|2018 UK Corporate Governance Code
Audit, Risk and Internal Control
M. The board should establish formal and transparent policies and procedures to ensure the independence and effectiveness of internal and external audit functions and satisfy itself on the integrity of financial and narrative statements.
N. The board should present a fair, balanced and understandable assessment of the company’s position and prospects.
O. The board should establish procedures to manage risk, oversee the internal control framework, and determine the nature and extent of the principal risks the company is willing to take in order to achieve its long-term strategic objectives
You are working for a large international accounting firm (Deloitte LLP) who are evaluating the quality of the voluntary disclosure that accompanies the audited financial statements of their clients. In light of the provisions of the UK Corporate Governance Code 2018, the need for fair and balanced assessment of a company’s position and prospects is an explicit principle.
Recent FRC investigations have highlighted serious concerns in the conduct of the accounting profession in discharging their duty to ensure that information provided in the audited financial statements shows a true and fair view.
Your firm is aware of the concerns that have been raised by regulators including the Financial Reporting Council (FRC) in the UK about narrative disclosure. You have been asked to explore the quality of narrative disclosure in the 2020 corporate reports for your client, Superdry Plc, an international clothing company which is exposed to significant risks arising from the impact of the Covid-19 pandemic.
|Going Concern and material uncertainty
The Committee reviewed and challenged management’s FY21 Budget and medium term forecast, including the detailed assessment of a number of downside scenarios, predominantly using a reverse stress-test approach.
This review focused on the assumptions made regarding the impact of the Covid-19 pandemic on the retail sector and wider economy and specifically to Superdry; and the ability to execute the turnaround plans required to recover brand health and return the business to growth.
Following this review, the Committee noted that these risks indicate that a material uncertainty exists and may cast significant doubt on the Group’s ability to continue as a going concern. The material uncertainty relates to:
• The recovery in consumer demand, and the Group’s ability to capture this during the AW20 reset season; and,
• The ability of the Group to meet the new covenants from debt providers in the next 12 months.
The Directors have assessed the liquidity requirements of the Group under these downside scenarios and believe them to be adequate. The detail behind this conclusion can be found in the Assessment of the Group’s Prospects on page 38
Extracted from the Audit Committee Report Superdry Plc Annual Reports 2020https://corporate.superdry.com/media/2821/27279-superdry-annual-report-2020-webready.pdf accessed 7th October 2020
This review should be presented as a professional report which explores your findings and concludes:
Overall word limit: 2000
A penalty will be applied for work uploaded after 12:00 midday as detailed in the Programme Handbook. You must leave sufficient time to fully complete the upload process before the deadline and check that you have received a receipt. At peak periods, it can take up to 30 minutes for a receipt to be generated.
Assignments should be typed, using 1.5 spacing and an easy-to-read 12-point font. Assignments and dissertations/business projects must not exceed the word count indicated in the module handbook/assessment brief.
The word count should:
Examiners will stop reading once the word limit has been reached, and work beyond this point will not be assessed. Checks of word counts will be carried out on submitted work, including any assignments or dissertations/business projects that appear to be clearly over-length. Checks may take place manually and/or with the aid of the word count provided via an electronic submission. Where a student has intentionally misrepresented their word count, the School may treat this as an offence under Section IV of the General Regulations of the University. Extreme cases may be viewed as dishonest practice under Section IV, 5 (a) (x) of the General Regulations.
Very occasionally it may be appropriate to present, in an appendix, material which does not properly belong in the main body of the assessment but which some students wish to provide for the sake of completeness. Any appendices will not have a role in the assessment – examiners are under no obligation to read appendices and they do not form part of the word count. Material that students wish to be assessed should always be included in the main body of the text.
Guidance on referencing can be found in the programme handbook and on DUO.
Performance in the summative assessment for this module is judged against the following criteria:
PLAGIARISM AND COLLUSION
Students suspected of plagiarism, either of published work or the work of other students, or of collusion will be dealt with according to School and University guidelines.
END OF ASSESSMENT