Microsoft Word - HA3032 Group Assignment T1 2018.doc 1|Page HA3032 GroupAssignment T1 2018 HOLMES INSTITUTE FACULTY OFHIGHER EDUCATION HOLMESINSTITUTE...

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AUDIT PROGRAM REPORT OF ITL HEALTHCARE PTY LTD

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INTRODUCTION
The report presented is about preparing of an audit program of ITL Health Group Limited is a globally recognized medical technology company engaged in the business of supplying the products to healthcare markets and also providing the individual health care solutions and management. The report provided below gives details about the areas which are critical and requires detailed analysis as laid down by the auditor.
TASKS 2-8
1. The following are the details in relation to ITL Health Group Limited:
(a.) Business Operations:
Since its establishment ITL Limited and the Entities under its control have grown from a small privately owned entity engaged in research into a publicly listed company engaged in manufacturing and supplying of products into the Australian and globally recognised healthcare markets. The growth in the ITL’s can be seen through the increase in the sales of the company’s main products supplied in Australia and around the world and also the growth can be witnessed by the purchase of an established operating entity in Australia. The company is now engaged in the business which consists of different types of business operations dealing with varying level of risks and products across the market. The new BioMed established by ITL is a manufacturing plant is successfully implemented and is operating efficiently. Its manufacturing operations are continuously expanding and have engaged in moving its products from Australia to Malaysia. The company is engaged in exploring and pursuing the new business opportunities. Healthcare Australia is also engaged in increasing its sales and ultimately its market share in public hospitals. ITL BioMedical also carry a number of research and development projects which work in the direction of providing the new sales opportunities. ITL is also engaged in pursuing organic growth and is continuously working towards the new business opportunities for growth and development. ITL has also acquired MyHealthTest Pty Ltd (“MHT”) which is engaged in directing to consumer pathology testing.
(b.) Investments and investment activities:
The principal activities carried on by ITL Healthcare Group include the following:
• Activities in relation to making and selling and distributing of innovative medical devices
• Activities relating to production, distribution and sale of procedure packs in relation to medical
There are no significant changes in the nature of ITL’s principal activities as stated above. ITL has acquired My Health Test Pty Ltd (“MHT”) which is engaged in direct to consumer pathology testing. The ITL Group has also got two business units operating in different regions with diversified products in order to take advantage of the different market conditions prevailing. The main aim of each business unit is to work for the future growth of the company as a whole on the basis of the available infrastructures and resources.
(c.) Financing and financing activities:
ITL healthcare group has undertaken the buyback of its ordinary shares trading in the market. ITL Asia Pacific bank has given bank overdraft facility, bankers’ acceptances and other finance facilities including a bank guarantee provided to a third party. These facilities are secured by the legal charges over the company’s factory in Malaysia, charges over the assets of the company and parent entity corporate guarantees. ITL Healthcare Pty Ltd has been provided overdraft facility and other finance facilities from Commonwealth Bank of Australia. These facilities are secured by way of guarantees and debenture charges
(d.) Financial reporting practices:
The financial statements prepared by the company are basically the general purpose financial statements prepared in accordance with Australian Accounting Standards, other requirements and amendments as laid down by the Australian Accounting Standards Board and the Corporations Act 2001. The financial statements prepared present that the company is in operation for the purpose of making profits from the business carried by the entity. The accrual basis of accounting is used in preparing the financial statements and historical costs basis are used where applicable. The financial statements are prepared in such a manner in order to provide a true as well as fair and faithful view of the business operations carried by the entity and its subsidiaries as a whole.
2. The following table shows the results of the analytical review of the financial statements of ITL Healthcare Pty Ltd on the basis of the ratios calculated for the financial years 2017, 2016, 2015:
    Sr. no.
    Event
    Explanations
    1.
    Net profit margin %
    The net profit margin is defined as a percentage of the net income earned by the company by the amount of total revenue generated by undertaking the business of the concerned. There has been an increase in the net profit margin of the company in 2017 in comparison to the previous years which means that the net income of the company have increased over the years in proportion to the increase in the revenue generated by the company.
    
        2015
    2016
    2017
    7.5
    1.1
    9.9
    
    2.
    Return on equity %
    Return on equity (ROE) is defined asa percentage of the amount of net income to the shareholdersequity. Return on equity is a measure of profitability of the company by depicting the amount of profit available for the equity shareholders.The money invested by the shareholders of the company is utilized in the best possible manner if the return on equity is on higher side. From the amount of the return on equity it can be seen that there has been a sudden decrease in 2016 but again in 2017 the result have unexpectedly increased in comparison to 2015. Thus the amounts of the shareholders are utilized efficiently by the company.
    
        2015
    2016
    2017
    17.9
    2.4
    19.5
    
    3.
    Return on capital %
    Return on capital employed (ROCE) is defined as a financial ratio used to measures a company's profitability and also how efficiently the...