Comprehensive Audit, Assurance, and Compliance Report: Orica Limited

This report provides a comprehensive analysis of Orica Limited's adherence to the ASX Corporate Governance Principles and its overall financial health. It begins with an executive summary highlighting Orica's compliance and risk mitigation strategies. The report then delves into a detailed examination of each of the eight ASX CGC principles, demonstrating how Orica has implemented them through board structures, codes of conduct, and timely information disclosure. A significant portion of the report is dedicated to risk assessment, identifying key risks such as credit risk, liquidity risk, and market risk, and detailing Orica's strategies for mitigating these. The analysis includes financial statement ratios and common-size financial statements to assess the company's performance and position in the Australian market. Finally, the report concludes that Orica maintains a stable financial position, having effectively implemented corporate governance practices and risk management strategies.

Running head: AUDIT, ASSURANCE AND COMPLIANCE
Audit, Assurance and Compliance
Name of the Student:
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Executive Summary:
The current report intends to assess the adherence to the ASX CGC principles and
process of assessment of an ASX listed entity. In order to fit the purpose of this report, Orica
Limited is selected as the organisation, which is one of the biggest global providers of blasting
systems and commercial explosives. Orica Limited has adhered to all the “ASX CGC Principles
and Recommendations” by implementing various strategies such as formation of board, effective
remuneration structure, code of conduct, timely revelation, risk realisation and management and
others. Some major risks are inherent in the business operations of Orica and they include credit
risk, liquidity risk, market risk, risk related to digital innovation and others. For this reason, the
organisation has undertaken certain steps like hedging, financial statement analysis and others
for mitigating the above-stated risks. Finally, it has been found out that Orica Limited is
maintaining stable financial position and performance in the Australian market.

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Table of Contents
1. Introduction:................................................................................................................................3
2. ASX Corporate Governance Principles and adherence of Orica Limited to these principles:....3
3. Risk assessment of Orica Limited:............................................................................................12
3.1 Nature and market overview:...............................................................................................12
3.2 Regulatory authority and the business strategy of Orica Limited:......................................12
3.3 Income statement and balance sheet ratios and common size financial statements:...........13
3.4 Relevant audit risks of Orica Limited and steps to minimise risk:......................................18
4. Conclusion:................................................................................................................................19
References:....................................................................................................................................20

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1. Introduction:
Auditing is the procedure of investigating the financial reports of the business
organisations for determining the material misstatements. When the financial statements of an
entity are audited, the auditors need to consider the primary risks related to material
misstatements and steps need to be taken for minimising them. In this context, ASX has
formulated eight corporate governance principles for the Australian entities to ensure sound
mechanism of corporate governance (Asx.com.au 2018).
This report intends to assess the adherence to the ASX CGC principles and process of
assessment of an ASX listed entity. In order to fit the purpose of this report, Orica Limited is
selected as the organisation, which is one of the biggest global providers of blasting systems and
commercial explosives. The primary business activities of the organisation include providing the
above products to quarrying, oil and gas, mining and construction, supplying sodium cyanide for
extracting gold along with providing ground support services in tunnelling and mining
(Orica.com 2018).
2. ASX Corporate Governance Principles and adherence of Orica Limited to these
principles:
“ASX CGC Principles and Recommendations” have been introduced in 2003 so that the
companies ensure sound practices of corporate governance. Orica Limited is no exception to this
aspect, since it has to adhere to these standards. The below-stated discussion would evaluate the
effectiveness of Orica Limited in complying with the “ASX CGC Principles and
Recommendations”:

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Principle 1:
According to this principle, an organisation needs to establish and disclose
responsibilities and roles of the management and directors along with measuring and monitoring
its performance.
The above figures denote that Orica Limited has disclosed the roles and responsibilities
of its board. Moreover, the organisation uses the balanced scorecard approach of yearly major
performance indicators for monitoring and measuring performance.
Principle 2:
It is necessary for the organisations to have boards with suitable skills, size, composition
and commitment for performing their duties effectively (Baylis et al. 2017). In accordance with

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the annual report and corporate governance statement of Orica Limited, it has seven board
members and their skills sets are disclosed appropriately.
Along with this, Orica Limited has disclosed previous experience and skills of their
directors for ensuring sound corporate governance within the organisation.

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Principle 3:
The business entities are needed to serve responsibly and ethically to comply with this
principle. In Orica Limited, it has formulated suitable framework of policies associated with
values and code of conduct. In order to comply with the code of ethics, the directors, staffs and
other executives require acting ethically.

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Principle 4:
It is necessary for the organisations to have formal procedures in order to safeguard and
verify the integrity of corporate reporting (Chambers and Odar 2015). It could be observed that
CSR Limited has conformed to the principles such as AASB, IFRS, IASB and Corporations Act
2001 for ensuring corporate reporting integrity. All such aspects assure fair and true depicting of
the accounting statements of Orica Limited. Besides, the managers of the business unit meet with
the representatives of the team of corporate finance for obtaining an overview of the financial

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aspects of the organisation in order to maintain financial reporting integrity (Duncan and
Whittington 2014).
Principle 5:
This principle requires all the crucial information of the business organisations to be in
balanced and timely manner (Griffiths 2016). In case of Orica Limited, the organisation has
enforced a long-term framework for providing timely and pertinent information to all the
stakeholders.
Principle 6:
The organisations are needed to maintain the shareholders’ rights by delivering them with
all the necessary information (Jones et al. 2017). In this regard, it is noteworthy to mention that
the market disclosure policy of Orica Limited assures timely supply of crucial information to the
shareholders. This has helped the shareholders in undertaking timely investment decisions.
Principle 7:

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This principles states that every ASX listed organisation is needed to mitigate their risks
through the formation of a sound framework for risk management. In order to adhere to this
principle, Orica Limited has formulated suitable policies and procedures so that it could monitor
its business risks. The four primary factors in the risk management framework of Orica Limited
include Risk Committee, Annual Risk Review, Internal Audit and Sustainability Risk.

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Principle 8:

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As per this principle, fair remuneration needs to be paid to the directors for attracting and
retaining them to assure the organisational benefits (Marques 2018). In addition, the
organisations need to align their interests with those of the shareholders. Orica Limited has
developed its remuneration framework effectively to retain its directors. The remuneration
framework of the organisation comprises of short-term and long-term incentives along with fixed
remuneration.