Auditing Assurance and Compliance Report: ASX Listed Company Analysis

This report provides a comprehensive analysis of the auditing, assurance, and compliance practices of Coca-Cola Amatil, an Australian Securities Exchange (ASX) listed company. The study examines Coca-Cola Amatil's adherence to the Corporate Governance Principles issued by the ASX Corporate Governance Council. It includes an executive summary, table of contents, and detailed sections covering the principles of corporate governance, risk assessment, and financial analysis. The report calculates and analyzes financial ratios derived from the company's income statement and balance sheet for 2017, along with a common-size statement using horizontal analysis. A risk assessment of the company is also performed, identifying processes to mitigate risks. The report concludes with steps for reducing risk, referencing relevant literature throughout. The report is designed to evaluate the company's overall value, performance, and operational compliance with various obligations.

Running head: AUDITING ASSURANCE AND COMPLIANCE
Auditing Assurance and Compliance
University Name
Student Name
Authors’ Note

1AUDITING ASSURANCE AND COMPLIANCE
Executive Summary
The discussion in the following report clearly talk over the process of audit of an organisation
along with its compliance with the corporate governance principles. The report is structured
in order to find out and evaluate the overall value, performance, and operations of the chosen
organization. The assessment would help to build an assurance that the organisation has
fulfilled the different obligatory compliances. In this context, the actual purpose of the
current study is to examine the level and scope of compliance analytically of the chosen
Australian company of Coca Cola Amatil that is a companies listed under the ASX 300. The
various responsibilities as mentioned under Corporate Governance Principles issued by the
regulatory body of the Corporate Governance Council under the Australian Stock Exchange
(ASX). In this report along with the principles there has been a risk assessment of the
company has also been done and analysed for identification of the various processes for
reducing the risk of Coca Cola Amatil. For the evaluation there has been calculation done of
the ratio from income statement, and balance sheet of the company from the annual report
2017.

2AUDITING ASSURANCE AND COMPLIANCE
Table of Contents
Executive Summary...................................................................................................................1
Principles of Corporate Governance under ASX.......................................................................3
Assessment of Risk....................................................................................................................7
Balance sheet and Income statement ratio calculation...............................................................9
Analysis of Common size statement-horizontal analysis.........................................................10
Risk assessment........................................................................................................................12
Steps for reducing Risk............................................................................................................12
Reference..................................................................................................................................14

3AUDITING ASSURANCE AND COMPLIANCE
Principles of Corporate Governance under ASX
 Basis of management and oversight
The basis of the management is taken care by the Board, who has been has delegated
authority for managing the day-to-day operations and performance of the Company. Amatil
has a comprehensive framework of delegations of authority it starts from the Group’s
Managing Director to the GLT and then goes down to the respective levels of management.
There exists a company secretary who is directly accountable to the Board for all matters to
do with the proper functioning of the Board (Beekes, Brown and Zhang 2015). The board
aims in providing the stakeholders of the company sustainable value ensuring that they are
well informed of Coca-Cola Amatil’s performance and major developments affecting its
affairs Corporate Strategy. The board also takes care about the optimised financial reporting
processes by forecasting the profits and other reports that are required at law or under the
ASX Listing Rules. The board also approves the major capital expenditure, acquisitions,
divestitures, and capital management, including approving dividend payments(Haimes 2015).
In addition to that the board monitors and influences the corporate culture and sets the values
of Coca-Cola. Risk management framework is also set by the boards.
 Structure and outline of board for the firm value expansion
The structure of the Board as mentioned in the Boards Charter Nominations Committee
Charter depends on the majority of the Board which is comprised of Independent Non-
Executive Directors. This includes being independent from The Coca-Cola Company, and not
being the Group Managing Director (Pearson 2016). In terms of election the one-third of the
Board is required to retire at each Annual General Meeting but may stand for re-election as
many times they want. The Directors who are to retire shall be those who have been longest
in office since their last election, noting that Directors must retire at the third AGM, or three

4AUDITING ASSURANCE AND COMPLIANCE
years since their last election whichever is longer and a Director who has been appointed by
the Board to fill a casual vacancy is required to retire and stand for election by the
shareholders at the next AGM (Richards et al., 2015). As the Group Managing Director’s
position as a Director is linked to an executive office, the Group Managing Director is not
required to stand for election/re-election.
 To undertake the exercises of business responsibly and ethically
The Coca-Cola Amatil ethics and responsibility is mentioned in the Code of Conduct
where there is the vivid elaboration of “How We Do Business”. It was updated by the Board
in the financial year of 2017. The code of conduct sets out the mechanism in which the
Directors, employees, contractors, consultants and third parties are required to conduct
themselves on a regular basis. The document expresses the high standards of business
conduct that is built on our commitment to act fairly, morally and lawfully with all
stakeholders. The Board has approved a separate policy ant bribery and Corruption Policy in
December 2017(Safari 2017). It sets out Coca-Cola Amatil’s zero tolerance for any bribery or
corruption in our business dealings and operations anywhere in the world, including in
respect of facilitation payments that may be customary or in fact legal in certain countries.
The company focuses on “doing business the right way”. In all the countries where the
company operates the focus is on the community partnerships and participation in public
policy development. The Board has also approved a Human Rights Policy that provides the
framework for the commitment to support the human rights. Coca-Cola Amatil ensures that
the workplace, the supply chain and the community is safe, lawful and diverse.
 Presentation disclosure timely as well as fairly

5AUDITING ASSURANCE AND COMPLIANCE
In the Disclosure & Communications Policy of Coca cola Amatil, it has a Policy of
disclosure and communications that includes the following principles which is consistent
with the continuous disclosure obligations under ASX listing Rules that govern the
communication of Coca-Cola Amatil. The Coca-Cola Amatil according with the
requirements of the ASX Listing Rules, immediately issues to ASX for any information
that a reasonable person would expect to have a material effect on the price or value of
Coca-Cola Amatil’s securities(Lama and Anderson, 2015). There exists a Coca-Cola
Amatil’s Disclosure Committee that manages the daily constant issues of disclosures and
operates informally and flexibly. It is responsible for compliance, coordinating disclosure
and educating employees about Coca-Cola Amatil’s Disclosure and Communications
Policy. The Coca-Cola Amatil’s shareholders are encouraged to make their views known
to Coca-Cola Amatil and to directly raise matters of concern. The views of those parties
are shared with the Board on a regular basis, both by the Chairman and management.
 To safeguard the integrity in the corporate reporting process
As per the Audit & Finance Committee Charter, approving financial reports, profit
forecasts and other reports required at law or under the ASX Listing Rules. The Corporate
governance and reporting structure plays an important role in supporting the organization and
ensuring the strategy (Du Plessis, Hargovan and Harris 2018). It provides the outline through
which the business and strategic goals are established, performance is supervised, and the
risks that have been controlled. There is a proper standard for decision making and
accountability and provides guidance on the standards of behaviour that are expected from
each other. In the 2017 Corporate Governance Statement there is the description of the key
governance arrangements and practices. The company complies with the third edition of the
Council for ASX Corporate Governance’s Corporate Governance Principles and

6AUDITING ASSURANCE AND COMPLIANCE
Recommendations (ASX Recommendations), which is reflected in this Corporate
Governance Statement (Wilson, 2017.
 To preserve the power and authorities of shareholders of the organisation
In the company of Coca Cola Amatil, the rights of Coca-Cola Amatil’s shareholders are
detailed in Coca-Cola Amatil’s Constitution. The rights include electing the members of the
Board. Additionally, the shareholders have the right to vote on important matters that have an
impact on Coca-Cola Amatil (Council and Exchange 2014). In order to allow the
shareholders to effectively exercise these rights, the Board is committed to ensure that there
is high quality communication to shareholders, the information that is communicated is
relevant and useful. Moreover it is to be verified that it is communicated in a timely manner.
The Coca-Cola Amatil gives shareholders the option to receive communications from, and
send communications to, Coca-Cola Amatil and its Share Registry, Link Market Services
Limited, electronically. Shareholders are even encouraged to attend the Coca-Cola Amatil’s
Annual General meeting and may raise question regarding the activities of the company
(Ergu, Kou, Shi and Shi 2014).
 To properly Expose and handle the risk of the firm that has been identified
The risk & sustainability Committee Charter and the Audit & Finance Committee Charter
deals with Risk Management Policy. The Board is responsible for ensuring that there are
adequate systems and procedures in place to identify, assess, monitor and manage risks. The
Risk and Sustainability Committee reviews and reports the management during the year
makes recommendations to the Board in respect of the material risks that Coca-Cola Amatil
faces in the markets in which it operates. Other Committees review risk matters in more
detail as required by their respective Charters (Kou, Peng and Wang 2014). The internal and
external audit functions, which are separate and independent of each other, provide an

7AUDITING ASSURANCE AND COMPLIANCE
independent and objective review of Coca-Cola Amatil’s risk assessment and risk
management. When it comes to risk management policy the board has established a Risk
Management Policy that formulates the approach to the oversight and management of
material business risks. The Risk Management Policy is implemented through a top down and
bottom up approach to identifying, assessing, monitoring and managing key risks across
Coca-Cola Amatil’s business units.
 To present a Fair and responsible mechanism of remuneration structure
In the annual report of 2017, that consist of the people committee that has approved
new measurable objectives for provide a fair remuneration to its employees and also related
benefits to them. There exist a remuneration committee that gives assistance to the Board
regarding the Remuneration policy of the Board, Company Secretary and CEO (Kent, Kent
Routledge, and Stewart, 2016). It also evaluates the Performance and remuneration
evaluation of senior management and deals with the Remuneration strategies, practices and
disclosures generally that includes non-routine remuneration arrangements. Various
employee equity plan, Management succession, capability and talent development are taken
care by them as well.
Assessment of Risk
Brief overview of the company
The Coca Cola Amatil is a public listed Australian company that is the largest non-
alcoholic beverage company that operates in six companies namely, Australia, New Zealand,
Indonesia, Papua New Guinea, Fiji and Samoa (Ashley 2017). They produce, carbonated soft
drinks, energy drinks, spring waters, and fruit juices. It has more than 14700 employees and
is listed under the Australian Stock Exchange. The Coca Cola Company has 29.37%
shareholding in the coca coal company.

8AUDITING ASSURANCE AND COMPLIANCE
Regulation of client
The clients are regulated by the subordinates and managements who are employed by
the board of directors.
Market Overview
The market share of the Coca Cola Amatil is 90 %( Hanrahan and Bednall 2015). The
company focuses of on differentiated and cost advantage products for reaching the
competitive advantage. Its main strategy is to retain the sustainability of the resources with
smart technology and personified service.
Balance sheet and Income statement ratio calculation
Balance Sheet Ratio
Amount
(US$M)
Amount
(US$M)
Quick Ratio 2017 2016
Quick Assets 2130 2429
Current Liabilities 1839 1843
Ratio 1.16 1.32
Debt Equity Ratio
Total Liabilities 4177 4054
Shareholder's Equity 1549 2064
Ratio 2.70 1.96
Receivable Turnover
Revenue 4881 5091
Accounts Receivable 922 871
Ratio 5.29 5.85
Ratio for Income
Statement
Operating Margin
Operating Income -272 -510
Revenue 4881 5091
Ratio -0.06 -0.10
Net Profit Margin

9AUDITING ASSURANCE AND COMPLIANCE
Net Income 445 246
Revenue 4881 5091
Ratio 0.09 0.05
Return on Equity
Net Profit 445 246
Shareholder Equity 1549 2064
0.29 0.12
Analysis of Common size statement-horizontal analysis
COCA-COLA AMATIL LTD INCOME STATEMENT
Fiscal year ends in December. AUD in millions except per share data.
2016 in
$m
2017 in
$m % change
Revenue 5091 4881 -4.12%
Cost of revenue 3012 2840 -5.71%
Gross profit 2079 2042 -1.78%
Operating expenses
Sales, General and administrative 863 837 -3.01%
Restructuring, merger and acquisition
Other operating expenses 1726 1477 -14.43%
Total operating expenses 2590 2314 -10.66%
Operating income -510 -272 -46.67%
Interest Expense 115 104 -9.57%
Other income (expense) 1018 986 -3.14%
Income before taxes 393 610 55.22%
Provision for income taxes 136 149 9.56%
Net income from continuing operations 257 461 79.38%
Other -11 -16 45.45%
Net income 246 445 80.89%
Net income available to common shareholders 246 445 80.89%
Earnings per share
Basic 0.32 0.59 84.38%
Diluted 0.32 0.56 75.00%
Weighted average shares outstanding
Basic 764 745 -2.49%
Diluted 764 796 4.19%
EBITDA 777 976 25.61%

10AUDITING ASSURANCE AND COMPLIANCE
Analysis Balance sheet
COCA-COLA AMATIL LTD (CCL) BALANCE SHEET
Fiscal year ends in December. AUD in millions except per share data. 2016-12 2017-12
%
change
Assets
Current assets
Cash
Cash and cash equivalents 1378 1038 -24.67%
Total cash 1378 1038 -24.67%
Receivables 871 922 5.86%
Inventories 676 670 -0.89%
Deferred income taxes 2 5
150.00
%
Prepaid expenses 37 67 81.08%
Other current assets 141 97 -31.21%
Total current assets 3105 2800 -9.82%
Non-current assets
Property, plant and equipment
Gross property, plant and equipment 4428 4332 -2.17%
Accumulated Depreciation -2479 -2467 -0.48%
Net property, plant and equipment 1949 1865 -4.31%
Equity and other investments 26 28 7.69%
Goodwill 119 148 24.37%
Intangible assets 1089 1060 -2.66%
Prepaid pension benefit 21 23 9.52%
Other long-term assets 156 134 -14.10%
Total non-current assets 3359 3257 -3.04%
Total assets 6464 6057 -6.30%
Liabilities and stockholders' equity
Liabilities
Current liabilities
Short-term debt 422 421 -0.24%
Capital leases
Accounts payable 581 587 1.03%
Deferred income taxes 42 28 -33.33%
Other current liabilities 799 803 0.50%
Total current liabilities 1843 1839 -0.22%
Non-current liabilities
Long-term debt 1960 1930 -1.53%
Capital leases
Deferred taxes liabilities 156 284 82.05%
Pensions and other benefits 58 56 -3.45%
Minority interest 346 331 -4.34%
Other long-term liabilities -309 -263 -14.89%
Total non-current liabilities 2211 2338 5.74%

11AUDITING ASSURANCE AND COMPLIANCE
Total liabilities 4054 4177 3.03%
Stockholders' equity
Common stock 2256 1907 -15.47%
Other Equity 415 399 -3.86%
Retained earnings -585 -621 6.15%
Accumulated other comprehensive income -22 -136
518.18
%
Total stockholders' equity 2064 1549
-
24.95%
Total liabilities and stockholders' equity 6118 5726 -6.41%
Risk assessment
 According to the annual report of 2017, it has been found that the debt equity ratio of
the company is 2.70. It is calculated by dividing the total debt of the company by its
total equity (Hanrahan and Bednall 2015). High ratio like more than 1 represents that
the company is highly leveraged and the higher interest burden can lead the company
to unsustainable level.
 The quick ratio that represents the liquidity position of the company is very low like
less than 1.16. This shows that the current assets of the company are considerably low
if it is compared to current liabilities (Xu, How, and Verhoeven 2017). Hence it can
be said that the organisation is not efficient in paying off the obligation of short term
with their short term assets.
 The shareholders return is low that is 0.29, the operating profit margin is running
negative as to -0.06. The net profit margin of the company is as low as 0.09. It
signifies that the company is not so efficient in earning return.
Steps for reducing Risk
The various steps to reduce the risk in the company are as follows:
 To develop a sound risk management plan: Having enough insurance to protect
against losses is only one aspect. Taking proactive steps to cross-train is another key

12AUDITING ASSURANCE AND COMPLIANCE
way to avoid risk. However, a proper plan of risk management will provide a measure
for reducing the risk (Lama and Anderson 2015).
 To employ internal control consultants: An outsider completely unconnected to a
company's daily operations who can view the situation more objectively and more
readily identify areas in need of improvement. Thus, he should be employed.
 To identify and review the internal controls of the company: The management
must checks the balances of the company. With regard to safety issues, internal
controls can be as simple as implementing a checklist of precautions before entering a
work zone.

13AUDITING ASSURANCE AND COMPLIANCE
Reference
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