Executive Summary 3
1. Company Profile 4
1.1 Principal Sources of Revenue 4
1.2 Products and Operations 5
1.3 Primary Competitors and Market Share 5
1.4 Regulations 6
2. ANALYSIS OF THE BUSINESS ENVIRONMENT 7
2.1 Political 7
2.3 Social 8
2.4 Technological 9
3. AUDIT RISKS 10
3.1 High Levels of Debt 10
3.2 Timing of Revenue Recognition 11
3.3 Completeness of Research and Development (R&D) Expenses 11
3.4 Valuation of intangible assets 12
3.5 Exchange rate fluctuations 12
4. IMPACT OF THE IPO ON THE AUDIT PLAN 12
4.1 Internal controls 13
4.2 Net Profit 13
4.3 Interest bearing loans 13
The purpose of this report is to provide our audit partners and managers with the significant findings in regards to Nine Entertainment Co. Holdings Limited (NEC). The report consolidates the background information of NEC relevant to the commencement of the audit. The report is structured to focus on the identification of key audit risks based on n analysis of the business and industry.
Firstly, this report will provide an overview of NEC’s principal revenue sources, operational procedures, industry overview in terms of its competitors and market share, and relevant regulations which may affect its operations. An analysis of the business environment has been conducted in the form of a PEST analysis, which will highlight the political, economic, social and technological aspects that may affect NEC. These include its Free-to-Air television licenses, restrictions on TV advertisements, household financial situation, exchange rate, popularity of television in Australia, consumer interests, internet and mobile advertising platforms and the shift to internet-based content delivery platforms. The report will explain the potential impacts of these factors on NEC’s operations and financial results.
The subsequent section will identify five key audit risks which will impact on the audit plan of NEC. These...