Origin Energy Limited Executive Summary

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Understanding of the entity and its environment
Origin Energy Limited (ORG) is an Australian listed company mainly operates in electricity and gas markets. In the following sections, several aspects of the client company will be discussed. This information is collected to help in the identification of the entity’s specific risks by following ASA 315 Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment. Both external market environment and internal business management factors are required to be assessed under ASA 315 (Auditing and Assurance Standards Board, 2013). However, because of the limitation of access to the company information, this report does not cover the analysis of control
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A large portion of the market participants pay the distribution network companies to transmit electricity and gas to ending retail customers. Origin acts as not only an energy producer but a trader that offer power directly in the electricity market. To offset potential variation in supply costs, market players often use hedging activities to manage the relevant risks. The hedging activities can easily effect on the assumptions in many valuation of accounts in the financial statement, thus auditors should take adequate concern on these activities.
1.3 Laws and regulations
Energy industry has always been affected by a heavy level of laws and regulations. However, the regulation aspect is slacker than it used to be in the past decade. Take the carbon tax as an example, the repeal of carbon tax in 2014 reduced the cost of energy industry by 4.7% for the 2014-2015 financial year (Allday, 2016). The current Australian energy market is mainly ruled by the Australian Energy Market Commission (AEMC) and the National Electricity Law and National Gas Law. What auditors must notice is, changes in law and regulation is somehow political and unpredictable, which may lead to auditing
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However, on 10 August 2015, Origin sold its all interest in Contact Energy.
2.3 Exploration & Production
Origin has exploration and production on traditional resources mainly located in eastern and southern Australia, the Browse and Perth basins in Western Australia, the Bonaparte basin in north-western Australia, the Beetaloo basin in Northern Territory. The company also has several renewable energy facilities like wind farms in New Zealand. These facilities generate energy resources for transmitting to customers or direct business on the market(DatAnalysis, 2015).
2.4 LNG
Origin holds a 37.5 % of the shares in Australia Pacific LNG. The LNG segment contains Origin’s equity on share of the results of Australia Pacific LNG as well as the activities and transactions arising from its operatorship of its upstream activities. The profit and loss of this subsidiary corporation does not show on the group’s financial statement, while this segment is directly reflected in increase or depletion of the investment asset (Origin Energy Limited, 2015).
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