Analysis of Corporate Governance and Auditor Independence

This report examines corporate governance and auditor independence within the context of Dollar Tree's financial operations. It analyzes the roles of the board of directors and executive management in implementing corporate governance policies aimed at delivering value to shareholders, emphasizing the company's commitment to transparency and ethical conduct. The report highlights the significance of auditor independence, specifically referencing KPMG's audit of Dollar Tree's financial statements and adherence to standards set by the Public Company Accounting Oversight Board (PCAOB). The analysis further explores the combined roles of the Chairman and Chief Executive Officer in enhancing corporate governance practices and concludes that the company maintains effective internal controls and adheres to US GAAP. The report emphasizes the positive impact of corporate governance on Dollar Tree's financial performance and its relationships with stakeholders.

Running head: MANAGING FINANCE
Managing Finance
Name of the Student
Name of the University
Author’s Note

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Table of Contents
Introduction......................................................................................................................................2
1. Corporate Governance related to Board and Executive Management.....................................3
2. Independence of the Auditors...................................................................................................5
3. Position of Chairman and Chief Executives.............................................................................6
Conclusion and Recommendations..................................................................................................7
References........................................................................................................................................9

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Introduction
In the businesses of twenty-first centuries, Corporate Governance is considered as one of
the major factors that helps the smooth running of the operation of the companies. In a more
specific note, corporate governance refers to a particular set of rules, regulations, processes and
practices that helps the directors of the companies in directing and controlling the business
organizations (Harford, Mansi & Maxwell, 2012). In this process, corporate governance includes
the process of balancing the interests of all the stakeholders of the companies like the
shareholders, investors, creditors, suppliers, management, people of communities and the
government. Thus, in the process of controlling the organizations, corporate governance plays an
integral part. It needs to be mentioned that there is a connection between the concept of corporate
governance and the management of the company as the Board of Directors of the company is
responsible for the adoption and implementation of the corporate governance policies for the
companies (Tricker, R. B., & Tricker, R. I. (2015). Apart from corporate governance, another
major factor for the business organizations is the independence of the auditors. In this context, it
needs to be mentioned that the financial success of the companies vastly depends on the audit
operations of the companies. Hence, audit is another major factor for the business organizations.
The main aim of this report is to analyze various factors regarding corporate governance and
auditor’s independence for the company, Dollar Tree. Dollar Tree is one of the major companies
in the industry of variety stores. It can be seen that in the recent years, Dollar Tree has reported
strong growth in their business operations. In addition, it can also been seen that the company is
well known for its corporate governance regulations and policies. The main aim of this report is
to analyze all these above-discussed aspects.

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1. Corporate Governance related to Board and Executive Management
From the earlier discussion, it can be seen that Dollar Tree is well known for their
corporate governance policies and regulations. One of the major reasons for the success of
corporate governance in this company is the support of board and executive management for the
implementation of effective corporate governance policy in the company. As per the 2016 annual
report of Dollar Tree, the main aim of corporate governance polices of Dollar Tree is to deliver
values to the long-term shareholders of the company (Dollartree.com.au, 2017). Thus, the
corporate governance policies of the company has been made base on this motive. It can be seen
that Dollar Tree is strongly committed towards the corporate governance commitment. The
board of directors of the company is strongly committed towards the corporate governance
strategies of the company (Wintoki, Linck & Netter, 2012). The majority number of board of
directors is independent directors in nature and a leads independent director can be seen in the
group of the board of directors of the company. It needs to be mentioned that the board of
directors of the company is always ready to bring positive change in the corporate governance
policies of the company. From the 2016 annual reports of the company, it can be noticed that the
board of directors of the company has brought some major positive changes in the corporate
governance policies of the company. The board of directors of Dollar Tree maintains effective
communication with the employees of the company so that they can remain aware about the
corporate governance issues of the company. This particular process helps to increase the
understanding of the board of directors about the corporate governance issues of the organization
(Dollartree.com.au, 2017).
As per the corporate governance policies of Dollar Tree, the company believes in the
strict adherence to the core values of the company. The major core value of the company are

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honesty, integrity and to bring transparency in every aspects of business. With the help of
corporate governance, Dollar Tree has become able to grow largely as these values reflect in the
financial performance of the company (Dollartree.com.au, 2017). In addition, with the help of
these values, the company has become able to maintain good relationships with some of the
major stakeholders of the company like customers, shareholders, vendors, business partners and
others. As a part of corporate governance strategies, Dollar Tree highly believes in providing
Value and Convenience to their customers. In this context, it need to be mentioned that in
today’s world, to provide the customers with quality products is not enough for the companies
unless they are providing quality services to their customers along with products (McCahery,
Sautner & Starks, 2016). Dollar Tree is always up to provide their customers with quality
products and convenient services. Thus, it is evident that the corporate governance policies of
Dollar Tree have major positive impacts on the overall business operation of the company
(Dollartree.com.au, 2017).
In the financial year 2016, Dollar Tree has been successful in achieving ‘Clean Bill of
Health’. It implies that the accounting as well as financial reporting of the company has no
weakness regarding materiality and financial control. From the annual report of 2016, it can also
be notices that all the accounting and financial statements of Dollar Tree have been done in
accordance with the due compliance and requirements of Sarbanes-Oxley Legislation
(Dollartree.com.au, 2017). In addition, the positive effects of corporate governance can be seen
in the financial performance of the company. It has been noticed that Dollar Tree has been able
to generate significant amount of cash flow for the past few years. Apart from this, the company
has been providing their shareholders with major benefits with the help of effective capital
management. Hence, from the above discussion, it can be seen that the corporate governance

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practice of Dollar Trees is one of the major success for the business of the company. In this
context, it needs to be mentioned that the board of directors of Dollar Tree have been taking
major initiatives for the success of corporate governance policies. In addition, the annual report
of the company also stares that the board of directors of Dollar Tree always plan for effective
future initiatives for the success of corporate governance policies of the company
(Dollartree.com.au, 2017).
2. Independence of the Auditors
In the process of auditing, Independence of the auditors is a major concept. Auditor’s
independence refers to the independence of internal as well as external auditors from the parties
that have financial interest in the audited business. All over the world, the independence of the
auditors is maintained on a high basis. Two of the major factors in auditor’s independence are
the presence of honesty and integrity. There is not any exception of this fact in case of the audit
process of Dollar Tree. In this context, it needs to be mentioned that the audit partner of Dollar
Tree is KPMG. From the 2017 audit report of Dollar Tree, it can be seen that KPMG has audited
the major financial statements of Dollar Tree like consolidated balance sheet, consolidated
income statement, statement of shareholder’s equity, statement of cash flow and others. It is the
responsibility of the management of Dollar Tree to prepare the consolidated financial statements
(Tepalagul & Lin, 2015). Thus, it is the responsibility of the auditors of KPMG to express their
audit opinion based on the required audit operations. From the audit report, it can be seen that
KPMG has done the audit program of Dollar Tree based on the standards of Public Company
Accounting Oversight Board (United States). The principles of auditor independence require the
auditors to perform necessary audit operations in order to find that the financial statements of
Dollar Tree are free from any kind of material misstatement (Dollartree.com.au, 2017).

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The audit process of Dollar Tree includes the testing of the sample of financial statements
in order to make it sure that the financial statements are made bases on the required disclosure. In
addition, it is the responsibility of the auditors to assess the accounting principles of Dollar Tree.
Thus, based on the audit report of the company, it can be said that the auditors of the company
has been able to conduct the audit operation of Dollar Tree based on the principles of auditor
independence (Blay & Geiger, 2013). From the auditor’s report of Dollar Tree of 2017, it has
been seen that KPMG has been done the audit operation of Dollar Tree as per the principles of
auditor’s independence. Based on the opinion of KPMG, it can be seen that the financial
statements of Dollar Tree has been made on the fair basis. The audit report of the company also
states the fact that all the financial statements of Dollar Tree have been prepared based on the
standards of United States Generally Accepted Accounting Principles. In addition, the auditors of
Dollar Tree have also audited the framework of internal control based on the criteria of Internal
Control Integrated Framework (2013) (Dollartree.com.au, 2017). At the end of the audit report of
Dollar Tree, KPMG has issued the unqualified audit opinion and KPMG mentioned that the
internal control of the company is effective as well. Thus, based on the above discussion, it can
be seen that the auditors of Dollar Tree has carried on the audit operation as per the principles of
auditor’s independence.
3. Position of Chairman and Chief Executives
From the annual reports of Dollar Tree, it can be seen that both the Chairman and Chief
Executive Officer of Dollar Tree have been equally involved in the development of corporate
governance policies of the company. From the corporate governance statement of Dollar Tree, it
can be seen that the board of directors of Dollar Tree is highly engaged in the improvement of
corporate governance strategies of the company. In this context, it needs to be mentioned that

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majority portion of the director of Dollar Tree are independent directors. It is the responsibility
of both Chairman and Chief Executive Officer of Dollar Tree to review the corporate governance
practices of the company for a regular basis. In addition, all the members of the board of
directors of Dollar Tree maintain an effective communication with all the employees of the
company so that they can get the idea about the corporate governance related issues of the
company (Claessens & Yurtoglu, 2013). Thus, based on the above discussion, it can be said that
both the Chairman and Chief Executive Officer of Dollar Tree play a combined part in the
improvement of the corporate governance practice of Dollar Tree and both of them have almost
equal contribution towards the corporate governance practice of Dollar Tree. Hence, it can be
said that the position of Chairman and Chief Executive Officer is not split in case of corporate
governance (Dollartree.com.au, 2017).
Conclusion and Recommendations
From the above discussion, it can be seen that corporate governance is a major practice
for the business operations of Dollar Tree. From the above discussion, it can be seen that the
board of directors of Dollar Tree is highly involved with the corporate governance practice of
Dollar Tree. The above discussion shows the fact that the Chairman and Chief Executive Officer
of the company work in the same line for the development of corporate governance practice of
Dollar Tree. From the above discussion, it can also be seen that the audit partner of Dollar Tree,
KPMG has conducted the audit operation of the company as per the principles of auditor’s
independence. From the audit report of Dollar Tree, it has been seen that Dollar Tree has
prepared all the financial statements of the company as per the regulations of US GAAP and the
company also has effective internal control system. Based on the total audit operation , KPMG
has provided Dollar Tree with unqualified audit report.

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Based on the above discussion, some recommendations are provided:
 It is recommended that Dollar Tree needs to update their corporate governance practices
as per the recent guidelines in order to get better results as the new corporate governance
processes are more effective.
 It is recommended that Dollar Tree needs to arrange campaign among the employees of
the company in order to create greater awareness about the corporate governance
program of them.

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References
Blay, A. D., & Geiger, M. A. (2013). Auditor fees and auditor independence: Evidence from
going concern reporting decisions. Contemporary Accounting Research, 30(2), 579-606.
Claessens, S., & Yurtoglu, B. B. (2013). Corporate governance in emerging markets: A
survey. Emerging markets review, 15, 1-33.
dollartree.com.au/. (2017). Dollartree.com.au. Retrieved 10 October 2017, from
http://dollartree.com.au/
Harford, J., Mansi, S. A., & Maxwell, W. F. (2012). Corporate governance and firm cash
holdings in the US. In Corporate governance (pp. 107-138). Springer Berlin Heidelberg.
McCahery, J. A., Sautner, Z., & Starks, L. T. (2016). Behind the scenes: The corporate
governance preferences of institutional investors. The Journal of Finance, 71(6), 2905-
2932.
Tepalagul, N., & Lin, L. (2015). Auditor independence and audit quality: A literature
review. Journal of Accounting, Auditing & Finance, 30(1), 101-121.
Tricker, R. B., & Tricker, R. I. (2015). Corporate governance: Principles, policies, and
practices. Oxford University Press, USA.
Wintoki, M. B., Linck, J. S., & Netter, J. M. (2012). Endogeneity and the dynamics of internal
corporate governance. Journal of Financial Economics, 105(3), 581-606.

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