Audit, Assurance & Compliance Executive Summary Report of Holden Car

This report provides an executive summary of an audit, assurance, and compliance analysis focusing on General Motors (GM) and its subsidiary, Holden Car, in relation to ASX principles. It examines the corporate governance structure of Holden Car, including its compliance with ASX guidelines, the roles of the board and management, ethical conduct, and safeguarding corporate reporting integrity. The report details risk assessment procedures, including the nature of the company, market overview, and business strategy. It also includes a computation of income statement and balance sheet ratios to assess financial performance, along with a discussion of audit risk and mitigation strategies. The analysis references relevant auditing standards (ASA 50) and the company's adherence to ethical and responsible business practices. The report highlights GM's commitment to maintaining a strong corporate governance framework and its efforts to ensure accurate and reliable financial reporting to stakeholders.

Audit, Assurance & Compliance
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Executive Summary
Business corporations need to place special emphasis on developing and implementing a
sound and efficient governance structure to promote its sustainable growth and development.
Also, they need to disclose materially accurate ad reliable financial statement to the end-users
that can be used for decision-making. However, there are some risks that can cause material
misstatements and need to be identified by the auditors accurately to minimize the chance of
occurrence of nay material misstatement. The Auditing Standard., ASA 50, has provided the
analytical procedures to be used by entities for assessment of audit risk and the strategies used
for their mitigation by the company. In this context, the report ahs carried out analysis of
corporate governance structure of Holden Car, a subsidiary of parent Company General Motor as
per ASX principles and discussed the risk assessment procedures for identifying audit risk.
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Contents
ASX Corporate Governance Principles Compliance by General Motor........................................................4
Developing Solid Framework for Management & Oversight...................................................................4
Structure the Board to Add Value............................................................................................................5
Ethical and Responsible Way of Acting....................................................................................................5
Safeguarding Integrity in Corporate Reporting........................................................................................6
Making Timely and Balanced Disclosure..................................................................................................6
Respecting the Rights of Security Holders...............................................................................................6
Risk Identification & Mitigation...............................................................................................................7
Fair & Responsible Remuneration...........................................................................................................7
Risk Assessment Procedures.......................................................................................................................7
 Nature of Company:........................................................................................................................7
 Market Overview.............................................................................................................................8
 Business Strategy.............................................................................................................................8
Computation of Income Statement & Balance Sheet Ratio.....................................................................8
Audit Risk & Its Mitigation.....................................................................................................................10
References.................................................................................................................................................11
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ASX Corporate Governance Principles Compliance by General Motor
ASX Corporate Governance Council ahs developed standard framework of corporate
governance to provide guidance to the business entities regarding the ways of carrying out their
business operations as per the highest ethical standards (ASX Corporate Governance Council,
2014). General Motor, an American multinational company involved in manufacturing and
distribution of vehicles and its associated parts also regularly develops and publishes its
corporate governance statement. The company has a manufacturing unit in Australia known as
GM Holden Car manufacturing wide range of engineered models of it scars such as Suzuki,
Toyota, Chevrolet and other car models. Thus, as the company operates in Australia and
therefore it is necessary to comply with ASX principles. The implications of the ASX Corporate
Governance Statement in developing an effective corporate structure in the company are
discussed as follows:
Developing Solid Framework for Management & Oversight
The company as per ASX principles and recommendations need to establish the
respective roles and responsibilities of board and management. Also, there should be presence of
effective processes and systems for evaluation of the performance of board and management
(Fleckner and Hopt, 2013). General Motor has stated the mission and responsibilities of Board in
its corporate governance statement. The board is the ultimate decision-making body of the
company and also oversees the functionalizing of the senior management. There are distinct roles
and responsibilities of Board and management as per the corporate governance statement. The
management personnel are directly accountable to the Board and hold the responsibility of
monitoring the day-to-day activities of the company. The performance of the Board is monitored
by the use of a self-assessment process that is governed by the governance committee and the
Chairman. The valuation of the performance is made on the basis of contribution of Board to the
growth and development of the company (General Motors Company Board Of Directors
Corporate Governance Guidelines, 2018). The performance of the management is reviewed by
the Board on an annul basis at the time of determining their remuneration. Therefore, it can be
said after analyzing the board and management foundations in the company that its governance
policies is similar to that of ASX Council principle and recommendations (Plessis, McConvill
and Bagaric, 2005).
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Structure the Board to Add Value
This ASX principle states that board should be composed effectively having diverse
range of skills, experience, and qualifications and competencies. The Board holds the
responsibility of electing the new members and the governance committee and Chairman are
responsible for assisting in the process of selecting board members. The board members are
selected by the governance committee against the standard skills and expertise. This is required
to maintain a diverse structure of Board so that it can effectively meet its roles and
responsibilities as per the ASX principles. Also, the company adopts the use of a Governance
committee for implementing an orientation process developed by the management for providing
knowledge to the new director’s appointed about the business and strategic plans of the
company. Thus, the ASX principle of marinating an effective composition of Board is also
followed by General Motors to a large extent as examined in its corporate governance statement
(General Motors Company Board Of Directors Corporate Governance Guidelines, 2018).
Ethical and Responsible Way of Acting
The business entities also need to develop a standard Code of Conduct and principles for
ensuring that all the operational activities are carried out in an ethical and responsible manner
(Nordberg, 2010). In this context, the company has adopted to the policy of ‘Winning With
Integrity’ for determining the standard values and guidelines for the conduct of the employees.
The Board in the vent of recognizing nay illegal activity from any of its team members issues a
termination letter for the concerned person. Also, there are strong policies related to maintaining
of confidentiality of information by the directors and employees. Also, the regulator compliance
such as trading laws and regulations is essential for employees and business directors as per the
ethical policies maintained by the company. Also, directors have the obligations of maintaining
the confidentiality of information after resigning form the service of the Board. This is because
the confidential information if accessed by any third party can prove to be benefit for the
competitors. The presence of responsible business practices in the company also disclosed in its
corporate governance statement. There is presence of strong policies and programs in relation to
preventing the occurrence of any unethical practices such as bribery, offering any gift to third
parties and reporting the relevant information to the shareholders. As such, the ASX principle of
ethical and responsible way of acting is effectively followed by the business company as there is
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no adequate disclosure regarding the ethical and responsible way of doing business (General
Motors Company Board Of Directors Corporate Governance Guidelines, 2018).
Safeguarding Integrity in Corporate Reporting
The company for ensuring the integrity in corporate reporting has developed a finance
committee. The finance committee is responsible for maintaining integrity in corporate reporting.
It holds the responsibility of recording and disclosing the financial information honestly and
accurately to the investors. The company ahs adopted its own distinct Accounting standards to
Comply that the finance committee is responsible for complying at the time of developing and
reporting the financial information. Thus, the company has also effectively followed this ASX
Council principle and recommendation (General Motor: Corporate Governance, 2018).
Making Timely and Balanced Disclosure
ASX Council has also stated the business companies to provide timey and balanced
information about its performance to the stakeholders that can have an impact on the price of the
securities. The company has complied with this standard principle by providing all required
financial and non-financial information to the stakeholders by developing its annual report and
sustainability report. The annual report and the information regarding the governance structure of
the company can be accessed on the online website of the company. The annual report encloses
all the general purpose financial statements of the company to provide all the relevant financial
information to the shareholders. Also, the sustainable strategies adopted by the company for
promoting its long-term growth are provided in the sustainability report (General Motor:
Corporate Governance, 2018).
Respecting the Rights of Security Holders
The company as per this standard corporate governance principle provided by ASX has
disclosed all the required information of the investors on its online website under a separate
section of the Corporate Governance. It encloses all the documents related to governance policies
and strategies adopted by the company for promoting the interests of the investors. Also, the
shareholders are provided the opportunity to discuss any of their issues in writing to the director
by providing the corresponding address for the same on its online website. The company
secretary is responsible for reviewing the compliance of the company with the corporate
governance policies (General Motor: Corporate Governance, 2018).
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Risk Identification & Mitigation
There should be a presence of an effective framework for identifying, measuring and
controlling the significant risk that can occur due to company’s nature of operations as per the
ASX principle. The company has developed a risk committee established by the Board for
identification, assessment and managing the major strategic and operational risks faced by the
company. The committee established the risk management framework of the company that
details the structure followed for identification and control of the material risk impacting the
performance of the company in the long-term (General Motor: Corporate Governance,
2018).Therefore, it ah effectively followed the respective ASX principle of developing a risk
management framework for mitigating the risk in advance (Bazley, Hancock and Robinson,
2014).
Fair & Responsible Remuneration
There is also a presence of a compensation committee to ensure that fair remuneration is
provided to the company directors, executive and key management personnel as per the ASX
principle and recommendation. The committee is responsible for developing the policies and
activities to determine the remuneration of key management personnel (General Motor:
Corporate Governance, 2018).
Risk Assessment Procedures
The presence of an effective risk assessment procedure is essential for a business entity to
ensure that information provided to the stakeholders is reliable and accurate. In this context, it is
essential that company carries out the auditing of its financial reporting process on a continuous
basis and provide them accurate formation for reviewing (Putra, 2010). In this context, relevant
auditing standards has been established by the standard auditing Board in Australia, that is, ASA
50 for ensuring that materialistic information provided to the auditors is free from any error and
is completely reliable. The standard has provided an analytical procedure to be used by auditors
to identify the presence of any material misstatement (Auditing and Assurance Standards Board,
2009). The analytic procedure stated has the followings steps:
 Nature of Company: General Motor Holden Car is completely owned and managed
by the parent Company General Motor, an American multinational automotive company
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involved in manufacturing and selling of cars. The parent company ahs developed a
governance structure that effectively complies with ASX Corporate governance structure.
As such, the company can effectively carries out its business operations with Australia.
Holden Car, carrying operations in Australia, has to follow Corporations Act 2001 and
the standard principle of international reporting of IFRS. The parent company has
maintained a related party transaction policy to report any transactions that occur between
the company and its board members or shareholders. The policy is applicable to all the
subsidiaries of the company including Holden Car.
 Market Overview: Hoddle Car, is specially established by General Motors to
manufacture the cars in Australia and to increase its business expansion within the
country. This si because the presence of a stable regulatory environment within the
country will promote ist growth and development.
 Business Strategy: Holden Car, ahs the strategic objective of strengthening the brand
image and expanding the product portfolio of General Motors within Australia. This is
done with the aim of driving the strategic expansion and growth of its parent company,
General Motors (General Motor: Annual Report, 2017).
Computation of Income Statement & Balance Sheet Ratio
Financial Data on Woolworth Group
Particulars 2016 2017
Net profit $9,268.00 $330.00
Gross Profit $30,047.00 $30,719.00
Revenue
$166,380.0
0
$145,588.0
0
Total Assets
$221,690.0
0
$212,482.0
0
Long term Debts $9,585.00 $10,987.00
Shareholder's
Equity $43,836.00 $35,001.00
Current Assets $76,203.00 $68,744.00
Current Liabilities $85,181.00 $76,890.00
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Income Statement
Ratios Formula Interpretation
Net Profit Ratio
Net
Profit/Revenue 5.57% 0.23%
There is decrease in
profit that shows that
risk of profitability
will increase
Gross Profit Ratio
Gross Profit/
Revenue 18.06% 21.10%
There is increase in
gross profit that
shows that risk of
profitability will
decrease.
Return on Assets
Net
Profit/Assets 4.18% 0.16%
There is decrease in
profit that shows that
risk of profitability
will increase
Overall there is risk of
profitability position
of the company in the
future years
Balance Sheet
Ratios
Debt Equity Ratio Debt/Equity 0.22 0.31
Capital Structure has
been increased with
debt capital
Fixed Assets
Turnover
Revenue/Total
Assets 0.75 0.69
Efficiecny has been
reduced that shows
lower ultisialtion of
resources
Current Ratio
Current
Assets/Current 0.89 0.89
No change in current
ratio
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Liabilities
Overall there is risk of
liquidity in the
company and capital
structure is also not
good.
Audit Risk & Its Mitigation
General Motors carries out its operations in a number of countries and therefore exposed
to wide range of financial risks. GM seeks to fund it operations in each country with the use of
local sources for minimizing the currency and country risk. It is exposed to high rate of foreign
exchange risk that can occur due to fluctuations in the exchange rates as company conducts it
operations across global level. Therefore, such fluctuations can cause material misstatement
provided to the auditors for reviewing purpose and can potentially impact the outcomes of the
process. As such, the company adopts the use of secured and unsecured credit facilities and
funding the operations in domestic currency for mitigating the currency risk effectively.
Also, it faces high operational risk that can materially impact the results of its financial
reporting process. The operational risk is unavailability of the company to develop a
technological competent model for customer attraction and its inefficiency in delivering the new
products in time to the customers. This can impact the sales volume of the company and can
cause material misstatement. Also, it has to comply with the diffident laws and regulations in
different countries and the failure to do can impact its financial results to a large extent. All such
operational risks that can cause material misstatement for the company is provided in its annul
report and the auditors need to review the business activities appropriately for identifying their
chances of occurrence. The company has also not disclosed the strategies implemented for their
reduction in its annual report and thus these risks can have a high materialistic impact on the
outcomes attained from the audit process. Therefore such risk present within the company can
cause the material misstatement and need to be taken into account by the auditor during the time
of audit of the company so that stakeholders are provided with reliable and accurate information
for decision-making (General Motor: Annual Report, 2017).
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References
General Motor: Annual Report .2017. [Online]. Available at:
https://www.gm.com/content/dam/gm/en_us/english/Group4/InvestorsPDFDocuments/02-pdfs/
10-K.pdf [Accessed on: 1 May 2018].
General Motor. 2018. Corporate Governance. [Online]. Available at:
https://www.gm.com/investors/corporate-governance.html [Accessed on: 1 May 2018].
General Motors Company Board Of Directors Corporate Governance Guidelines. 2018. [Online].
Available at:
https://www.gm.com/content/dam/gm/en_us/english/Group4/InvestorsPDFDocuments/
Corporate_Governance_Guidelines.pdf [Accessed on: 1 May 2018].
ASX Corporate Governance Council. 2014. [Online]. Available
at: https://www.asx.com.au/documents/asx-compliance/cgc-principles-and-recommendations-
3rd-edn.pdf [Accessed on: 1 May 2018].
Auditing and Assurance Standards Board. 2009. Auditing Standard ASA 520 Analytical
Procedures. [Online]. Available
at: http://www.auasb.gov.au/admin/file/content102/c3/ASA_520_27-10-09.pdf [Accessed on: 1
May 2018].
Bazley, M., Hancock, P. and Robinson, P. 2014. Contemporary Accounting PDF. Cengage
Learning Australia.
Fleckner, A. and Hopt, K. 2013. Comparative Corporate Governance: A Functional and
International Analysis. Cambridge University Press.
Nordberg, D. 2010. Corporate Governance: Principles and Issues. SAGE.
Plessis, J., McConvill, J. and Bagaric, M. 2005. Principles of Contemporary Corporate
Governance. Cambridge University Press.
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