Audit and Assurance Compliance Analysis for Dexus Units FP Report

This report provides a comprehensive analysis of Dexus Units FP's audit and assurance compliance, focusing on corporate governance, risk assessment, and financial performance. It examines the necessity of corporate governance, highlighting its impact on successful management, stock price stability, stakeholder involvement, and a motivated workforce. The report details how Dexus implements ASX principles, including board roles, ethical conduct, and timely disclosure of information. It also explores the role of the Board Risk Committee, internal working procedures, and the Internal Audit Program. The analysis includes a review of Dexus's financial statements, revealing trends in revenue, expenses, and balance sheet items, providing a holistic view of the company's financial health and risk management strategies.

Running head: AUDIT AND ASSURANCE COMPLIANCE
Name of the student
Name of the University
Author note

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Executive Summary
In the 21st century or in the ancient times, every business activity was characterised by
two sets of features, one was risk and the other one was conflict. The absence of both of them
is imperative for the business’s point of view. As risk could hamper the success of any firm
or business, similarly, lack of efficient and proper management might derail the fortunes of
the business. It thus becomes important for any company, big or small to assess these risks
and address them. In the same way, prevention of conflicts between partners or members of
any business organisation is important, which is possible only through the adoption and
implementation of a set of rules and regulations to govern them and their actions. This project
deals with the analysis of both these characteristics through the lens of Dexus Units FP
Stabled.

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Table of Contents
Introduction:...............................................................................................................................3
Corporate governance:...........................................................................................................4
Why is it necessary?...............................................................................................................4
How Dexus implements ASX’s principles:...........................................................................6
Risk administration and assessment...........................................................................................8
Dexus’s Board Risk Committee.............................................................................................8
Internal working procedures..................................................................................................8
Conclusion:..............................................................................................................................13
References:...............................................................................................................................14

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Introduction:
Every business in today’s world face insurmountable amount of risks on a daily basis.
How successful any business organisation becomes, is only depended on the very major fact,
that how well, they have been able to mitigate these very risks. As it has been seen, many
organisations face failure because of their inability to assess these risks in a time bound
manner. Effective management of risks provides a wide range of comfort to all the
stakeholders of the company. It also helps in confirming the compliance with the corporate
governance requirements. No matter how big or small the organisation is, risk management is
relevant to each and every business organisation. Its effectiveness ensure an all round
efficacy throughout the organisation. Similarly the importance of corporate rules and
regulations cannot be ignored at all. A set of rules and regulations is necessary to manage the
business entity, in order to prevent its diversion from its prescribed path. With these two
important things, this report aims to delve into Dexus Units FP’s compliance of corporate
principles of governance and its risk administration procedures.

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Corporate governance:
Why is it necessary?
Why is compliance of corporate rules and regulations so necessary in today’s world.
There are numerous reasons for this, a handful of them have been diagrammatically shown
below:
Each of these reasons form the crux the advantages which is provided by the compliance of
these corporate rules and regulations. These have been explained below:
 Successful management: By complying with the corporate rules and regulations
advocated by bodies like ASX, companies could find a balance in the dual objectives
of maximisation of profits and economic interests and welfare of society. By striking
a balance between the two, successful management is ensured.
 Stability in stock prices: Stock price’s play a significant role in the performance of a
company. This stability of stock prices is only possible through proper corporate
governance. Investors want to invest in those companies which have high standards of
Successful
management
Stability in
stock prices
Training of
dirtectors
Motivated and
talented
workforce
Better
shareholder
communication
Involvement of
stakeholders
Checks and
balance
Goodwill and
Market
Reputation
Absence of
exploitation

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governance, better accountability and higher profits, which is only possible through
better corporate governance.
 Director’s training: Directors are the main architects of any business organisation. If
they underperform, are incompetent, selfish or careless, the company would suffer, as
a result of which, their importance cannot be ignored (Al-Malkawi et al., 2014).
Therefore proper governance, monitoring and training of directors is necessary.
 Involvement of stakeholders: There is genuine disconnect between the stakeholder
and the company board and management. Sometimes the company; looks after their
own interests and ignore the stakeholders, but they deserve more attention and respect
from the company board and management (Garcia, Aguilera and Ariño, 2013). This
could only be done with the compliance of corporate governance principles.
 Better shareholder communication: An effective communication with the
shareholders is very necessary for any successful business organisation. This
communication serves the basis for a sound transparency and is only possible through
company governance.
 Motivated work force: A talented, skilled and motivated work force is the main
driving machine behind each and every organisation’s success. The ability to retain
this human capital is possible through proper governance of corporate principles.
 Checks and balances: The importance of checks and balances is very important to
ensure transparency towards all the stakeholders. The directors are in a strong position
to exploit the company’s resources for their self interests (Honoré, 2015). The current
financial crisis is the result of the high risks and irresponsible handling of company’s
resources by senior management and board members.
 Goodwill and market reputation: Corporate governance helps in improving the
company’s reputation and overall goodwill. It helps in developing good customer

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relationships and in its absence; the fraudulent activities might affect the company’s
repute.
 Absence of exploitation: In the absence of corporate governance, the directors of the
company and the rest of the board or the senior management might be able to deviate
from the goals of the company and start exploiting the employees of the company
(Garcia, Aguilera and Ariño, 2013). This could have an adverse impact of the
company.
How Dexus implements ASX’s principles:
 Board’s role and objectives: The robust kind of outline adopted by Dexus ensures a
thorough level of accountability and authority by specifically mentioning the work
and functioning of each and every director and member of the board. The board deals
with the determination of overall business strategies relating to real estate, approve
business plans, implements market plans, and approve disclosure of financial
statements. The Chair’s role includes leading the board and maintains a peaceful
relation between the management and the board. National police check, directorship
checks, public record checks and bankruptcy record checks are done before
appointment of directors.
 Proper structuring of the board: The following committees assist the board in
implementing its duties and functions; audit committee, nomination committee, risk
committee. The membership of these boards is regularly revised in order to attain
maximum efficacy in discharge of duties. These committees are again supported by
various management committees in their daily discharge of duties.
 Acting in accordance to ethics: Dexus, being one of the most recognised real estate
companies in the world, follows the rules and regulations and acts ethically while
discharging its duties. Each of them are as follows:

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1. Dexus considers it important that all of its members must meet and adhere to
the highest ethical and professional standards and has also established a ‘code
of conduct’ for this purpose.
2. In case of trading in Dexus securities, the directors and the employees must
obtain the due permission of the Chair before engaging in any investing
activities involving the shares of Dexus. If the Chair wishes to trade in any
security, he or she must obtain approval from a non-executive director.
3. Dexus conflict of interest policy ensures that the conflicts which might arise
during allocation of property transactions, negotiation of leases or when the
self-goals of an employee or director is involved is resolved amicably.
 Protection of authentication of corporate reporting: Dexus aims to present each of
its financial statements in a fair manner and with genuine authenticity. Dexus has built
a robust structure and review system and it looks into the following matters; financial
statements of each of entities, the independence and honesty of each auditor, treasury
and other tax related matters and matters related to the semi-annual management
representation to the committees.
 Timely disclosure of material information: Dexus ensures complete and
comprehensive disclosure of all its reports and material statements by conducting
ongoing education and training of directors regarding the ASX rules and regulations,
by initiating efficient reporting channels by passing through the CEO or the General
Counsel. An efficient system of monitoring is also in place which would help in
complying with the disclosure principle.
 Ensuring respect for shareholder’s rights: The board routinely conducts Annual
General Meetings for better communication with the shareholders, by providing a

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authentic financial information and by increasing the opportunities for better
communication. Dexus also ensures better participation from the shareholders end by
informing them about the happenings of the company from time to time.
 Risk administration: The Risk Committee looks after risk management in Dexus.
The Committee carefully looks into the company’s various risk management
procedures, as well as job, proper health and safety, environment protection,
sustainability procedures, acquiescence with internal audit rules (ASX, 2018). It also
looks into the effectiveness of the company’s Risk administration Framework,
Compliance Management Framework and Risk Appetite Statement.
 Better and just remuneration: The Company follows a strict pay to performance
criterion for the payment of wages. The company looks into the director as well as
other board members in order for a just remuneration. The board has separate
remuneration committee which oversees the remuneration framework of the company.
Risk administration and assessment:
Dexus’s Board Risk Committee
The Board Risk Committee has the job of looking into the risk management within
Dexus. This Committee fulfil its responsibilities by looking to the Group’s enterprise risk
management practices, as well as work, health & safety, environmental management,
sustainability initiatives, compliance and various internal audit practices. It also looks into the
effectiveness of the Dexus’s Risk Management Framework, Compliance Management
Framework and also checks the Risk Appetite Statement.
Internal working procedures
All members of the Board Risk Committee are independent including the Chair. The
Board Risk Committee meets at least four times during the Reporting Period and each

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member attended all meetings. This is mandatory in order to discuss and take important risk
related decisions (Davenport, 2013).
While most kind of risks are identified, managed and monitored internally, Dexus has
appointed independent experts for monitoring of work, health & safety, environmental risks
and other risks where expert knowledge is required in order to ensure the fact that Dexus has
in place best practice processes and procedures in order to identify and avert any kind of
risks.
Comprehensive administration of risk is an imperative part of Dexus’s functioning, and the
company has a separate risk function reporting to the General Counsel on a daily basis, as
well as a Group Risk Committee comprise of senior executives that supports the Board Risk
Committee (Dexus, 2017).
The Risk as well as the Compliance team aims to endorse an effective risk and acquiescence
culture by providing assistance, drafting and updating relevant risk and compliance policies
and procedures, conducting intense and rigorous training, monitoring and reporting by
adhering to the main policies and procedures.
Internal audit
The Internal Audit Program of Dexus has a three year cycle period, the results of which are
reported quarterly to the Group Risk Committee as well as Board Risk Committee.

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Common size income statement for the year ended 31st March, 2017 is as follows:
Analysis:
The company has faced a lot of flak due to its underperformance in terms of its
financial results. The real estate giant has seen a dip in its revenue from ordinary activities by
14 million dollars. Consequently Dexus has also faced a drop in the annual total income in
the year 2017 by 30 million dollars from the year 2016 (Dexus, 2017). Development costs
have continued to rise, signifying an increase in the scale of real estate and property
activities. On a positive front, the company has seen a drop in the property expense by 0.2%.
As a result of which, the total expense of the company has dropped by 32 million dollars in
the year 2017, which is a welcoming addition. In addition to this, the profits have increased
too.

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Common size balance sheet for the year ended 31st March, 2017 is as follows:
:
Analysis:
Dexus’s balance sheet has been healthy, when compared with the income statement of the
company. There have been a steady increase in cash; receivables have seen a dip by a minor
amount. Noncurrent assets like plant and machinery and investment have seen a significant