Using the information above:

（i） Calculate FIVE ratios,for BOTH years,which would assist the audit senior in planning the audit; and（5 marks）

（ii） From a review of the above information and the ratios calculated,explain the audit risks that arise and describe the appropriate response to these risks. （10 marks）

（20 marks）

4（a）Explain the purpose of a value for money audit. （4 marks）

（b）Bluesberry hospital is located in a country where healthcare is free,as the taxpayers fund the hospitals which are owned by the government.Two years ago management reviewed all aspects of hospital operations and instigated a number of measures aimed at improving overall 'value for money' for the local community.Management have asked that you,an audit manager in the hospital‘s internal audit department,perform a review over the measures which have been implemented.Bluesberry has one centralised buying department and all purchase requisition forms for medical supplies must be forwarded here.Upon receipt the buying team will research the lowest price from suppliers and a purchase order is raised.This is then passed to the purchasing director,who authorises all orders. The small buying team receive in excess of 200 forms a day.The human resources department has had difficulties with recruiting suitably trained staff.Overtime rates have been increased to incentivise permanent staff to fill staffing gaps,this has been popular,and reliance on expensive temporary staff has been reduced.Monitoring of staff hours had been difficult but the hospital has implemented time card clocking in and out procedures and these hours are used for overtime payments as well.The hospital has invested heavily in new surgical equipment,which although very expensive,has meant that more operations could be performed and patient recovery rates are faster. However, currently there is a shortage of appropriately trained medical staff.A capital expenditure committee has been established,made up of senior managers,and they plan and authorise any significant capital expenditure items.