisation:........................................13
Conclusion:..............................................................................................................................14
Reference and Bibliography:....................................................................................................15

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Executive Summary:
The overall assessment focuses on identifying ethical measures used by TPG Telecom in
formulating its annual report. In addition, the Corporate governance principal is also
evaluated for the organisation to understand its commitment towards the legal requirements.
the company adequately follows all the corporate governance principles, wild pig thing its
annual report. Furthermore, the resort reviews of the organisation is evaluated to identify and
me to get any kind of negative actions which can hamper profitability of the organisation.
Moreover, the annual report of TPG Telecom is relatively restated, while providing adequate
financial ratios for the organisation. Lastly adequate recommendations for the mitigation of
this is also conducted which might allow the organisation to improve it operations and
minimise the losses incurred by external forces.

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Introduction:
The overall assessment is mainly focused on identifying the measures that is used by
TPG Telecom in conducting its operations. In addition, the risk involved in the assessment of
the company is also evaluated to understand problems faced by the company. Moreover, the
financial statement is reinstated while providing details regarding ratios of the organisation.
Moreover, the measure in reducing the risk attributes of the company is also evaluated, which
could help in improving the level of profits for the organisation.
Evaluating the corporate governance principle of TPG Telecom:
Firstly, TPG Telecom has effectively evaluated a solid foundation for the
management and oversight, as it has provided relevant disclosures in its annual report
regarding the roles and responsibilities of board members. There is a relevant section
provided in the annual report regarding the Responsibilities and rules that needs to be
conducted by the management of the organization.
TPG Telecom relatively has an adequate board, which consists of appropriate size
composition skills and commitments that needs to be followed by the board members. the
distinct characteristics of the board members is depicted in the annual report of the
organization which list all the skills and commitments of the management and board
members working in the organization (Reuters.com 2018).
The disclosure provided by director and the independent auditor relatively indicates
the ethical and responsible activity conducted by the organization. The disclosures relatively
indicate no material misstatement or unethical measures conducted by the organization.

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TPG Telecom relatively has an adequate formal and rigorous process that is
independently verified by auditors for safeguarding its corporate reporting structure. KPGM
is the independent auditor of TPG Telecom, who relatively evaluates the overall financial
statements and verifies there corporate reporting structure (Tpg.com.au 2018).
TPG Telecom adequately discloses all the relevant matters on timely basis through
their announcement section. The company complies with all the relevant rules from the CGS
principal, while declaring all the relevant information affecting its progress and growth.
TPG Telecom directly provides all the relevant information to its security holders by
publishing the overall data in their website and with the a ASX. The disclosures regarding
any kind of increment in revenue or losses is directly provided by the organization to its
security holders.
The sound risk management Framework is depicted in the annual report of TPG
Telecom which is used by the management to minimize the negative impact of external risk
on its operations. the Framework directly allows the organization to identify the potential
risk, which could directly affect its operation and revenue generation capacity. Therefore, the
organization relatively uses the risk management framework to identify and minimize the
negative impact of risks (Tpg.com.au 2018).
The remuneration provided to the directors are listed in the annual report, where the
adequate remuneration for the directors are effectively stated. the remunerations are paid on
monetary and share based, which is sufficient to attract and retain high quality directors and
senior executives in their vicinity. The remuneration is adequate as it increases the interest of
both the senior executives and directors of the organization.

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Evaluating the risk assessment of the organisation:
Nature of the company:
TPG Telecom mainly focuses on providing telecommunication services to consumers
wholesale and corporate sector in Australia. The company is Australian based where it
provides telecommunication services to residential and small businesses in Australia and has
been an effective telecommunication provider within the country. the company is mainly
focused on telecommunication services, where it delivers the services to the Australian
citizens, Government and Wholesale customers. TPG Telecom provides services like tele
housing, internet, data, network capacity, voice, and other services to its consumers.
Furthermore, the company provides range of national broadband network services with its
fiber networking division in Australia, which helps in generating higher revenues from the
services. The fiber broadband services have allowed TGP Telecom to become one of the
leading communication service providers in Australia (Tpg.com.au 2018).
Market Overview:
The company is listed in ASX where the overall market cap is around $5,204.17
million, which has allowed the organization to acquire the required level of capital from the
stock market.in addition the shares outstanding of the organization is at the levels of 926.50
million, while the overall dividend is at 0.02 with the yield of 0.70%. the above information
relatively evaluates the current market position of the organization. Moreover, the company is
a relatively trading at AUD5.84, while the 52-week high value is at the levels of AUD6.88
and 52 weeks low value is at the levels of AUD4.86. The above information relatively
provides adequate data regarding TPG Telecom, which would allow investors to identify
investment opportunity. the market information is a relatively adequate which in turn depicts
the current market position of the organization (Reuters.com 2018).

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Relevant Risks:
There are both external and internal risk involved in the operations of TPG Telecom,
which might directly hamper its operational capability in the long run. The company has
overall financial performance has a relatively improved over the fiscal year but it is not
providing adequate returns to the investors due to the limitations and discontinuation of
different TPG dial ups. The company has strong balance sheet is not allowing the
organization to improve its operational capability due to the restrictions on certain actions on
the technological field.
TPG Telecom relatively faces thread from other organization, where the continuous
increment in competition is directly affecting the operational capability of the organization.
the competition is relatively reducing it bargaining power among customers and minimizing
its sales revenue, which is directly affecting its financial position. In addition, the current
service pricing of the organization is relatively competitive and any increment in the
competition level for directly affect its revenue generation capacity (Tpg.com.au 2018).
However, the organization is utilizing an adequate framework which is helping the
management to minimize the negative impact of external and internal risk. This evaluation is
directly identifying the ways in which expenses could be reduced to maximize their
competitiveness in the market.
Computation of balance sheet and Income statement ratios, while formulating the
common size financial statement:
Common size Income Statement
Particulars 2016 2017 Variance % Change
Revenue 2387.8 2490.7 102.9 4%
Cost of sales 1163.9 1203.8 39.9 3%

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Gross Profit 1223.9 1286.9 63 5%
Other Income 92.7 48.8 -43.9 -47%
Employee benefits expense -273.6 -256.7 16.9 -6%
Other Expenses -193.6 -188.2 5.4 -3%
Depreciation of plant -136.9 -141.1 -4.2 3%
Amortization -115.1 -103.3 11.8 -
Finance income 1.3 1.4 0.1 8%
Finance Costs -84.6 -52.3 32.3 -38%
Profit Before Tax 514.1 595.5 81.4 16%
Income Tax Expenses -129.5 -179.8 -50.3 39%
Profit 384.6 415.7 31.1 8%
Common size Balance Sheet
Assets 2016 2017 Variatio
n
% Change
Current Assets
Cash and cash equivalents 39.2 46.3 7.1 18%
Trade and other receivables 140.3 131.6 -8.7 -6%
Inventories 12 6.4 -5.6 -47%
Investments 139.1 0 -139.1 -100%
Current tax assets 3.8 0 -3.8 -100%
Derivative financial instruments 5.4 1.3 -4.1 -76%
Prepayments and other assets 18.8 25.6 6.8 36%
Total Current Assets 358.6 211.2 -147.4 -41%

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Non-Current Assets
Investments 16.3 2.9 -13.4 -82%
Derivative financial instruments 6.4 0 -6.4 -100%
Property, Plant and equipment 895.1 1055.5 160.4 18%
Intangible assets 2485.2 2632.5 147.3 6%
Prepayments and other assets 9.4 8.9 -0.5 -5%
Total Non-Current assets 3412.4 3699.8 287.4 8%
Total assets 3771 3911 140 4%
Liabilities
Current Liabilities
Trade and other payables 298 289.4 -8.6 -3%
Loans and borrowings 27.1 32.5 5.4 20%
Current tax liabilities 0 54.4 54.4 100%
Employee benefits 28.1 28.2 0.1 0%
Provisions 16.6 11.7 -4.9 -30%
Accrued interest 1.6 1.4 -0.2 -13%
Deferred income and other liabilities 142.5 150 7.5 5%
Total current liabilities 513.9 567.6 53.7 10%
Non-current liabilities
Loan and Borrowings 1350.4 872.4 -478 -35%
Deferred tax liabilities 62.7 10.1 -52.6 -84%
Employee benefits 2.4 2.4 0 0%
Provisions 36 33.6 -2.4 -7%
Derivative financial instruments 0 1.2 1.2 100%

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Deferred income and other liabilities 26.4 24.4 -2 -8%
Total non-current liabilities 1477.9 944.1 -533.8 -36%
Total Liabilities 1991.8 1511.7 -480.1 -24%
Net assets 1779.2 2399.3 620.1 35%
Equity
Share capital 1051.9 1449.4 397.5 38%
Reserves 41.2 -18.1 -59.3 -144%
Retained earnings 681 963.3 282.3 41%
Equity attributable to owners 1774.1 2394.6 620.5 35%
Non-controlling interest 5.1 4.7 -0.4 -8%
Total equity 1779.2 2399.3 620.1 35%
Profitability Ratio Analysis: - TPG Telecom
Particulars 2017 2016
Revenue (A) 2490.7 2387.8
Net Profit/Loss after Tax (D) 415.7 384.6
Ordinary Equity(H) 1779.2 2399.3
Total Assets (G) 3911 3771
Net Profit Margin (D/A) 16.69% 16.11%
Return on Equity (A/H)) 23.36% 16.03%
Return on Assets (G/D) 10.63% 10.20%

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2017 2016
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
TPG Telecom
Efficiency Ratios Analysis
Particulars 2017 2016
Cost of Goods Sold(A) 1203.8 1163.9
Inventory (H) 6.4 12
Revenue (A) 2490.7 2387.8
Total Assets (G) 3911 3771
Inventory Turnover Ratio (A/H)) 188.09 96.99
Total Asset Turnover Ratio (A/G) 0.64 0.63

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2017 2016
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
180.00
200.00
TPG Telecom
Short-Term Liquidity Ratio Analysis: -
2017 2016
Total Current Assets (A) 211.2 358.6
Receivables (D) 131.6 140.3
Cash and equivalents (B) 46.3 39.2
Total Current Liabilities (F) 567.6 513.9
Current Ratio (A/F) 0.37 0.70
Quick Ratio [(B+D)/F) 0.31 0.35