Comprehensive Audit and Assurance Report: Graincorp Limited Review

This report presents an audit and assurance analysis of Graincorp Limited, a food ingredients and agriculture business company listed on the Australian Stock Exchange (ASX). The report begins with an executive summary and then assesses the implementation of ASX Corporate Governance Principles, evaluating the company's compliance with principles related to management, board structure, ethical conduct, corporate reporting, disclosure, shareholder rights, risk management, and remuneration. The analysis includes a discussion of Graincorp's market overview, regulatory environment, and risk assessment. Furthermore, the report computes and analyzes various financial ratios, including profitability, liquidity, and efficiency ratios, providing insights into the company's financial performance. The report concludes with a summary of findings and references.

Audit and Assurance

TABLE OF CONTENTS
1. EXECUTIVE SUMMARY................................................................................................1
2. Implementation of ASX Corporate Governance Principles to the financial statements of the
company.................................................................................................................................1
3. Computation of financial ratios for the company Recognizing the nature of the company,
what’s the company’s market overview and who regulates the client? ................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................6

1. EXECUTIVE SUMMARY
Firms allows the external parties and organisation to have appropriate access in their
operational activities, gains, expenses, losses etc. therefore, they believe that all relevant
information are needed to be delivered and presented among stakeholders of firm. Moreover,
these are the data set which are essentially required by investors to analyse the financial capacity
and capabilities of firm. In the present report there will be analysis over the operational
functioning of the Graincrop Limited. On which there has been proper determination of the facts
which were being in associated with the international standard and jurisdiction. Therefore, the
internal audit of an organisation is comprises with accurate, clear and consistent data which will
be easy to compare and present the financial data set with proper transparency.
2. Implementation of ASX Corporate Governance Principles to the financial statements of the
company
The ASX Corporate Governance Principles are required to be implemented by company
so that corporate governance statement disclosed by organisation help to identify useful insights
to the investors and as such, their trust can be enhanced and maximised in a better way. This is
important for company so as to maximise shareholders' interest towards firm in effective manner.
Graincorp Ltd Class A is one of the largest company engaged in receival and storing grains and
imparts logistics services to customers. Organisation is listed on Australian Stock Exchange and
has earned adequate profits in recent years. The annual earnings in 2017 financial year has
increased which is a good sign for the firm as it is able to perform well in the market and
satisfying customers in the best possible manner (Yan and Zheng, 2017).
Moreover, it is evident from the fact that net income was 30.9 million in 2016 year which
roused to 125.2 in 2017. The figure shows that company is meeting set targets with much ease
and as such, profits are attained in effective manner. On the other hand, there are various
corporate governance principles as listed by ASX which are required to be disclosed in the
annual report of company to enhance shareholders' trust towards company. There are certain
principles which will be discussed and whether company has complied with same or not. These
are explained below
Principle 1: Lay solid for management and oversight
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The first principle states that roles and responsibilities of directors should be disclosed
and accompanied in corporate governance statement of the company. Moreover, performance of
board of directors should be evaluated and measured in a better way. The primary goal is to
enhance long-term interest of shareholders' so that they may be benefited with higher dividends.
Graincorp Ltd Class A has implemented this principle. The board has enhanced its charter which
includes role of board in making strategy and planning for future activities. Moreover, role in
preparation of budgets, remuneration policies, managing risks and audit compliance has also
been attained. The power is delegated to Managing Director and CEO (Cheif Executive Officer)
of the company. Furthermore, governing with the principle for solid management, Graincorp Ltd
Class A has successfully complied with it. On the other hand, CEO has the responsibility for
effectively monitoring performance of personnels of executive team. This is ensured by this team
that to regularly assess performance and strategic issues are also carried out by the board ( Karna,
Richter and Riesenkampff, 2016).
Principle 2: Structure the board to add the value
The second principle deal with having adequate composition, skills and abilities to
effectively release their duties and responsibilities in the best possible manner. The structure of
Graincorp Ltd Class A is confined with skills and expertise to discharge duties in effective way.
It can be seen as per the corporate governance statement of 2017 that company has minimum
four of directors and maximum limit up to ten directors. In the early start of 2017, organisation
had eight non-executive directors and one was executive director. At the Annual General
Meeting (AGM), two of non-executive directors such as Mr Peter Housden and Mr Simon
Tregoning were once again elected to the same post. The required skills, attributes and
experiences of directors makes it possible to add value to the structure of Board. Graham Bradley
which is Chairman and Non-executive director of firm has adequate skills and attributes in the
business field and has remained on higher posts in various big companies as well. Mark
Palmquist is Managing Director and CEO of organisation and has skills in global agribusiness
(Kural, Fuglsang-Frederiksen, Johnsen and Tankisi, 2016).
Principle 3: Act ethically and responsibly
This principle clearly explains that company should act ethically and responsibly towards
everything. This is evident from the fact that Graincorp Ltd Class A has focused on this principle
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and implemented Code of Conduct which provides guidelines for acting ethically and behaviours
of employees, directors, executive team should have responsibility. Organisation has
implemented Share Trading policy which prohibits dealing in securities by the directors,
employees under in possession not published share price information. This policy provides
specific guidelines and process for officers to take proper approval before dealing in securities of
the organisation. Whistle-blower protection is also implemented which provides clarity to the
company and is a mechanism where any kind of breaches shall be reported so that fair treatment
can be made in effective manner. Furthermore, Graincorp Ltd Class A imparts various political
donations. In relation to this, company would not use property as donation. The legitimate fees
are approved and paid as a donation. Thus, it can be said that firm has effectively complied with
ethical principles (Damodaran, 2016).
Principle 4: Safeguard integrity in corporate reporting
The principle states that there should be adequate formal procedures so that corporate
reporting may be safeguarded in the best possible manner. Furthermore, it can be analysed that
company has followed this principle as Board Audit Committee has implemented financial
reporting standard and regulated the internal controls up to a high extent. External Auditor of
company is Price water house Coopers which has been reviewing financial statements of
company.
Principle 5: Make timely and balanced disclosure
The company has fulfilled this corporate governance structure as timely disclosure of
financial statements are provided to stakeholders in the best possible manner. Quality
information is imparted to stakeholders so that they may take enhanced decisions. It has also
complied with Corporations Act, 2001 and discloses material information to them.
Communication policy is provided to stakeholders so that needed information can be imparted
(Joos, Piotroski and Srinivasan, 2016).
Principle 6: Respect the rights of security holders
The rights of shareholders are also complied by company. Graincorp Ltd Class A respects
right of shareholder and convince them to attend AGM so that any suggestions or advices can be
implemented so that company may improve upon the same. The company information is also
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accessible at company website. Investors relation program is implemented to promote clear
understanding to the investors regarding outlook of the company. Moreover, electronic
communication option is available to shareholders to receive information on electronic basis.
Principle 7: Recognise and manage risk
This principle is also followed by company as it has implemented Risk Management
Policy and as such, systematic approach of risk management framework which are in relation to
objectives of firm. Moreover, directors has the roles and responsibilities to effectively recognise
and manage risk. Business risk committee is also initiated to effectually identify risk and as such,
monitoring and reviewing of risks can be measured. Thus, organisation has complied with this
principle.
Principle 8: Remunerate fairly and responsibly
Remuneration should be fairly provided and employees should be retained so that
business may be able to achieve stated targets and profits in effective way. In accordance to this,
PRNC (People Remuneration and Nomination Committee) is being implemented which guides
and assists board in providing fair remuneration to all the employees. The remuneration report is
also imparted which includes information of remuneration of managerial personnels. Moreover,
non-executive director remuneration is also highlighted (Shi, Lim, Weitz and France, 2017).
3. Computation of financial ratios for the company Recognizing the nature of the company,
what’s the company’s market overview and who regulates the client?
Risk assessment is control the risk and to identifying and measuring the risk. It is very
important is to find out the financial statement are materially correct or not. Graincorp limited is
an Australia based food ingredients company. In Risk assessment of the company Graincorp
limited is find out that financial statement of the company is materially correct. Risk assessment
ensured that agreed for safe working practices. Risk statements include five steps Identify hazard
for the company, to decide who may be harmed, assess risk and take action, and make record of
the findings and the last review the risk assessment.
Nature of the company
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Graincorp limited company is food ingredients and agriculture business company . This
company mainly focuses its activities on three grains which are wheat, barely and canola. This
company allows the grain growers to set the cash price for their warehoused grain.
Company's market overview
Graincorp limited is a public company. This company ranked 81 out of 2000 companies
in Australia. This company earn income mainly from the cereal grain wholesaling. In 2017 the
company earn total revenue of $4668700000 sales in included in this. In Graincorp limited had
3191 employees is working in the company it included all subsidiaries. Its vision is to be a
leading agribusiness as our customers. Company benefited from a record coast crop as it A$142
million. Last year it grew 10.06% from 4.16 and its net income is also improved (Dona and et.al,
2016).
Regulate the client
In Graincorp limited they focus on providing the best possible solutions for their
customers or clients. The company manage health and safety and environmental risks.
Company’s business strategy
Graincorp limited company marketing strategy focuses on strengthen the business. This
company included growth opportunities, expanding the business, on a capital investment get a
good return. To strengthen a business it is very important, in marketing strategy they involve
grain other agriculture products. Graincorp limited also manage market speculation and rumours.
Throughout the year this company follow a calendar of regular disclosure. In market strategy this
company used market segmentation. In this wheat classification plays an important role.
Graincorp limited business strategy is who we are and what we do and where in the future. This
company protects safety and health for their employees, the company put their customer in the
centre and company also provide solutions for customers support and their needs. This company
pursue excellence, foster innovation and continuous improvement (Ostroumova and et.al, 2016).
This company engage in decision making and keep their commitments.
Particulars Formula 2017 2016
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Profitability ratios
Net profit ratio Net profit / sales 2.74 0.75
Return on Assets (ROA) Net profit / total assets 3.49 0.85
Liquidity ratio
Current ratio Current assets / Current Liabilities 1.87 1.56
Quick ratio Liquid assets / Current liabilities 1.00 0.84
Efficiency Ratios
Stock turnover ratio
COGS (Cost of Goods Sold)/ Average
inventory 6.80 6.46
Receivables turnover ratio
Net Credit sales / Average accounts
receivables 10.02 13.73
Ratio analysis : It is an analysis of information contained in company financial
statements. It involves evaluating the performance and financial health of the company. Ratio
analysis divided into six main groups that are liquidity ratio, solvency ratio, profitability ratio,
efficiency ratio and coverage ratios and market prospect ratios. Ratio analysis can provide
warning of a potential improvement. Ratios only compare the companies which is work in same
sectors. It can be identified that company financial position is good as all ratios are adequate.
Inherent risk is identified which means that company's internal auditors cannot find the same
(inherent risk. 2014). It can be reduced by reviewing financial statements.
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CONCLUSION
This report is based on a company Graincorp limited which is situated in Australia. This
company is a food ingredients and agriculture business it focuses mainly on grains. In this report
the company uses corporate governance principles which are required for maintaining trust of
investors in a better way
REFERENCES
Books and Journals
Yan, X. and Zheng, L., 2017. Fundamental Analysis and the Cross-Section of Stock Returns: A
Data-Mining Approach. The Review of Financial Studies. 30(4). pp.1382-1423.
Karna, A., Richter, A. and Riesenkampff, E., 2016. Revisiting the role of the environment in the
capabilities–financial performance relationship: A meta‐analysis. Strategic Management
Journal. 37(6).pp.1154-1173.
Damodaran, A., 2016. Damodaran on valuation: security analysis for investment and corporate
finance (Vol. 324). John Wiley & Sons.
Joos, P., Piotroski, J. D. and Srinivasan, S., 2016. Can analysts assess fundamental risk and
valuation uncertainty? An empirical analysis of scenario-based value estimates. Journal of
FinancialEconomics.121(3).pp.645-663.
Shi, Y., Lim, J. M., Weitz, B. A. and France, S. L., 2017. The impact of retail format
diversification on retailers’ financial performance. Journal of the Academy of Marketing Science.
pp.1-21.
Dona, E. and et.al, 2016. Lifetime-ratio analysis in the posterior lateral line primordium. dim
(xGFP). 1(2048).p.300.
Ostroumova, E. and et.al, 2016. Non-thyroid cancer incidence in Belarusian residents exposed to
Chernobyl fallout in childhood and adolescence: Standardized Incidence Ratio analysis, 1997–
2011. Environmentalresearch. 147.pp.44-49.
Kural, M. A., Fuglsang-Frederiksen, A., Johnsen, B. and Tankisi, H., 2016. Quantitative MUP
and peak ratio analysis in diagnosis of myopathy. Clinical Neurophysiology. 127(3). p.e35.
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