Victorian Emergency Laparotomy Audit: An Analysis Of Business Operations And Financial Reporting Practices

Investment activities

Discuss about the Victorian Emergency Laparotomy Audit.

The issue that has been presented in the question refers to the fact that the accounting statements of a corporate entity can be analyzed for the purpose of understanding the operations of a corporate entity in regards to a single financial year. This means that the financial report of a corporate entity describes the financial performance of the business organization. Moreover, the stakeholders and the other investors of the corporate firms tend to understand and forecast the business performance of the corporate entities on the basis of the financial information that has been represented in the annual report of the firm (Raju et al. 2015). Furthermore, this kind of financial information can be utilized for the purpose of analyzing the business operations that have been carried out by a business entity and whether the business operations have been in accordance to the accounting standards that have been established by the accounting regulatory body.

This particular study aims to analyze the financial statements of a business corporation. This means that the accounting statements of the corporate entity that has been chosen for the purpose of the study is of the name…. The financial statements that have been chosen belong to the financial year of 2017.

The certain business operations that have been carried out by the business entity refers to the essential operations that have been carried out by the corporate firm throughout a single financial year. These business operations can be listed down as follows:

• Zinclear – the revenue in regards to the Zinclear range of products has continued to grow in regards to the percentage of 14.32%. This means that the corporate entity has partnered with Devereaux Specialties for the purpose of carrying out partnership with the distribution partner for a longer period of time. The firm also aims to grow its sales by the financial year of 2018. ANO has aimed to build the distribution network in Europe.
• Manufacturing in the US – the corporate entity of ANO has been planning to result in the commencement of the production that will be full scale in nature in the country of US in October 2017. The occurrence of the delays that have been technical in nature and the equipment that have been required for the assistance in the manufacturing process (Tuinamuana 2016). The US partners have also been helpful particularly in regards to the R&D Department that have provided the required assistance in regards to the changes in the production of the sunscreen. At the time of the commencement of the US manufacturing the generation of the efficiency of the operation and has reduced the logistic times to the Europe and US.
• Australian Manufacturing – the careful consideration of the different options of manufacturing in Australia. The management of the corporate entity has been involved in the negotiation of the long-term lease. This particular transition has been operational in the creation of a new equipment (Howes et al. 2015).
• The financial year of 2017 has been significant for the corporate entity due to the fact that the company of ANO has resulted in the successful filing of the three new patents. The patents have been in regards to the products of a battery, a XPA end formulation recipe and 3D Ceramics. The new patents have also been filled in the financial year of 2018.
• It must also be further noted that the corporate entity of ANO has resulted in the development of a network of chemists that have been global in nature. The corporate entity had developed a network of 28 chemists with 11 chemists. In the current times, the corporate entity have developed 29 end formulations. The cost in regards to the development of the project has been anticipated to be less than $500,000 includes the approvals that are fully regulated in nature.

The investment activities that have been carried out by the corporate entities is that the corporate entity has resulted in the investment in the subsidiaries and have been accounted for at cost in the accounting statements in the books of the business entity. The investment activities that have been included in the corporate accounting statements refer to the fact that the particular amounts that have been included are the financial components of the purchase of the property, plant and equipment (Lakhanpal et al. 2015). The other financial components are the payment in regards to the development of the assets and the net amount of cash that has been used in regards to the investing activities.

The financial component that has been included in the financing activities in the cash flow statement of the corporate entity are the increase or decrease in regards to the cash and cash equivalents. Moreover, the component of cash and cash equivalents have also been included in the annual report of the corporate entity (Lehner et al. 2018). The next financial component that has been included in the cash flow from the financing activities include the adjustment in regards to the rate of exchange. The cash and cash equivalent that has resulted from the financial components at the end of the financial year amount to $908,287.

Financial reporting practices

The financial reporting practices that have been included in the accounting statements of the corporate entity refer to the fact that the accounting statements or the books of accounts have been prepared on the basis of the International Financial Reporting Standards. This means that the books that have been prepared by the accounting body, are based upon the accounting guidelines, that are issued by the accounting regulatory body of International Accounting Standards Board. These accounting standards are known as the International Financial Reporting Standards. Furthermore, the declarations or the assertions that have been included in the financial report of the corporate entity can be listed down as follows:

• The compliance with the accounting standards, which has been included in the basis of preparation of the financial statements, has been stated accounting statements the International Financial Reporting Standards.
• The accounting statements that have been included tend to give a fair and true image of the accounting statements of the corporate entity.
• It has been further mentioned in the annual report of the corporate entity that the financial statements that have been prepared have been properly constructed and maintained in accordance to the section 286 under the Corporations Act 2001.
• The financial statements the particular accounting notes also comply with the mentioned accounting standards. This means that the management of the firm has asserted the particular value that the financial statements have been prepared to reflect a proper true and fair view of the accounting statements of the corporate entity (Wang et al. 2017).
• Lastly, the directors of the corporate entity have reported in the financial report of the corporate entity that the financial statements have been prepared in accordance to the accounting standards. Moreover, the financial position of the firm has been such that there are reasonable grounds to make the corporate entity believe that the company will be able to make the required payment of the debts of the company at the point when it becomes due in nature and has to be paid immediately.

The issue that has been presented in the question refers to the fact that the financial performance of the firm has been asked to be analyzed for the purpose of the fact that the investors and the other stakeholders of the firm can determine the investment or the economic decisions in regards to the investment in the selected corporate entity. This means that the particular financial tool that can be utilized for the purpose of determining the financial performance of the firm (Worthington and Pardy 2015). This means that the significant ratios that have been utilized for the purpose of determining the financial performance of the firm can be listed down as follows:

• Asset turnover ratio
• Return on equity ratio
• Current ratio
• Gross Operating margin

The asset turnover ratio refers to the particular ratio that results in the identification of the result whether the optimum amount of returns from the assets of the firm has been acquired by the corporate entity of the firm. The higher the amount of the asset turnover ratio more is the ability of the firm to acquire the optimum amount of returns from the financial assets of the firm.

The return on equity ratio refers to the ability of the firm to secure optimum amount of returns by utilizing the amount of equity that has been contributed by the stakeholders of the firm. The higher the amount of the return on equity ratio more is the ability of the firm to acquire the optimum amount of returns from the equity capital of the firm (Thompson et al. 2015).

The current ratio refers to the liquidity position of the firm. This means that the current ratio refers to the ability of the current assets of the firm to make the payment for the current liabilities of the firm. It must be noted here that more the amount of the current more improved will be the liquidity position of the firm.

Significant ratios

The gross operating margin on the other hand refers to the returns that have been secured from the operating profit of the firm. This means that higher the operating profit of the firm higher will be the value of the ratio that has been obtained from the operating margin of the firm (Kurmis et al. 2015).

The ratios that have been computed can be listed down as follows:

The table that has been included above shows the financial performance of the selected firm in terms of the ratios that have been computed on the basis of the financial components that have been included in the financial statement of the corporate entity. This means that the asset turnover ratio has decreased over the financial year of 2017 from the financial year of 2016. This means that the firm has not been able to obtain the required amount of returns from the assets of the company in comparison to the financial year of 2016 (Chintrakarn et al. 2017).

Next, the particular ratio that has been included refers to the return on equity ratio which has fallen over the financial year of 2017 in comparison to the financial year of 2016. This means that the management of the firm due to reasons like a high debt structure and other potential issues has not been able to acquire the optimum amount of returns from the equity capital of the corporate entity in regards to the financial year of 2016 (Rey?Conde et al. 2016). This means that the management of the business entity has not been able to secure the required returns from the equity or the retained capital. The potential reasons might bad acquires or involvement in too much debt that belongs to the third party investors.

The current ratio on the other hands clearly indicates the liquidity position of the firm. This means that if the liquidity position of the firm is good then the health of the business entity can be regarded as healthy. However, it must be noted here that the a firm having a too high liquidity position refers to the fact that the liquid cash content of the firm is too high which again reflects the fact that the financial structure of the firm is not strong enough. In case of the selected firm, it can be noted that the liquidity position of the firm has fallen in regards to the financial year of 2016. This means that the management of the firm has not been able to maintain an optimum amount of current assets that will be required to substitute the current liabilities of the firm (Heng et al. 2018). This means that the situation might have been such that the firm has to sell or give up certain current assets of the firm for the purpose of meeting up to certain debts. This has reduced the ability of the firms to make the payment for the current liabilities that have been acquired by the firm in the current financial year of 2017 in comparison to the financial year of 2016.

Financial performance analysis

The gross operating margin reflects the fact that the ratio has increased over the financial year of 2017 in comparison to the financial year of 2016. This means that the management of the firm has been able to make certain that the profitability of the firm increases from the financial year of 2016 to the financial year of 2017 (Wilkinson et al. 2015).

The particular auditing framework that should be adopted by the auditor for the purpose of checking the authenticity of the financial information that has been reflected in the accounting statements of the corporate entity refer to the fact that the auditor should engage in constructing a potential framework. This means that it is not possible for the auditor to check each and every financial transaction in the books of accounts (Stevens et al. 2017). Therefore, the auditor should adopt the process of sampling for the purpose of checking and evaluating the fact that whether in reality the issue of materiality or material misstatements has occurred in the books or not. Before ascertaining this particular fact, it is the duty of the auditor to make sure that the exact amount of materiality has been fixed on the basis of the auditing procedures. This means that the auditor might ascertain the amount of materiality on a certain percentage of sales. The auditor should also look into the internal control that have been established within the organization for the purpose of mitigating the occurrence of the material misstatement or other kinds of frauds in the books of accounts of the fir. The auditor will also be certainly be able to find the loopholes of the accounting procedure by the adoption of the particular process of sampling (Muhammad et al. 2016).

Conclusion

The determination of materiality level for various items in a financial statement is an important part of an audit. The ascertainment of materiality helps the auditor to develop an appropriate audit programme for the organization. In the above report an audit programme is developed for the organization the address all the risks.

References

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