Audit Risk Assessment
Client: Wesfarmers Ltd
Wesfarmers Ltd., formerly known as Western Australian Farmers’ Co-operative has been the one of the eminent name in the Australia. In these 100 years of operating the business since its inception in 1914, it has grown itself into one of the largest listed companies in Australia.
The company runs its diversified business operations from its headquarter located in Perth which includes supermarket (Coles), department stores (Target, Kmart), home improvement and office supplies (Bunning Warehouse), coal production and export; chemicals, energy and fertilisers; and industrial and safety products. Wesfarmers is one of Australia's largest employers and has a shareholder base of approximately…show more content… Wesfarmers group consist of strong workforce comprising of 203,000 team members. The financial performance of the group is strong recording the profit after tax of $2,689 million which is up by 18.9 per cent compared to prior year. The group’s balance sheet continues to be strong with net tangible assets and reduced debt to equity ratio.
Despite running in highly competitive environment in retail and manufacturing sector, the group as a whole has been able to overcome the competition. Some of the fierce rivals its group companies are Coles- Woolworth, Aldi, IGA; Kmart, Target- BigW, Myer, David…show more content… Inherent Risk
2. Control Risk
3. Detection Risk
Assessment of Inherent Risk
In general terms, inherent risk are the risks without taking into consideration of the internal control. In terms of auditing inherent risk are the risk related to financial statement. If there are any material misstatement in the financial statement which may be due to the error of fraud then inherent risk is said to occur. For the organizations like Wesfarmers where transactions are really complex due to their size and also their volume of transaction are really high, chances of inherent risk is really high.
Risk Strategy of Wesfarmers
Wesfarmers has always accepted the risk as the part of business and it well recognizes the importance of the risk and its impact on the operations of the business. It is committed to monitor and manage any material misstatement that is associated with its activities across the group.
The company is committed to identify and mitigate the risk associated with the group activities whereas the monitoring the risk of the individual companies are left with its divisional board