Complete the table above for changes in the items noted. Make an appropriate com
ID: 2513375 • Letter: C
Question
Complete the table above for changes in the items noted. Make an appropriate comment against the change computed, indicating how the change will impact the audit risk assessment and the audit work to be done on that area (20 marks)
CALCULATE THE NET MARGIN AND RETURN IN INVESTMENT (ROI). Show workings.
2016
2015
% Change
$’000
$’000
INCOME / (EXPENSES)
Premiums
5,771,000
5,858,000
-1.49
Operating Expenses
(2,323,000)
(2,397,000)
-3.09
Claims Expenses
(3,710,000)
(3,843,000)
-3.46
Payroll Costs
(880,000)
(680,000)
29.41
Investment Income
856,000
851,000
0.59
Net Income
2,088,000
940,000
122.13
ASSETS/ (LIABILITIES)
Fixed Assets
941,000
1,064,000
-11.56
Investments
11,383.000
10,577,000
7.62
Outstanding Claim Settlement
(8,483,000)
(8,795,000)
-3.55
Shareholders’ Equity
(6,088,000)
(4,993,000)
21.93
RATIOS
Net Margin
Return on Investment
2016
2015
% Change
$’000
$’000
INCOME / (EXPENSES)
Premiums
5,771,000
5,858,000
-1.49
Operating Expenses
(2,323,000)
(2,397,000)
-3.09
Claims Expenses
(3,710,000)
(3,843,000)
-3.46
Payroll Costs
(880,000)
(680,000)
29.41
Investment Income
856,000
851,000
0.59
Net Income
2,088,000
940,000
122.13
ASSETS/ (LIABILITIES)
Fixed Assets
941,000
1,064,000
-11.56
Investments
11,383.000
10,577,000
7.62
Outstanding Claim Settlement
(8,483,000)
(8,795,000)
-3.55
Shareholders’ Equity
(6,088,000)
(4,993,000)
21.93
RATIOS
Net Margin
Return on Investment
Explanation / Answer
2015 2016 % Change Ratio Net Margin 36.18% 16.05% 125.42% ( Net Income/Premium X 100) (20,88,000/57,71,000)X100 (9,40,000/58,58,000)X100 Return on Investment 16.94% 8.08% 109.91% (Net Income /Investment)X100 (20,88,000/(9,41,000+1,13,83,000)X100 (940000/(10,64,000+1,05,77,000)X100
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