New Hope Corporation: Key Audit Matters, Risks, and Audit Procedures

This report provides an overview of New Hope Corporation Limited, a leading energy generating company in Australia, focusing on its key operations in coal mining, oil and gas exploration. It identifies key audit matters from the company's annual report, including the carrying value of non-current assets and rehabilitation provisions, and discusses the inherent risks associated with global warming due to the company's involvement in coal energy generation. The report highlights the significance of global warming as a risk factor, especially concerning the Climate Change Bill 2022 and the goals of net zero emission, and suggests measures such as internal controls, tests of control, and changes in mining methods to address this risk. It further reflects on the team's role in gathering and analyzing information to support the project's objectives, emphasizing the importance of effective communication and data sharing.

INDIVIDUAL AND GROUP
WRITING
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TABLE OF CONTENT
MAIN BODY..................................................................................................................................3
Overview of selected firm:..........................................................................................................3
Key audit matters:........................................................................................................................4
Additional possible inherent risks:..............................................................................................4
1. Why the risk is significant:......................................................................................................4
2. How the risk could be addressed in the audit:.........................................................................5
Reflection:....................................................................................................................................6
REFERENCES................................................................................................................................6
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MAIN BODY
Overview of selected firm:
New Hope Corporation Limited is one of the leading energy generating company based in
Australia focusing on diverse energy segment including energy from coal, port handling
operation, logistic dealing, agriculture and oil & gas supply. This company carry out their
operation in New South Wales and Queensland promoting mining industry, New Hope
Corporation Limited operate two open coal mines in the Australia and many other business unit
all over Australian territory (Beekink and Logarajah, 2020). New Hope Corporation Limited is
publicly listed on Australian Securities Exchange (ASX Code: NHC), Washington H. Soul which
is leading investment company of Australia is major stakeholder in New Hope Corporation
Limited and consider as parent company. There are certain elements which are related, these are:
Key operation: New Hope Corporation Limited is energy generation industry but operating in
certain other segment, this company deal in different area of mining industry including trade
process of coal production, other segment may include:
 Coal mining in Queensland: This is one of the most important operation of New Hope
Corporation Limited where company extract coal including mining production,
processing of raw material, transporting mining mineral and port operating allow
company to ensure logistic business unit.
 Coal mining in New South Wales: New Hope Corporation Limited deal in generating
energy from coal, this area allow company to develop energy from coal and coal
products, New Hope Corporation Limited also focus on transportation of raw material
from different segment of the company.
 Oil and gas exploration: This is another important operation of New Hope Corporation
Limited where company extract oil and nature gas for the generation of energy in the
process, the pastoral and administration dealing allow company to ensure their energy
generation remain better.
Major competitors of New Hope Corporation Limited are YanCoal limited, Coal & Allied
Industries and Coronado Global Resource. These are industry ruler in energy industry promoting
energy generation in the country.
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Key audit matters:
Key audit matters are matters occur in professional judgement for overall financial report current
period, these matters are design to provide overview for financial performance of firm over the
year, there are certain key audit matters identified in Annual report of New Hope Corporation
Limited, these are:
Carrying value of non-current assets:
At 31 July 2021: The New Hope Corporation Limited had assets worth $1952 million including
plant and equipment, a worth of $106 million including E&E assets and worth $77 million as
intangible assets. The group have performed assessment for impairment for CGU’s including
detailed impairment assessment for three major matters including an impairment charge of $45
million including $43 for PPE and $2 million for E&E assets. The group have recoverable
amount for CGU which was calculated on fair value less cost of disposal over the commodity
price in the market (Annual report, 2021). At disclosed note on 14, judgement is provided by the
company highlight the impact of legal environment and current delay due to application sent to
Queensland Coal Mining Operation CGU.
Rehabilitation provision:
At 31 July 2021: The group has provision of $268 million for restoration and rehabilitation
including calculation of management judgement estimating the quantum of future cost mainly in
the unique nature of each site. Evaluating the management process including design and control
of rehabilitation process and objectivity of the implementation. Disclosed in note 15 of the
report, the appropriateness of financial statement is being provided to the investor., rehabilitation
of each site.
Additional possible inherent risks:
1. Why the risk is significant:
Global warming is one of the major issue in the world, almost every industry performs those
activities which promote global warming. Energy generation industry have major impact over
environment which promote global impacting and sudden raise to warming of earth’s land
(Kosov and et.al., 2018). This risk is significantly important for New Hope Corporation Limited
as they are dealing in energy generation process allowing them to generate energy from coal and
other mining products. The issue of global warming impact operation and accounting of New
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Hope Corporation Limited, this company is ignoring the fact about sudden rise in global
warming.
This company tend to continue their coal energy generation by the year 2030 which
means they will break element and agreement of Paris Agreement Goal; this company have goal
to extract 231 million tonnes of marketable coal which promote global warming. However,
government is planning to reduce coal extraction and coal use for energy generation which
means this will cost New Hope Corporation Limited to address this issue. There is certain
element to global warming measure, these are:
 Reduction in operation: The government of Australia introduced Climate Change Bill
2022 in which reduction of 43% in global warming will be achieved, government is
demanding every industry including energy industry to reduce operation. New Hope
Corporation Limited will going to face critical challenges due to this act of government.
 International Energy Agency (IEA): according to Paris Agreement and IEA, the goal of
net zero emission demanding coal and energy companies like New Hope Corporation
Limited to reduce their operation to manage issue of global warming. Study shows 1.5C
increase in temperature increasing global warming (Letcher, 2019).
2. How the risk could be addressed in the audit:
Global warming risk is one of the major risk in the world, to measure and mitigate this
risk, coal companies need to undertake certain measure including internal control. New Hope
Corporation Limited need take certain measure including tests and audit report for management
of global warming operation (Herndon, 2018). It is very clear that New Hope Corporation
Limited is dealing in coal and energy industry which promote global warming in the world, there
are certain way to address the risk of global warming, these are:
Internal control: Internal control means New Hope Corporation Limited need to take certain
measure including reduction in coal extraction, and production which means company need to
take sustainable measure to manage global warming issue. Underground method for mining coal,
this is one of the best measure to manage global wringing issue in coal energy industry, New
Hope Corporation Limited need to extract coal from underground area which do not impact
upper layer of earth.
Tests of control: This is another measure in which audit highlight key process to manage global
warming issue test control is audit performed either by government or company itself which
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means testing the impact of coal and energy operation on the environment and key measure
taken by the company. New Hope Corporation Limited have their own methods of managing
global warming issue, audit provide test control measure including underground mining project
by New Hope Corporation Limited to reduce soil erosion and impact on nearby living society.
Change method: New Hope Corporation Limited have changed their method of coal and energy
generation, this company is focusing on increasing their coal capacity and energy generation
from coal which means they are working on alternative method to reduce the impact of coal
mining and energy generation on environment (Oskarsson and Bedi, 2018). Audit including
certain type of methods including air pollution and control measure to manage impact of coal
and energy generation on environment.
Reflection:
Team is one of the most important group in every project, my team was focusing on major
issue faced by the world due to certain industry. As a coordinator, I was providing support to the
team, my role was to arrange information which is reliable and valid. As a coordinator, I brought
internal details of the industry including certain measure taken by the company to ensure
reduction in global warming. I communicated with my subordinate via technology allowing me
to ensure effective connection with other member of the group, I share data and information and
provide key insight audit and report to complete the project. I completed my role to ensure team
remain effective in the process.
REFERENCES
Books and journals
Beekink, P. and Logarajah, R., 2020. 'Wiggins Island Coal Export Terminal Pty Ltd v New Hope
Corporation Ltd; Northern Energy Corporation Ltd (In Liq) v New Hope Corporation
Ltd'. AUSTRALIAN PROPERTY LAW BULLETIN, 35(3), pp.26-29.
Herndon, J.M., 2018. Air pollution, not greenhouse gases: The principal cause of global
warming. J Geog Environ Earth Sci Intn, 17(2), pp.1-8.
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Kosov and et.al., 2018. Energy industry: Effectiveness from innovations. International Journal of
Energy Economics and Policy, 8(4), p.83.
Letcher, T.M., 2019. Why do we have global warming?. In Managing global warming (pp. 3-15).
Academic Press.
Oskarsson, P. and Bedi, H.P., 2018. Extracting environmental justice: Countering technical
renditions of pollution in India’s coal industry. The Extractive Industries and
Society, 5(3), pp.340-347.
Online:
Annual report, 2021. New Hope Group Overview. Available through., <
https://newhopegroup.com.au/wp-content/uploads/2021-Annual-Report.pdf>
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