Analysis of Business and Financial Risks: Myer Holding Limited Report

This report provides an in-depth analysis of Myer Holding Limited, an Australian retail company. It begins with an overview of the company, its operations, and its industry. The report then identifies and discusses five key business risks, including external factors, technology, competition, regulatory issues, and people management. Following this, the report examines three significant financial risks derived from Myer's 2018 annual report, namely foreign exchange risk, market risk, and liquidity risk, and explains how these risks could contribute to material misstatements in financial reporting. Finally, the report assesses Myer's corporate governance practices, evaluating their reliability and effectiveness in mitigating risks. The analysis is conducted to provide insights relevant to auditing the firm, helping to identify inherent risks and risks of material misstatement, and to prepare for the audit process.

Running head: MYER HOLDING LIMITED
MYER HOLDING LIMITED
Name of the Student:
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Author Note

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Executive Summery
The main objective of this report is to analyse the business as well as financial risk associated
with the Myer Holding Limited those have the potential to cause material misstatement in the
financial reporting of the firm. This report analyse the recent transaction and news to
ascertain the business risk of the firm and annual report of the firm for the year 2018 to find
out the financial risk of the firm. Lastly, this report analyse the corporate governance report
of the firm to analyse whether it is reliable or not.

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Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
Requirement A: - Overview of Myer Holding Limited.........................................................3
Requirement B: - Business risks............................................................................................4
Requirement C: - Financial Risk............................................................................................6
Requirement D: - Corporate Governance practise.................................................................8
Conclusion..................................................................................................................................8
References..................................................................................................................................9

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Introduction
This report is prepared to understand the client named Myer Holding Limited. Myer
Holding Limited is public listed company of Australia. This is a departmental retail chain
company which operates in every states of Australia including one self – governing
territories. The objective of the report is to know about Myer Holding Limited including their
business, industry and like. Secondly, this report highlights top five business risk associated
with the operation of the firm and their effect on its operations. Further, this report reviews
the financial statement of the firm for the year 2018 and identifies another three financial risk
associated with it and explains how those can make material misstatement. While, in last, this
report also analysis the corporate governance report of the firm and express the opinion
weather this information of corporate governance is reliable or not. The all above analysis of
the firm is made with the objective of auditing the firm. By performing the all the above
analysis, this report is trying to identify inherent risk associated with the firm along with the
risk of material misstatement. The main objective of this analysis is to prepare the plan for
the audit of Myer Holding Limited as this information will help the auditor to make the plan
for the audit.
Discussion
Requirement A: - Overview of Myer Holding Limited
The Myer Holding Limited is a departmental store of Australia. This firm operates an
extensive store chain across every states of Australia. Firm mainly deals with the products
like footwear, menswear, women wears, baby wears and children wears along with several
beauty products, fragrance, accessories, electrical goods and other general product. Myer
operates more than 60 retail stores across Australia. As firm offers a large variety of
merchandise including for men, women, baby and children hence firm also owns several

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merchandise brands especially for women (Myer, 2019). This brands are Mimco, Jack &
Jones, Veronika Maine, seed and like. Apart from this brands, Mayer also have several
subsidiaries named NB Elizabeth Pty Ltd, Warehouse Solution Pty Ltd, Mayer Pty Ltd,
Russell Pty Ltd and likes. There are several other firm which work under the subsidiary of
Myer Holding Limited. This holding also operates its business outside its retail stores though
its brands, subsidiaries and likes.
Hence, it can be said that the Mayer Pty Ltd mainly operates in retail industry of
Australia. While, the other subsidiaries and brands of Mayer operates in several other
industries like merchandise industry, stationery, cosmetic and likes.
Requirement B: - Business risks
The Group has implement a proactive risk management approach to look after the key
business risks along with the uncertainties which can cause material misstatement in the
information related to the firm’s business. The management of the firm always also try to
minimize this risks and uncertainty associated with the business of firm by looking into all
the aspects of the group (Sadgrove, 2016). There are various risks associated with the firm
which can result material misstatement. The followings are the five key business risk of Myer
Holding Limited which can cause material misstatement: -
External Risk
In the basis of director’s report of Myer Holding Limited, one of the major business
risk associated with the group is the external business environment factors. Here, the external
business risk factors refers to those factors which is not part of the group’s business but be
present in the external aspect of the group like the market in which firm operates. Hence, the
micro economic factors like fluctuation in the Australian Dollars, weak confidence of
consumers, changes in the government policies and like can deeply affect the business of

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Group (Lin, Li & Bu, 2015). The external risk of the firm also includes the external events,
natural events or the unforeseen events like act of terrorism, weakness in global economy or
national strikes. This factors also affect the business of the firm by affecting the ability of the
group to achieve their predetermined sales.
Technology Risk
The Myer group is mainly focused to increase use of technologies in their business
operations. While the digital environment always keeps changing. Hence, there is high risk
related with the information technology used by the firm in their business operation as there
is high chances that these technology will become outdate in near future and start performing
malfunctions in the system. Apart from that this also have risk related to the cyber – security
which can affect the sales of the firm including the efficiency of firm and brand reputation.
The technology risk associated with the information technology system of the firm can also
manipulates the data of the firm which can affect can cause material misstatement in the firm.
Competitive Risks
As discussed above the industry of Myer Group in which it operates is the retail
industry of Australia. While, the retail industry of Australia is highly competitive. Hence, this
is also an important business risk associated with the Myer as the new entrants, existing firms
and the increasing online competition can affect firm negatively by impacting the sales of
firm. This is one of the biggest business risk which associated with Myer Group (Robinson et
al, 2015). This directly affect the sales of the firm which is directly related with the revenue
of the firm. Hence, this business risk have the high potential to cause material misstatement.
Regulatory Risks
Myer may be subjected to investigation and dispute as per the regularity consider by
the Australian Taxation Office, Australia Securities and Investments Commission, Australian

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Securities and Investment Commission, Australian Securities Exchange including various
other Federal as well as States regularities towards the group is liable in time to time basis.
The negative outcomes of this investigations and disputes can affect the operations as well as
financial performance which can also increase the chances of material misstatement in the
financial reporting of the firm. Hence, this regulatory risk is another important risk for the
Myer Holding Group.
People Management Risk
Another important business risk associated with Myer Group is the management of
people within the organisation. This is one of the major business risk for Myer Group as this
can affect the internal operation of the firm. The group needs to manage various people
related to the organisation like employee, customers as well as suppliers. There are several
issues which are related with the management of peoples like employees safety (afraccess,
2019). If firm fails to provide safety to its employees then it not only affect the efficiency of
the firm but also the reputation of the Group. While, the reputation of the firm is directly
impact the sales of the firm. Hence, this risk also have the high potential to rise the material
misstatement in the firm.
Requirement C: - Financial Risk
The financial risks are those risk that are related with the financial aspect of the firm
and can lead the firm to the material misstatement in the financial reporting of Group. The
Myer Holding Limited also have several financial risk which have the potential to cause
material misstatement in the financial report of the firm. In the basis of the annual report
published by the firm for the year 2018, the followings are the key financial risks which are
related with the Myer Group Limited those have material misstatement: -
Foreign exchange risk

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The financial risk arises when the future commercial transaction as well as recognised
assets and liabilities are denoted in the foreign currency or in those currency in which is not
the functional currency of the firm. In simple words, the foreign exchange risk are those
which is arises when firm generate revenue in apart from their operating currency
(Santibañez-Aguilar et al, 2016). This risk mainly arises when firm operates in different
countries globally or import their material from the foreign countries which operates in other
currency which is not the currency of the operating firm. This one of the important financial
risk associated with the firm which usually leads the firm to material misstatement.
Market risk
The financial market risk are those risk which affect the policy of the Group regarding
the interest rate. Interest rate exposure is evaluated regularly to confirm alignment with the
policy of Group that is not exposed to excess risk from volatility of interest risk. If the
interest rate changes compare to the period end rate while the other variable remains constant
then this will directly impact the post - tax profit of the firm for the given period of time. This
directly affect the financial performance of the firm if it fails to revise their policy related to
the interest according the changes in the market then it effect of the net profit of the firm.
Hence, this financial risk have high potential to make the material misstatement in the
financial reporting of the firm.
Liquidity Risk
Third financial risk of the firm in the basis of the annual report published by the firm
for the year 2018 is liquidity risk. This financial risk associate with the liquidity position of
the firm. Group need to maintain balance between its assets and liabilities. If the firm have
higher liability then the asset then firm is more liquidity in which firm will not able to operate
their business and need to pay high amount as the interest to its borrowers (Wilhelm &

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Kirsch, 2015). Secondly, the if the firm have higher asset and very low liabilities then it is
also not good for the firm as this situation shows that the firm is not properly utilizing its
available cash. Hence, it is important for the firm to maintain the balance between assets and
liabilities. This risk also can cause the material misstatement in the financial statement of the
firm.
Requirement D: - Corporate Governance practise
The corporate governance practises of Myer Holding Limited is mainly focused to
minimize the business risk as well as the financial risk of the firm and to increase the
efficiency of the business operations. This policies of the firm is focused to minimizing those
aspect of the firm which is creating the risk for the firm. The corporate governance of the
firm ensures that operating and other policy of the firm must compliance with the
requirement of all the regulatory of Australia for which the company is liable. This also
ensures that the firm must consider about the management of the customers, suppliers,
employees and other related people of the firm. The corporate governance practises of the
firm is complies with the requirements of the ASX Corporate Governance along with all
other requirements of related regulatory of Australia.
Conclusion
This paper concludes that the Myer Holding Limited is an Australian listed firm
which mainly operates in the retail industry by operating extensive retail chain across
Australia. The group mainly involves retailing of several products like merchandise for men,
women, babies and kids, cosmetics and others. The firm also own several brands especially
for the merchandise for women. Apart from that firm also have various subsidiaries through
which firm operates in the various other industries. Though the main business of the firm is
retail business and industry in which firm operates is retail industry. There are several
business risks associated with the operation of the firm which includes external risk,

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comparative market risk, regulatory risk, technical risk and like. While, the major financial
risk of the firm are the interest risk, liquidity risk and market risk. Lastly, the corporate
governance policy of the firm is appropriate to rely on its performance.
References
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Australian corporate firms. International Journal of Managerial Finance, 11(2), 162-
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Castro-Montoya, A. J., & Ponce-Ortega, J. M. (2016). Financial risk assessment and
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