Response to the following problems:
1. You are a part of the team responsible for planning the Wesfarmers (parent and the consolidated economic entity) audit engagement for 2017. You have been assigned to gather relevant background information and prepare a report for a meeting with your audit partner and audit managers. Your report must address the following issues:
a. What are the areas in which Wesfarmers conducts its operations?
b. Which particular laws/regulations (other than financial related categories which include legislations such as: Corporation Act 2001, Australian taxation laws, etc.) affect its operations? You need to identify at least FIVE laws/regulations.
c. Who are its primary competitors (TWO major and TWO minor) in retail sector?
The answers for above questions should be reflective of your in-depth understanding of how the Wesfarmers operates.
2. A SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis also known as internal-external analysis is a planning tool and often used in strategic analysis of a business. Prepare a SWOT analysis showing the kind of factors that may have a material impact on the business of Wesfarmers. You need to identify at least TWO factors for each of the four areas and explain how each of the factors impacts Wesfarmers.
3. Identify at least FIVE accounts susceptible to misappropriation or fraudulent financial reporting within the Wesfarmers Group and explain why. Your answers should be reflective of your in-depth understanding of Wesfarmers Group and its environment.
4. With specific reference to Wesfarmers's corporate governance arrangements, you need to assess the likelihood of the potential reliance that could be placed on the overall control environment. Your conclusion should be supported by at least FIVE factors.
5. Recently Target (one of Wesfarmers department stores) rocked up by an accounting scandal after finding that about 10 staff pumped up the chain's earnings (in the first half of 2016) by almost 40 per cent by colluding with suppliers to book extra rebates in return for promises of higher prices in the second half of 2016. As a result, Target has to restate its profits. How will this accounting scandal affect your 2017 audit plan for Wesfarmers Group?