Myer Holdings Limited possesses 66 stores over the Australia, being Australia’s major non-discount department retail store chain. Myer provides customers a broad selection of product categories and a wide collection of domestic and international brands at multiple price details. To keep up the dominance in the market, Myer has signed 14 lease agreements for innovative shops, redeveloped Melbourne flagship retail store to an international class standard; grow MYER one loyalty course, as well as installation of a fresh point-of -sale program. On 2nd November 2009, Myer was listed on the Australian Securities Exchange (ASX) after a short public offering.
Sales revenue matures 0.7%  to $332.24 million in FY2010  . As demonstrated in the Shape 1, 3.7 million MYER one members contribute 68% of sales. It is potential to develop top-line sales through existing and new members. Myer as well generates more income predominantly through interest charges and annual fees, as 35,600 latest Myer Visa cards registered in FY2010. Total MYER one Gold card holders are now more than 20,000, who spend more than $7,500 per annum.
Underlying earnings were supported by better margins from its developing line of exclusive brands, now accounting for 17 % of its organization  .
Concession operator sales will be $103,712,000 for FY2010, which is made from providing store space for well-established brands, comprising of obligations for living area and/or a share of gross sales.
Myer’s corporate and wedding services are another revenue streams. Myer Gift items and Myer’s online revenue channel further support merchandising earnings, being anticipated to have a larger occurrence in the next 5 years.
Myer how to start a personal statement is the most significant multi-category department retail outlet chain in Australia. To be able to stand out in the competitive sector, Myer employed a solid, clear growth technique which is built on four crucial pillars: comparable store product sales, gross margin improvement, brand-new store opening and reductions in the price. In line with the financial total annual reports, earnings before interest and tax (EBIT) increased substantially from $165 million to $236 million since 2007 and keep growing to between $265 million to $272 million this year 2010. Myer’s vision of being an international class retail organization has setup an iconic and respected brand, together with Myer Loyalty system to retain and expand customer base to be able to increase sales. Myer has opened 65 stores in prime retail locations in Australia and Bernie Brookes, and 14 fresh stores are planned to start over another four years. Myer utilizes different store rollout to attain a more substantial scale business. Chief Executive Officer points out that the investment in the execution of CCTV is accomplished which is anticipated to decrease losses from theft. Myer also set up a new POS system to generate productivity and customer companies improvements. Improve markdown management which is expected to be done by intelligent allocation of items and better sourcing is certainly developed as a way to reduce the procedure costs and obtain a increasing gross margin.
Myer operates a buyer loyalty program and offers a large number of Australian households more than 600,000 products, comprising 2,400 brands sourced from over 800 international suppliers. Myer’s product contain eleven core groups: womenswear, menswear, youth fashion, childrenswear, intimate apparel, wonder, fragrance and cosmetics, homewares, electrical goods, toys, products, and general merchandise. Goods are sold across a number of marketplaces defined by their price tag points: Permanent Benefit, Attainable Fashion, Inspired Styles, Affordable Luxury and Prime Extravagance, ensuring depth of spectrum and broad customer charm.
Myer has a suite of services to support its business, partnering with Visa and QBE to provide credit facilities, including the Myer Visa cards and comprehensive MYER Insurance plan for customers. There’s also been focus on the expansion of Myer’s online store presence, surprise cards, corporate companies and bridal and surprise registries in 2009 2009, Myer entered a partnership with Red Balloon, Australia’s leading distributor of experiential gifts to further develop its surprise registry business.
Myer is Australia’s most significant non-discount department store chain in retail sector. Supplies are essential to department stores’ victory, with shops clamouring to secure unique supplier agreements with popular brands. Regardless of increasing bargaining electric power of suppliers and lower switching costs, increasing access barriers to the industry as a result of growth of existing players, strong brand loyalty, excessive capital costs and substantial acquisition costs  contain ensured the competitive environment remains high, yet steady.
Despite the primary rival, David Jones, Myer as well competes with specialty shops, especially footwear and clothes, and discount shops such as Concentrate on, Big W, and Kmart. Pharmacies present significant competition in fragrances and cosmetics.
The Board of Myer Holdings Small adopts corporate governance to improve efficiency of managers and staff to be constant with shareholders’ objectives. The Myer’s code also provides regulations of conducts and behaviours which must mindful and adhere to laws and regulations highly relevant to Myer’s operations, including occupational health insurance and safety, fair-trading and coping, privacy and employment methods. Considering of commercial leases is needed to open a new shopping centre, signing agreements and agreements require compliances with retail tenancy legislation. Additionally, Myer Holdings Small needs to adhere to the Corporations regulation which is established to provide rules and obligations to stakeholders. As Myer Holdings Small is listed on the ASX, it is also required continuous and transparent disclosure of its personal studies and any significant happenings and transactions. Furthermore, Myer should abide by the Trade Practices Take action backed by the Australian Competition and Buyer Commission (ACCC) with goal of protecting customer privileges. Breaching this can be fined severely by Government Court.
In general Australia includes a secure political environment and comparatively low political risk. The Government is implementing economical reforms to improve and secure the economy. This will make certain Australia is very well positioned to fully take advantage of the opportunities created by good growth inside our region, and ensuring that all Australians share in the benefits of a strong market  .
The government is achieving this by means of closer interactions with emerging economies such as for example China, free of charge trade agreements with China, Japan and Korea are under negotiation, and the Australian federal government has signed free of charge trade agreements with New Zealand, Singapore and america  as Myer presents its customer both localized and global makes by importing from worldwide. These free trade agreements help Myer to accomplish cost effectiveness in its supply chain, nevertheless the potential conflict between Australian Requirements and other countries’ benchmarks for a same product may exists and impact Myer’s supply of these products to its customers.
From 1 July 2010, “the low income tax offset increase from $1350 to $1500, the 30% threshold increase from $35000 to $37000 and the 38% marginal tax price will decrease to 37%  “. Tax cuts increase household’s disposable income which could motivate more expenditure. Myer will potentially take advantage of the increasing of household expenditure.
Due to the Global financial crisis, Australia economic contracts in 2009 2009, negatively impacting the retail industry and therefore produced an unfavourable environment for Myer. Nevertheless, the Australian market had rebounded fairly well. The unemployment level decreased 0.2 percentage tips over August 2010. In addition, the seasonally modified GDP growth rate differ from Jun quarter 2009 to Jun quarter 2010 is normally +3.3%  . These will improve the consumer confidence and potentially increase the sales of Myer.
Additionally, the consumer price tag index indicates that the level of inflation has decreased over summer and winter (Mar 09 is 3.9, Dec 09 is 3.1, and Jun 10 is usually 2.7). It can be beneficial to Myer as rising purchasing power of customers can increase usage on products offered by Myer. Furthermore, the Australian dollar has appreciated considerably through the year. Myer may take advantage of it since the imported products are cheaper than before.
On the other palm, based on the statistic from RBA, it’s the simple fact that RBA has raised the money rate 6 times for every time being 0.25% since 7 October 2009. The rise of the cash rate leads to a significant amount of curiosity Myer has to cover.
Australia is an immigration region with a pluralistic society. “In the 2006 Australian census, the mostly nominated ancestry was Australian (37.13%) followed by English (31.65%), Irish (9.08%), Scottish (7.56%), Italian (4.29%), German (4.09%), Chinese (3.37%), and Greek (1.84%).”  With the diversity in way of life and background, the whole society has a good attitude of welcoming foreign services and products. This is favourable to Myer since Myer provides international-brand goods to its customers.
Australia has a people of 22 million and centralized around the coasts as proven in Number2. “The geographic distribution of the Myer’s shop portfolio is consistent with Australia’s geographic inhabitants distribution, with almost all
of stores positioned in the more densely populated eastern seaboard states  .”
Figure 2: Inhabitants density, Australia- June 2009 
The Australian society promotes equality between men and women as both genders takes on a critical role in the development of the society. Family and leisure are also useful to Australians. Myer’s core offering include women’s don, men’s wear, child’s have on and home wares, and a great shopping knowledge is promoted to motivate shopper to go to the department store on leisure time.
Furthermore, social responsibility, sustainable creation and green issues are praise very in the Australian contemporary society. Myer takes its cultural responsibility through its network initiatives including donations to pure disasters like the Victoria’s bushfire in ’09 2009 and also to cancer foundations. Helps of neighborhood events are improved by Myer’s geographic area marketing system. 
Technology creation in e-commerce has allowed electronically commercial transactions. Substantial business opportunities are presented by different technology, online direct marketing and online browsing that enables Myer to reach to a wide range of customers and provides customers convenience and instant responses. However, the rise of online looking could negatively effect on product sales of Myer as consumers may obtain merchandises from different online sellers, such as for example sellers on EBay.
Furthermore, it system permits company to integrate data across procedures and different functional areas of the company, facilitates business method and improves efficiency. For instance, Myer operates merchandising program, MyMerch, on daily basis to deliver the support in the most efficient way. The brand new PoS and CCTV devices are launched into Myer’s stores aswell  . Although new means of doing business may cause inconvenience or dangers to department store store shopping at the early stage, technology allows retailers to conduct business functions more efficiently and keep maintaining the competitive advantages.
Key Audit Risk: Overstate benefit of inventory
Key Bill at risk: Inventory
Myer captures around 3.5 million customer visits weekly in 2009 2009, failure of its key it system such as for example CCTV results in an upsurge in the losses from theft. Because of the limitation amounts of attendants, it will pose an audit risk that may affect presence of inventory account.
A superb percentage of Myer’s earnings is related with fashion related products which keeps changing rapidly as client inclination is unpredictable. Myer’s product mixes do not match customer preference can contributes to growing quantity of the slow-moving, obsolete things in stock. Furthermore, Myer use MyMerch as its inventory operations system. The function of this system as well influent the proficiency of logistics. All this factors will have a significant impact on valuation and allocation of inventory profile.
Financial reports of Myer displays its inventory turnovers somewhat declined from 4.0 in 2008 to 3.8 of current time. Considering of sales increased 0.7% since 2008, there can be dangers of misstatement in inventory accounts.
Key audit risk: Undervalued of fascination expense
Account at risk: financing costs
The table above shows that RBA has increased money level from 3.00% to 4.5% since 8 Apr 2009, as the serious economic contraction in Australia possesses exceeded, and the Australian authorities willing to achieve an inflation amount of 2-3%.
According to Myer’s economical report 2010, Myer has $118million capital expenditure invested  ; Myer has also dropped ideas for fourteen retailers which expected to open over another four years. It is anticipated that 22% of capital will be financed using debt. The interest rate changing is essential to Myer, as finance cost is significant. Actually, the finance expense decreases from $87,626,000 to $44,570,000  as the borrowing lower from $879,005,000 to $419,919,000. Both of the accounts figure dropped about 50%. That draws focus on the opportunity that Myer misstate this bill since interest rate has more than doubled. It poses an audit risk which can affect the completeness, accuracy and take off of finance expense.
Key Audit Risk: Overstatement of current year revenue
Key Consideration at risk: Sales Revenue
Key assertion at risk: Occurrence & Accuracy
The sales revenue raised from A$2,798,916,000 to A$2,825,034,000. Simultaneously, money decreased from A$184,773,000 to A$105,834,000 with trade and various other receivables decreased from A$32,897,000 to A$24,045,000. Myers introduces many different incentive and bonus applications to the management to improve sales and productivity across all levels and areas of the business enterprise. Managements have the incentive to meet up the forecasted sales progress disclosed in the prospectus since 2010 is normally their first of all FY after listing. Consequently, the audit risk associated with the inaccurate analysis of sales revenue is relatively huge. Occurrence and accuracy are believed as major assertions vulnerable to sales income account. Recorded revenue invoice and purchase invoice should be properly verified to the inventory records and delivery documents. On the other hand, cash decreases may as a result of pay for of PPE, which improved from A$371,699 million to A$468,050 million.
Key Audit Risk: Material mistake of overstate or understate Accounts Payable volume because of the fluctuation of exchange rate
Key Bank account at risk: Trade payables
Key assertion at risk: valuation and allocation
Australia currently includes a floating exchange rate program and as proven in the graph above the exchange fee is continuous fluctuating.
“Myer sources its merchandise from over 800 suppliers globally to provide customers with among the broadest company offerings by an individual store in Australia.” When Myer imports on credit rating with a foreign currency, the final payment changes to the initial recognised amount due to the fluctuation of exchange rate, therefore the trade payable account is either understate or overstate and the valuation and allocation assertion reaches the priority position that needs to be examined.
The trade payable account decrease from $224,471,000 in 2009 2009 to $216,588,000 this year 2010, this may be due to the high value of Australian Dollar, even so with the rapidly growth of opening new retailers, it is expected Myer to acquire more and has a higher quantity of trade payable, as a result a potential audit risk is present.
Key Audit Risk: Valuation of the existing PP&E
Key Consideration at risk: Non-current possessions: property, plant and equipment
Key assertion at risk: Valuation and Allocation
For Myer, plant and devices is stated at cost a lower amount depreciation. Myer is now operating 66, and on the right track to open another 14 new stores by 2014 with scope to develop beyond 80 stores supported by their existing source chain. It really is predictable that the depreciation bills should increase with the excess depreciable assets. Since it is displayed in the 09-10 survey, the PP&E heightened from A$371,699,000 to A$468,050,000 in FY2010, whereas, the depreciation of non-current property – PP&E expenses decrease from A$47,200,000 to A$41,888,000 in FY10. For these reasons, it might be easy for Myer overstating its PP&E account by using off balance sheet accounts and/or changing depreciation method. It needs more substantive assessments in auditing process.
With listing on the ASX, more rules are imposed on Myer, such as for example higher normal of disclosures. Myer’s shareholders would expect a much better performance which can be reflected by share price and directly related to the dividend. Myer should improve its performance to maintain at or above specific level, otherwise it will breach of the continuing listing guidelines of ASX. These would probably place weighty burden on management, therefore there is high possibility to deliberately manipulate the accounting numbers to meet the objectives of shareholders and forecasted earnings. Therefore, the risks connected with conducting audit of Myer’s financial statements increases. So as to present the real and fair fiscal performances and positions of Myer, some issues need asa format title page to be concerned when preparing audit plan.
It is important to make sure the consistency in financial record through the entire entity. The depreciation and amortization strategies must be consistent with previous years. For example, Myer has been applying the direct line depreciation for a long time; it should be still utilized when calculating the depreciation bills.
Moreover, it is necessary to set a lesser materiality threshold than previous years as a result of higher audit risk. Myer as a publicly listed organization, the materiality will end up being set at 5%-10% of the net profit after tax. However, the managers will be motivated to accomplish some creative accounting, that’s to control the figures to make the annual statements more attractive to existing and potential buyers, involving reporting a higher profit through home window dressing income and expenses. Consequently, revenues and expenses accounts ought to be carefully investigated. Extra substantive testing, particularly testing of information on occurrence, completeness and accuracy and for those accounts should be employed to make sure that revenues and expenses actually occurred this year 2010 truly exist and are recorded appropriately.
Furthermore, predicated on the 2010 Myer’s twelve-monthly report, Myer includes a total liability over 1 billion. It is likely that managers hide some liabilities to make annual statement more appealing. It is important to test the completeness and valuation and allocation of liability account in details.