Audit, Assurance and Compliance Report: Newcrest Mining Evaluation

This report provides a comprehensive analysis of Newcrest Mining's audit, assurance, and compliance practices, with a particular focus on its adherence to the ASX corporate governance principles. The report begins with an executive summary and an introduction that highlights Newcrest's position as a leading gold mining company in Australia. It then delves into the implications of ASX corporate governance principles, evaluating the company's compliance and ethical business practices. A significant portion of the report is dedicated to risk assessment, covering the nature of the company, market overview, regulatory authorities, and business strategy. The report also includes the computation of common-size statements and balance sheet ratios, relevant audit risks, and the steps taken to mitigate these risks. The report concludes by emphasizing Newcrest's commitment to ethical practices, transparency, and alignment with the interests of stakeholders, offering insights into how the company manages its operations and ensures sustainable development. The report is a valuable resource for understanding the corporate governance and financial aspects of the mining industry.

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

1AUDIT, ASSURANCE AND COMPLIANCE
Executive Summary:
The corporate governance system is considered as the procedures and system that is used by
organization to comply with the relevant ethical standard and guiding principles. The report is
prepared for evaluating the adherence of organization with the corporate governance
principles of ASX. In this particular study, the organization that has been selected for the
purpose of analysis is Newcrest Mining Company that is the largest gold mining company
operating in Australia. Later part of report deals with the assessment of risk faced by
organization by explaining the regulations, market in which company operates and the
measures that should be taken by organization to mitigate such risks.

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Table of Contents
Executive Summary:..................................................................................................................2
Introduction:...............................................................................................................................4
ASX Corporate Governance Principles implications:................................................................4
Risk Assessment:.......................................................................................................................8
Nature of the company:..............................................................................................................8
Market Overview:......................................................................................................................8
Regulatory Authority:................................................................................................................9
Business Strategy:......................................................................................................................9
Computation of common size statements and balance sheet ratios.........................................10
Relevant Audit Risk:................................................................................................................17
Steps taken to reduce the risks:................................................................................................18
Conclusion:..............................................................................................................................19
Reference List:.........................................................................................................................21

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Introduction:
New crest limited is the largest mining company of gold that is based in Australia that
is involved in the development, exploration, mining and sale of gold copper and copper
concentrate. Organization has a world class of portfolio of substantial gold reserves,
operating mines and options for strong pipeline of growth that is located primarily in
Australia. The company was established in year 1996 and has interest in four countries in five
production provinces with geographical focus on Asia, pacific region and Australia (Shimeld
et al. 2017). New crest is placed in well position for generating strong cash margins over the
long term from selling high quality gold assets. A considerable focus is placed on making
investment in strategic research and development of underground mining technologies and
this has enabled them to advance technical development. The company has it’s headquarter in
Melbourne, Australia with a workforce of 10000 people and market capitalization of US $
11.9 billion (adenergy.com.au 2018). One of the important elements of Newcrest strategy is
to discover new iron ore bodies. Securing the large mineral and districts projects is the key
objective of exploration activities of Newcrest. Currently, there are two major projects that
are evaluated by Newcrest namely Namosi in Fiji and Papua New Guinea. Company has a
strong operating cash flow and sound balance sheet along with strong growth opportunities
and extensive technical capability.
ASX Corporate Governance Principles implications:
New crest mining limited places considerable importance on the principles of
corporate governance. Company and its people adhere to the highest standard of corporate
governance that is considered critical factor for achievement of the vision. For practising the
corporate governance in an effective way, the organization follows the recommendations that

4AUDIT, ASSURANCE AND COMPLIANCE
are published by ASX corporate governance council and is involved in regularly reviewing
the compliance and governance practices.
The board of directors of company are involved in regularly reviewing the
appropriateness and implementation of the strategic direction of company. In relation to
assessing the performance of board and evaluating the individual director performance is
undertaken by conducting annual review. Such process of evaluation is based on
questionnaires and interviews of company secretary, general counsel and other executives
(Williams 2017). The performance and functionality associated committees and board is dealt
by making regular improvement. Board of Newcrest has ultimate accountability to the
strategy to sustainable development. The board has an important role to play in oversight and
governance of Newcrest remuneration policies and has the responsibility of ensuring that the
long and short term objective of business well aligns with the remuneration strategy
(adenergy.com.au 2018). Moreover, the board is also responsible for forming the annual
budget that helps in setting the target performance. In general, the board is also discrete to
forfeit or reduce the long term incentive award for participants in event of circumstances that
have occurred in appropriate benefit.
The board of Newcrest Mining limited comprises of nine none executive director with
one non executive director being the chairman of the company. Other members include chief
executive officer, finance director and managing director. On all health, safety and
environment related incidents, managing director is entitled to report to board. During the
year 2017, the directors of the company were not acquainted with any environmental matters
that would materially impact the overall business. The CEO of company has experience in
operations, research and business development projects and across commodities such as lead,
copper, zinc and aluminium. Total number of females in the board of Newcrest stood at three

5AUDIT, ASSURANCE AND COMPLIANCE
and the proportion stood at 30%. Company intends to take efforts for increasing the
representation of women on the board as a part of gender diversity (adenergy.com.au 2018).
The implementation of ethical business practices and principles at Newcrest is
supported by the number of policies. Such policies comprised of market disclosure policy,
independent policy of board of director, investor and market related policy, securities dealing
policy and external communication policy. Group takes every possible step to conduct the
business in an ethical and transparent manner. The human rights of all stakeholders such as
contractors, employees and local communities are respected at Newcrest. Any unethical or
misconduct behaviour is encouraged to be reported by employees by creating an environment
that help in protection and retribution of those for making disclosure on concerns. All the
activities of company rely on the maintenance and implementation of sound corporate
governance and ethical business practices (Graham et al. 2018). The suppliers of company
are expected to act in accordance with the ethical position of company.
When conducting business, Newcrest seeks to act with integrity and honesty that
helps in promoting the transparency in dealing with business. Integrity within the
organization is comprehensively and systemically managed by the robust process safety
management. All the values underpinning the behaviour and relationship of stakeholder of
Newcrest is reflected by code of conduct. Activities of organization are guided by values and
people acting honestly and integrity and such values are expected to shape the behaviours
(Safari 2017).
Newcrest limited intends to make balanced and timely disclosure according to the
principles of ASX corporate governance policies. All the procedures of disclosure and the
controlling methods are controlled by management with the participation of chief financial
officer and chief executive officers. They are designed in a way for giving assurance to the

6AUDIT, ASSURANCE AND COMPLIANCE
non financial information and material functioning so that all the information’s are disclosed
in a timely manner. Newcrest provides voluntary disclosure to the shareholders with
increased transparency and clarity. Disclosures about statutory remunerations are computed
by making reference to the relevant accounting standards and Corporation Act 2001.
Interests of shareholders are protected by delivering long term benefits and
maximizing the value of their portfolio for assessing the options with strategic review.
Security code of conduct is intended to form a part of ongoing boarding process of the
contractors and new employees. The long term interest of security holders are well aligned
with the performance incentives and measures of business performance (Beekes et al. 2015).
In order to provide strong alignment to the security holder interest, the performance of
company is measured using the direct financial measurement such as earning target.
For every project associated with high risks, management o organization implement
critical control measures and performing the application of robust process of systems of
safety management. The development, exploration and activities of production of Newcrest
are subjected to several economic, political and other risks (McKinney 2015). In light of such
risks faced by organization, there is increasing political and social focus on revenue derived
by stakeholder and government form mining activities. Business risks are identified and
managed by Newcrest so that management are able to render assistance by allowing audit
committee to discharge their responsibilities of assessing the risk in timely manner. Newcrest
conduct the sensitivity analysis where the potential form risk adjusted value for a future block
cave are taken into consideration for valuation. Risks faced by organization are assessed by
the suitable management committee that comprise and are inclusive of governance of
organization (Lama and Anderson 2015).

7AUDIT, ASSURANCE AND COMPLIANCE
The remuneration framework of then group is monitored continuously for ensuring
that it remains competitive, well aligned and effective to strategy. Board plays a very crucial
role in maintaining then oversight and governance of remuneration policies that are
responsible for ensuring that the long term and short term objectives of business are well
aligned with the remuneration strategy. Strategy concerning remuneration is to provide
employees with competitive remuneration irrespective of the complexity and size of company
and impact of each person role on the performance. The key elements concerning
remuneration are to incorporate performance of business measures that reinforce values and
culture and are aligned with the long term interest of shareholders (Hartnett and Shamsuddin
2017). Moreover, it is also ensured that there is an appropriate balance of reward and risk
between company and executives.
Therefore, it can be inferred that Newcrest complies with principles of corporate
governance while acting ethically and with integrity.
Risk Assessment:
Nature of the company:
New crest is the largest gold mining company of Australia having a strong pipeline of
Greenfield and brown field exploration projects along with gold reserves that are
representative of the fact that they are involved for more than 25 years of production.
Commissioning and development of smaller and large scale operations has been experienced
by company and such investment has assisted organization in technological development
advancement. Securing large mineral districts is the key objective of exploration activities of
Newcrest and they have a strong record for the past fifteen years in discovering of major
projects at Ridgeway, Cadia East and Cadia Hill and base metal deposits (O'Connell 2016).

8AUDIT, ASSURANCE AND COMPLIANCE
Market Overview:
The long-term view and the trend of market in which Newcrest operates continue to
remain positive. There is increasing demand of metals, energy and fertilizers due to rise in
growth and population. In addition to this, there would be rising new centres for demand
when industrialization and urbanization are posed with threat. In spite of this increasing
growth, there is challenge of weaker price is faced by the industry in which company
operates. In long term forecast, there are a numerous products of Newcrest mining company.
Guidance are provided by Newcrest subject to operating and market conditions. Metal price
are fluctuated by several number of geopolitical and macro economic factors that are beyond
the control of organization. Total revenue of Newcrest is impacted by potential impact of the
factors influencing the prices of metals. The economic viability of mining operations might
change due to material changes in prices of metals (Chen et al. 2015). Furthermore, this
would give considerable impact on the exploration activities as it might lead to its curtailment
or suspension.
Regulatory Authority:
The activities of Newcrest mining company is carried out in compliance with the
Australian accounting standard that incorporates the Corporation Act 2001. The entire
individual associated with organization complies with relevant regulations and laws and the
company adheres to such regulations in the country inn which operates.
Business Strategy:
Valuing people- People of Newcrest are engaged, capable and empowered for
delivering returns that are superior. The focus of organization is inclusion and diversity and
development of people at all levels.

9AUDIT, ASSURANCE AND COMPLIANCE
Prioritising the importance of sustainability and safety- The priority of company is
that every individual should go home safely and organization is involved in maintaining well
being of community by the application of sustainable practices across the business activities.
Embracing innovation and technology- The development of mining is optimized by
targeting technical breakthroughs that helps in providing step for the success of future
projects.
Focusing on profitable growth- The value of business is grown in an active way by
focusing on the prospects of acquisition and merger in known area of gold mining.
Computation of common size statements and balance sheet ratios:

10AUDIT, ASSURANCE AND COMPLIANCE

11AUDIT, ASSURANCE AND COMPLIANCE
2017 2016
-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
6.18%
-4.28%
Net Profi t Margin
Figure 1: Figure representing Net Profit Margin
(Source: As Created by Author)

12AUDIT, ASSURANCE AND COMPLIANCE
2017 2016
-3.00%
-2.00%
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
2.85%
-1.98%
Return on Equity
Figure 2: Figure representing Return on Equity
(Source: As Created by Author)
2017 2016
-1.50%
-1.00%
-0.50%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
1.86%
-1.26%
Return on Assets
Figure 3: Figure representing Return on Assets
(Source: As Created by Author)

13AUDIT, ASSURANCE AND COMPLIANCE
2017 2016
0.29
0.30
0.31
0.30
0.29
Total Asset Turnover Rati o
Figure 4: Figure representing Total asset Turnover Ratio
(Source: As Created by Author)
2017 2016
-0.50
-0.45
-0.40
-0.35
-0.30
-0.25
-0.20
-0.15
-0.10
-0.05
0.00
-0.17
-0.46
Inventory Turnover Ratio
Figure 4: Figure representing Inventory Turnover Ratio
(Source: As Created by Author)

14AUDIT, ASSURANCE AND COMPLIANCE
2017 2016
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
0.87
0.28
Quick Ratio
Figure 7: Figure representing Quick Ratio
(Source: As Created by Author)
2 0 1 7 2 0 1 6
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2.00 1.88
1.20
Current Rati o
Figure 7: Figure representing Current Ratio
(Source: As Created by Author)

15AUDIT, ASSURANCE AND COMPLIANCE
2017 2016
0.34
0.35
0.36
0.37
0.35
0.36
Debt-to-total Assets Ratio
Figure 8: Figure representing Debt to Total Asset Ratio
(Source: As Created by Author)
2017 2016
0.52
0.53
0.54
0.55
0.56
0.57
0.58
0.54
0.57
Debt Equity Ratio
Figure 9: Figure representing Debt to Equity Ratio

16AUDIT, ASSURANCE AND COMPLIANCE
(Source: As Created by Author)
Relevant Audit Risk:
It is recognized by Newcrest mining company that there are some risks that is inherent
to the nature of business for which it is required to have effective risk management technique
for protecting the value of business and securing the growth of company. Some of the risks
associated with business of Newcrest Mining Company are listed below:
It can be seen from the efficiency ratio that the inventory turnover ratio of company
has reduced considerably in year 2017 to 0.17 as against 0.46 in year 2016. This is indicative
if the fact that ratio has declined and that there are slow moving stock and obsolete
inventories lying. This lower value of ratio might be due to the maintenance of excessive
inventories that is not required by business. If an organization maintains excessive
inventories then it is illustrative of the fact that management of inventories are not done
properly by organization. The reason is attributable to the fact funds are lying up idle that
otherwise can be used for carrying out business activities and its operations. Therefore, it is
required for organization to take into account several factors that impacting inventory
turnover ratio.
In addition to inventory turnover ratio, it can be seen that short term profitability ratio
of company that is current as well as quick ratio have increased significantly in the current
year. Current ratio have increased from 1.2 in year 2016 to 1.8 2017 and quick ratio have
increased from 0.28 in year 2016 to 0.87 in year 2017 respectively. Computation of this
liquidity ratio does not reflect the true liquidity position of business. Increase in the value of
current as well as quick ratio is not indicative of the fact that company will be able to make
the payment of its current liabilities as they fall due because a large proportion of current

17AUDIT, ASSURANCE AND COMPLIANCE
assets might comprise of obsolete inventories and slow moving inventories (Exchange 2014).
Therefore, there is risk associated with the current as well as quick ratio.
Moreover, organization is also exposed to the risks of failure to acquire and identify
the resources. The ability of organization to identify and acquire the resources might be
impacted in a negative way because of factors that are inherent to organization as well as
factors that are external to the operations of company. The reserves of Newcrest have the
possibility of becoming uneconomic due to decline in the prices of commodity and there are
inherent risk faced by company associated with its business risks (Adams 2017). In addition
to this, there can be depletion in the existing reserves of company due to the production of
assets and the demand of product of Newcrest mining company.
Furthermore, Newcrest mining limited is also exposed to the risk of potential changes
in the portfolio of assets. This is so because the business collect and posses the assets through
the method of divestment and acquisition strategy and this ultimately have an impact on the
financial conditions of the business. There can be adverse reaction to the terms and timing on
which the business is made due to some of the regulatory obligations and conditions that are
adverse. The commercial objectives that have been set by the management of organization
might be difficult to attain because of unforeseen changes in the liabilities of organization as
there might be failure on part of anticipation of such circumstances (Bell et al. 2015).
Steps taken to reduce the risks:
Some of the steps that can be taken by organization for reducing the identified risks
are as follows:
 Organization should intend to maintain a framework of risk management that helps in
effective integration and implementation into the process and business system.

18AUDIT, ASSURANCE AND COMPLIANCE
 There should be development of internal audit functions test that would help in
creating effective plans related to internal control system. The report on the corporate
assets should be reviewed by development of closure plan by evaluation the financial
conditions so that risk exposure concerning the assets is reduced.
 It should be ensured by organization that there is proper designing, operation and
implementation of risk control measures so that level of residual risks are reduced at
an acceptable level and verification of effectiveness of control system should be done.
 There should be development of effective financing strategies for handling the risks
along with incorporating the insurance of risk of management (Contessotto and
Moroney 2014).
 When taking into account the designing of appropriate strategic direction, company
should consider all the risks with regard to the diverse environment in which the
company is carrying out their operations.
 The business model of Newcrest mining limited is based on trust by reducing the
exposure to risks along with maintaining the priorities of company regarding public
disclosure and transparency (Wells et al. 2016).
Conclusion:
The report is prepared for evaluating the compliance of organization corporate
governance practice and principle with reference to the corporate governance principles of
Australian stock exchange. From the analysis of the above facts regarding the governance
practices, it can be inferred that company have adhered to all the principles while practicing
their corporate governance. It is conclusively provided in the report that all the corporate
governance principles have been effectively applied by the group. It is evident from the
analysis of annual report of company by gathering the relevant facts and figures that

19AUDIT, ASSURANCE AND COMPLIANCE
organization takes every possible measure to protect the long term interest of their
shareholders. Moreover, the evaluation of financial condition of the company by computing
the balance sheet ratio has helped in identifying some of the risks associated with the
accounts of company. However, some of the risks are inherent to the nature of business and
its operation while other risks are attributable to the macro economic factors in which the
company is operating. Therefore, it can be concluded that Newcrest Mining company have
framed their organizational objective by well aligning with their strategic objectives and
protection of the interest of shareholders.

20AUDIT, ASSURANCE AND COMPLIANCE
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