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HI6026 Sample assignment Holmes


Word Count 2500
Executive summary
This assignment deals with a report on a food and dairy based company of South Wales in Australia, named Bega Cheese limited. This company is known for being the largest apparatus in the continent for the production of dairy related products.



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HI6026 Sample assignment Holmes


Word Count 2500


This assignment deals with a report on a food and dairy based
company of South Wales in Australia, named Bega Cheese limited. This company is
known for being the largest apparatus in the continent for the production of
dairy related products. It is also a listed company for Australian
Securities exchange. However, most of the company’s shareholders are the
suppliers of the company itself. Thus, even thou the company trades publicly,
there is no external issue for everyday operations for the company and an
amount of positive faith is there between the individuals. The report below
analyses the audit issues. These are the matters highlighted by the auditors.
The report also includes the compensation and remuneration provided to them,
declaration of independence. The report also analyses the incomplete or missing
information to formulate the questions that can be asked to the committee of
auditors to understand the business better.

Table of Contents

Introduction. 4

Complied with independence requirement 4

Non-audit services and their nature as well as Auditor remuneration and changes. 5

Audit committee. 6

Type of Audit opinion. 6

Key Audit Matters. 6

Directors’ and Management’s responsibilities differ from the Auditor’s responsibilities. 8

Any material subsequent event 8

Missing of any material information. 9

Follow up questions. 9

Conclusion. 10

Reference List 11


Bega Cheese limited did not become the largest producer of dairy products over the
night. They had steady growth from humble beginnings to the most accepted and
consumed brand in the continent. However the company is not limited to the
dairy products. It has been through many acquisitions and partnerships and has
expanded itself to more consumer goods. The profit does not depend on only the
low marginal dairy products. Among the recent partners is the Mondelez International that will able to
give the company, the license to manufacture brands of Kraft products. Also the
trading license for Vegemite and Bonox will increase the sales of the company
for the coming financial years. The reason why such great sales would lead the
shareholders to respond by the increase of their shares in the company of a
whopping 13% to a high rise of about 25%, as expected for the coming up sales. The
changes mentioned have been noticed in only one year, adding to the hopes for
the future of the shareholders as well as the company. Before 2016, the company
had its fair share of troubles and mishaps about acquisitions and partnerships.
But within the last year, the company learned to overcome its drawbacks, and
focused mainly on the hike in the sales and profits in its finances.

The audit mentioned below, is a fair and good analysis of the statements mentions
by the external auditors. This report has provided insights about the annual
report. However there is a room for the auditors as well as the management team
to make decision on the future of such annual report (Marques, 2019). Most of the company’s shareholders are the
suppliers of the company itself. Thus, even thou the company trades publicly,
there is no external issue for everyday operations for the company and an
amount of positive faith is there between the individuals. The report below
analyses the audit issues. These are the matters highlighted by the auditors. The
report also includes the compensation and remuneration provided to them,
declaration of independence. The company continues to make sure that any
investor for the company is in good position and understands the value of the
company. Then only the investor and the company together can generate the
finance that has been invested, even if the vital investment is not done
optimally. There is addition of other reports to this audit. The remuneration
of non-audit services is also take under consideration (Chambers & Odar, 2015).

Complied with independence requirement

For most of the companies the annual reports are reviewed by external auditors.
This is important because this helps to convince the users who are going to use
the report to realize that they are not being trapped or misled.  The auditors, thus, declare themselves as
independent. One of the key features of such declaration is to gain the trust
of the users. One can easily be sure of the report to be genuine. Thus such
declaration that proves them less bias. The auditor needs ensures that the
claims are correct and they are not misleading (Rossouw,
2015). Then they list down the shareholders who are considered as
drawbacks and cannot be worked with anymore. This also brings transparency in
the company management and among the users. Such example can be seen in the
case which is mentioned at page 80 of this annual report. The Corporation Act
2001 mentions such independence of auditors. Also the code of ethics claims
such fairness in the annual report of any company.

Non-audit services and their nature as well as Auditor remuneration and changes

The above piece of information concludes that the previous financial status of the
auditors were different from the present ones. The compensations are completely
different for the auditors for this financial year. It is found that the
company still has not only engaged with audit services but also non-audit ones.
It is clear from the table above that the non-audit services has gain higher
rises implementing that the management has been engaging price water house
coopers,  PWC, along with the operations
that are connected with other audits and they have more responsibilities (Rossouw, 2015). Ideally, the auditors are to provide reports that are considered independent and it is expected to look less
at the external services but this scenario does not permits such rules to be
followed. There has be an extreme rise in the remuneration services for the
non-audit and have been dealing with capitals and raising them along with share
schemes and the advices given to the clients on international taxes. Additional
to the rest policies, the company had created a policy long back to engage the
auditors to non-audit services especially, when it is important for the company.
For such cases, the most experienced is engaged because such auditor is assumed
to have in and out knowledge about the company.

Audit committee

The members of the committee board who are responsible to formulate are shown in
the table above. The table shows how many meetings were arranged and held and
the number of members attending such meetings. It is important for the council
to keep track of these internal audits as these helps to establish the facts on
fair decision making in the management and also keeps track of all the
incomplete pieces of data (Eaton et al., 2017). From the above
table, it can be concluded that all the members of the committee had attended
the meetings, even though it is clear that the number shown here is quiet less
than the original number of members.

Type of Audit opinion

This report is based on the Corporation Act of the year 2001. This report includes
the opinions of the auditors on the accounting according to the act mentioned.
It is a record of the auditor’s outlook on the reports and their actual
representation. The report stands as the originality of the auditors as they
portray the audit honestly or not. According to them, the audit seems fair
enough. Thus in the case mention, the opinions can be considered unqualified.

Key Audit Matters

The matters key audits are correspond to the different types of matters experienced
by the auditors. It is necessary to find out as it has one of the biggest
impacts on the business outlook and financial outlook of concerned
organisations regarding their particular financial year (Duncan & Whittington, 2014). PWC has been
managed to find out some maters which are very much significant for the company
Bega Cheese limited. They are following:

The Acquisition of the concerned company, Bega Cheese limited: There
are different kinds of reasons to list it as significant. Most importantly, the
entire transaction volumes are very high. On the other hand, the corresponding
accounting is not that much simple. This is because the transaction is
performed after the formulation of balance sheet in June (Baylis et al., 2017).
As well as, it is able to take calls for the process of evaluating the
different values of the kind and the related intangible assets. In addition,
there are also some types of royalty rates and discount rates with the purpose
of valuating the concerned assets in a proper way. In this process, there is
calculation of the fair value of the concerned assets by performing the
accounting of the inventory sample. As per the view of Nalewaik & Mills (2016), then it is compared with the collected data from penetrated market and other related
and adjacent information which are also collected in a historic way. It can
derive the goodwill after calculating the fair values. As well as, in respect
to the intangible assets, there are some assumptions based on the income which
are generated by them with their associated capacity. After that it is
discounted to the current and existing values of the similar thing to find out
the goodwill.

The transaction with
the Mead Johnson limited:
The transaction always includes the selling up formula which is there to produce and package the plant to the organisation. It must have a license to sell the similar thing to the
country, China, for the time period of 10 years. This is of the amount of 200
million dollars and in return Bega Cheese limited can have the grant of
accessing to the company Mead Johnson limited and to their capacities and
manufacturing plant (Schmidt, Wood & Grabski, 2016). It also includes their equipment. On the other hand, there are different types of which are included regarding the transactions which can have
the long term impacts to the financial and operational performance of the
concerned business organisation. It must be noted that some of the factors are
included in a group for interpreting the terms of the existing contracts. They
are mainly analysed by the auditors. There are others for checking the impacts
of them on the current business between two companies. In this process, it also
determines the impacts on the corresponding cash flows which have occurred in
present and expected for the future business. It must be noted that, there are
also some other types of commercial aspects which are associate with the considered
business and its activities (Woiwode et al., 2016).

Inventory provisions: As
founded by the auditors, the company is recording some of their selling goods
which are now in the inventory state or they are semi-finished and in this
case, they have some certain selling price which is expected (Sen & Madria, 2018). This type of goods is
recorded at lower values which is even lower than their acquired price. They
are main raw materials or infant or baby foods. The main reason of this which
is very much significant is the global pricing of these types of commodities
and goods are always fluctuating. According to Brawley
et al. (2015), this has a specific
impact on the financial statements in a significant way. Therefore, the
auditors need to perform proper analysis on the expectations of their
penetrated industry, their coming future strategies and their past performance
of business. These can be applied to curb the purchase devaluations. As a
result of this, it can enable the concerned organisation in the process of
8nderstandin the reflected decisions are proper or not.

Directors’ and Management’s responsibilities differ from the Auditor’s responsibilities

Responsibility of a Director: As stated by Marques (2019), the responsibilities of a director are to assure the given information and statements regarding the financial information are
proper as per to the best of their knowledge. Therefore they confirm that any
type of errors, frauds, bogus claims and misstatements are not entertained by
them in their financial statements. In addition, one key responsibility is
there of taking decisions and implement them in a proper way as per belief of
the organisation and make them one of the important concerns. The
responsibility of a director also includes that directors need to formulate
appropriate policies which are compatible with the beliefs and concerns of the

Responsibility of an Auditor: As per the view of Eaton et
(2017), an auditor has to confirm that any type of financial claims are
made within the financial statement of the organisation are correct and without
any type of fraud. The auditors need to list down their obligations which
include that it is their duty to safeguard the interests of their shareholder
and general people as best as possible. As well as, according to Chambers &
Odar (2015), they need to include some analysis base on their
necessities regarding their business standards where sometimes the standards
cannot be as effective for tracking the raised loopholes which are missed by
the auditors. It can be able to support the more probation of the different
types of business processes of the concerned company.

Any material subsequent event

It must be noted that there is no significant and subsequent material event which
are raised after the publication of the financial statements (Griffiths, 2016). As well as, it does not
include any kind of wrong or not related information in this financial report.

Missing of any material information

Asper the view of Rossouw (2015), the
concerned company does not manage to give extensive details of their
transactions which are performed in the process of selling of their asset. It
can give some benefits which are mainly provided by the buyer to the company. It
must be noted that it is very much crucial to know that the added benefits
which are availed by the company can also avail the operational efficiency and
improvement. As well as the examples of any lower priced or the under-priced
inventory, any type of questions on the selling price of the goods and selling
actions can be managed to decide the dealings with the eternal factors of
increase or reduced pricing of the selling goods and commodities within the
penetrated market (Brawley et al., 2015). On the other hand, if the company is looking
at their global expansion, it is necessary not to give detailed information to
any other business organisation which can result to the violation of their
future goal.

Follow up questions

There are different types of questions which can be asked to the auditors regarding the
topics which are not included in the annual report or within the auditors’
report. It is noted that the auditors did not consider some important topics in
the comment section. In addition, the company policies state that the auditors
perform non-audit services and tax advisory. Therefore it is very much
necessary to give more independence.

According to Eaton et al. (2017), at first the auditors must include their own
comments on the review procedure o the internal audit which are mainly
performed by the internal audit committee. Therefore they are aware about the
fact that how the audit has been done. Therefore to solve any type of
inconsistent activities, they can recommend some activities or some remedial
actions for the betterment of the company performance.

In a similar way, the auditor can be asked for producing other types of material
events which are found by them and not that much significant at all. Therefore
regarding the size of the operations of the company, they can include it to
their annual report (Sen & Madria, 2018).
On the other hand, it is very much difficulty to assume the findings of the
auditor as they have found only three key matters of audit which has to be
considered worthy for mentioning within the annual report. Thus, the auditor
can be asked for more related information which is not share within the
financial statement or annual report of the company.


By analysing different aspects it can be said that the auditors have done a good
analysis on the financial statements and on the relate notes which can be able
to give insights to the readers. It also includes some open questions which are
required more clarification from the responsible auditors and the management
team of the company for making sure that the investors are in good positions.
It is very much needed to understand the value of the business of the concerned
company in their penetrated market. If the investors and the company, both are
in good positions, the firm can be able to avail more investments for their
business and further progress. In addition, in this present report by
commenting on the remuneration, it managed to add higher value to the non-audit

Reference List

Baylis, R. M., Burnap, P., Clatworthy, M. A., Gad, M. A.,
& Pong, C. K. (2017). Private lenders’ demand for audit. Journal of
Accounting and Economics
64(1), 78-97.

Brawley, S., Clark, J., Dixon, C., Ford, L., Nielsen, E., Ross, S., & Upton, S. (2015). History on trial: Evaluating learning outcomes through audit and accreditation in a national standards
environment. Teaching and Learning Inquiry3(2),

Chambers, A. D., & Odar, M. (2015). A new vision for internal audit. Managerial Auditing Journal30(1), 34-55.

Duncan, B., & Whittington, M. (2014, September).
Compliance with standards, assurance and audit: does this equal security?.
In Proceedings of the 7th International Conference on Security of
Information and Networks
 (p. 77). ACM.

Eaton, D. J., Tyler, J., Backshall, A., Bernstein, D.,
Carver, A., Gasnier, A., … & Yang, H. (2017). An external dosimetry audit
programme to credential static and rotational IMRT delivery for clinical trials
quality assurance. Physica Medica35, 25-30.

Griffiths, P. (2016). Risk-based auditing.
Abingdon: Routledge.

Marques, R. P. F. (2019). Continuous Assurance and the Use of
Technology for Business Compliance. In Advanced Methodologies and
Technologies in Business Operations and Management
 (pp. 429-441). IGI

Nalewaik, A., & Mills, A. (2016). Project
performance review: Capturing the value of audit, oversight, and compliance for
project success
. Abingdon: Routledge.

Rossouw, D. (2015). The Impact Of Combined Assurance on The
Internal Audit Function.

Schmidt, P. J., Wood, J. T., & Grabski, S. V. (2016).
Business in the Cloud: Research Questions on Governance, Audit, and
Assurance. Journal of Information Systems30(3),

Sen, A., & Madria, S. (2018, January). Data Analysis of
Cloud Security Alliance’s Security, Trust & Assurance Registry. In Proceedings
of the 19th International Conference on Distributed Computing and Networking
42). ACM.

Woiwode, R., Grandin, T., Kirch, B., & Paterson, J.
(2016). Compliance of large feedyards in the northern high plains with the Beef
Quality Assurance Feedyard Assessment. The Professional Animal
32(6), 750-757.

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