Axiata Group Bhd: A Case Study

According to Karen K.W. Li, (School of Accountancy, The Chinese University of Hong Kong), inherent risk is defined as the susceptibility of an assertion about a transaction, account balance or disclosure to a misstatement, individually or in total with other misstatements, that can be material, assuming no related internal controls. This means that the auditor assesses the likelihood of material misstatement before considering the effectiveness and impact of the client entity’s internal control. According to Pearson (2014), if the auditor concludes that a high likelihood of misstatement exists, the auditor will conclude that inherent risk is high. Therefore, audit risk model is used where auditors consider risks in planning procedures to obtain

involves in the telecommunications industry. Likewise, inherent risks exist in every industry. For the purpose of this paper, I would like to focus on the 3 inherent risks that is in my opinion, much relevant to Axiata Group Bhd. These are, the risk of failure to realize new roles in evolving industry ecosystems, understand what customers value and adopt new routes to innovation. These are the inherent risks that can be said had affected the Axiata’s audit work. As for illustration purpose, I have included the Axiata’s risk management process (which is guided and principally aligned to ISO31000:2009). Risks are managed to make sure the achievement and execution of strategic objectives. This model will be used throughout the part of the discussion to show what generally makes up the common inherent risks in the Axiata Group and telecommunications industry. Refer figure

Quick technological advances may actually leads to technology, equipment and machineries obsoletes even before their expected useful life. Likewise, a delay in development and deployment of fresh technologies may in the end results in the Group lagging behind its competitors. Therefore, to remain relevant in the game, it is critical that the Group consistently refreshes and evaluates its technology use yet maintain a prudent financial costs. Capital expenditure (CAPEX) continue to remain as a challenge given constant upward spending trend in attempt to keep up the competition. Therefore, the Group has recently reevaluated and reconstructed its capital expenditures governance and business planning processes that include the value chains. It is focusing more on prudent management of cost and capital expenditure productivity while at the same time trying to grow Group’s apparent on the expenditures across all operating companies