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Extensive research on Metcash’s internal and external environments, operations, strategies and analysis of annual reports

ЕХTЕNSIVЕ RЕSЕАRСH ОN МЕTСАSH’S INTЕRNАL АND ЕХTЕRNАL ЕNVIRОNMЕNTS, ОРЕRАTIОNS, STRАTЕGIЕS АND АNАLYSIS ОF АNNUАL RЕРОRTS

Executive summary

having a distribution network covering Adelaide, Perth, Melbourne, Brisbane and Sydney, the company has gained much market underits control and therefore faces stiff competition from other major establishments in the same business which calls for analyzing the environmental and strategic situation for the business. This retrospect paper seeks to analyze the areas in which Metcash conducts its and the accounts susceptible to misappropriation besides analyzing the major competitors to the business. Rupšys&Stačiokas 2015, Metcash . As discussed by Metcash Annual Report2016)Metcash Group, being a leading Australian wholesaler and distributor of liquor, grocery, hardware and food industries, supports and supplies about 10,000 independent retailers (

Operations conducted by Metcash

).Food and grocery for Metcash is focused on creating sustainable growth through developing competitive prices, core ranging and network investment. The area has achieved 960 stores under Price match program, 150 diamond stores, and private Label has been boosted by 175 mid-tier products all of which have contributed to a 16 percent retail sales increase and 16 percent wholesale sales uplift.Metcash Annual Report2016Metcash Group deals in various merchandises that are within its network to create sustainable strategic priority which has seen the company grow her revenues to $13.5 billion in 2016 financial year which is a 1.3 percent increase from 2015 financial year (

. This has seen the sales growth for the liquor business to 3.7 percent.Metcash Annual Report2016)Similarly, the group also deals in liquor which is operated throughout Australia and only recently in the 2016 financial year, the company converted the wholesale customers to IBA bannered network so as to improve retail network quality (

Hardware business has developed a network of approximately 380 independent retailers that are operated under joint venture stores. This includes 12 Sapphire stores, 350 stores on e-learning and 45 stores under Core Ranging which have seen an average of 17 percent uplift in sales.

Primary competitors

. The company was worth $18 billion which besides having many retail shops for food poses a threat to the well-being of the Metcash Group.Rupšys&Stačiokas 2015)Metcash group faces stiff competition from majorly three companies: Coles Group, Woolworths limited and ALDI GmbH & Company KG Essen. Coles Group headquartered in Hawthorn East, Victoria, Australia, is a food retailer in Australia having 740 supermarkets, 785 Liquor outlets and 620 convenience stores under Coles Express which have formed the firm basis for the company to create a competitive platform (

.Bonner et al 2016)ALDI GmbH & Company KG Essen, headquartered in Nordrhein-Westfalen, Germany, is the world’s biggest grocery chains having about 10,000 stores worldwide besides having modest staff and selling their goods at lower prices which gives them a competitive advantage over Metcash Group due to economy of scale (

et al 2007, a company such as Woolworths that has over 3,200 stores and about 1000 supermarkets, it is likely to reach more customers than Metcash Group posing a competitive threat.LeungWoolworths on the other hand being headquartered in Bella Vista, New South Wales, is ranked first in Australian food retailing business. According to

Metcash company has experienced fraud and misappropriation of accounts by the omission of the company amounts or the disclosures with the intent of deceiving the company users.

Revenue Accounts

Metcash company encountered the falsification of the accounts by overstating the accounts revenues so that the company business could be perceived to be worth more money so that the Metcash share prices increase so as to attract an increasing number of the public consumers that are interested in purchasing the company shares market. Revenue account fraud took more than 2 years in Metcash company and it involves millions of resources. Based on the rationalization, it can be presumed that the company altered the revenue accounts by using the aggressive earning forecasts or make extensive accusations by using the company stock so that it can lure the public on how the company is having an outstanding business performance so that the public can easily purchase the company shares.

Financial Account Statements

Unethical financial account statements from Metcash company pose a devastating outcome for the company shareholders, board of directors and employees that basically rely on the issued financial account statements. Metcash financial account statements involved the extension of the credits to the undeserving entities while shareholders were perceived to highly invest in overhauled securities. Additionally, Metcash incentives positions the company into pressure on how to attain debt covenant and additional financing hence the reason to fraud the financial account statements. It is presumed that the company pose weaknesses in effective oversight of the financial reporting from the financial board of directors hence an opportunity to engage into discretions over financial accounts discretions on fraud.

Fictitious Sales Invoice Account.

Metcash fictitious sales invoices account fraud focused on improving the financial statements of the company and to inflate its stock prize. As such, the company engaged into fictitious sales transactions of its products and services by creating false invoices for the company accounting system. In this action, the company doesn’t showcase the underlying consumers orders, shipping of the products or payments for the company. The company simply decided to use false data to fill out the invoice such as fake customer names, the item description on prices, the quantity of the product purchased and when it was purchased. Generally, the creation of invoice is known to be an easy task but the ability top deal with the fraudulent AR that basically is easily retrieved from Metcash company showcasing the transaction is difficult.

Returns Account Fraudulent

Metcash engaging into intense activities across the festive seasons showcase how the returns account system has been misappropriated. The fraudsters take advantage of the poor security systems to return a stolen good purposefully for a return for a refund. As the scam is carried out, the products are not necessarily removed from the store. Such a technique has made the Metcash company to acquire massive losses for refunding fraudsters yet the product was not necessarily purchased from the company. As such, Metcash company needs to improve on product securities system.

References

Bonner, SE, Majors, TM & Ritter, SL 2016, ‘Prepopulating Current Year Work papers with Prior Year Audit Results: Effects on Auditors’ Risk Assessment Accuracy’, Available at SSRN 2841050.

Leung, P, Coram, P & Cooper, B 2007, ‘Modern auditing & assurance services’, John Wiley & Sons Australia.

Metcashannualreport.com. (2016). Metcash 2016 Annual Report. [online] Available at: http://www.metcashannualreport.com/ [Accessed 29 Sep. 2016].

Rupšys, R &Stačiokas, R 2015, ‘Internal audit reporting relationships: the analysis of reporting lines’,Engineering Economics, vol. 43 no. 3, pp.49-53.