BSBFIM501 Manage budgets and financial plans Assignment Help

BSBFIM501 Manage budgets and financial plans Assignment Help

Assessment 1

Question 1 

Financial probity is the evidence of ethical behavior in a process. Identify three principles and three requirements related to financial probity?

Scrupulousness is the evince of virtuous behavior, and can be demarcated as ample and confirmed veracity, decency and rectitude in a finnicky administer.

 The principles underpinning ethics and probity in Australian Government Procurement are:

  • Virtue and skirmish of curiosity requirements should be applied with seize and proportionate trials cognizant by sound peril management ideologies.
  • Secret information must be treated appropriately during and in quest of attacking process.
  • External probity mavens should only be appointed where justified by the nature of the locating.
  • Officials must not make crooked use of their standpoints. 
  • Bureaucrats should ignore serves themselves in a stance where there is the budding for prerogatives of preconceived notion.
  • Officials must not accede cordiality, largess or fundraisers from any conceivable purveyors.

Virtue Chucks

         When commencing civic Edifice Procurement, Bureaus must:

  • (a) demeanor Communal Erection Procurement in modus that is harmonious thru Unrestricted Zone Tenets;
  • (b) extravagance enflamed accomplices (and potential sore applicants) legitimately and uniformly, and dodge giving one fond partaker an indecorous pro over another;
  • (c) uphold concealment of contributor discreation tidings, embracing commercially subtle tidings and highbrow stuff;
  • (d) ensure sore means, parleys, valuation tricks, and shrivel management knobs are auditable, translucent and blamed; and
  • (e) proactively isolate and handle skirmishes of interest whether authentic, impending or professed aptly and in accordance with germane licit and dogma chucks, including pertinent Victorian Public Sector ciphers of comportment.

Question .2 describe the principles of accounting and financial systems?

 accounting principles is the guidelines which is to be followed by company while preparing accounts.

The principles of accounting are

    1. Conservatism principle- this principle says that at the time of preparing accounts we consider our future losses.
  •  Consistency principle- this principle says that we use only one accounting method throughout the year.
  •  Business entity principle- acc. To this principle business is to be treated separately from is owner.
  • Going concern principle- acc. To this principle our business life will never end. our business will remain continue even after the died of its owner.
  1. Matching principle- according to this principle, there is a dual entry of every transaction. Every transaction as its own debit and credit.
  2. Cost principle- according to this principle, every business records their assets, liability, equity at its original cost, at cost it purchased not at the present cost either current price is less or high.
  3. Full disclosure principle according to this principle, every information related to company , which affects the business or transaction which is not recorded but that is necessary for company should be fully disclose.

Question 3

Explain legislation and conventions relevant to financial management in an organization ,including:

  • Australian legislation and conventions
  •  International legislation and conventions
  • State/territory legislation and conventions
  • State/Territory legislation and conventions:

Australian regimes and state and territory leaderships code subsist to shield patrons as well as to indorse unbiassed swapping and antagonism. These lawmaking rule how businesses interact with their suppliers patrons and erstwhile businesses.

Antagonism Edicts

Australia has a federal legislative scaffold to ensure that trafficking is fair for businesses and consumers. This charter is oversaw and obligatory by the Australian Competition and Consumer Commission (ACCC).

         Product liability regulation

  Australia has its own policies and framework synchronize product security and        confidentiality. These standards are formed to protect the safety of harmful products to not to advertised these harmful products in the Australian market.

  •  Australian legislation and conventions:

 Guidance on tax and superannuation measures-

As per Australian government which governed rules or we can say legislations, whenever new tax regimes and superannuation gages they provide practical tactics to their taxpayers and made available practical supervision for them so that the taxpayers understand which byelaws they have to follow- its old law or attempt to forestall insinuated vagaries.

Mention their clerical approach to precise ex post facto laws. Their advice covers their routes want to opt along with their collaries of preferring the options.

It also includes how the law supervise and done supervision of that law by them thru the retro until the decisive upshots emanates from the anticipated edict.

Transformation hikes tax bursar Jinxes-

What it says until and unless the pertinent law has made or relevant jurisdictive catalyst made would hike the liabilities of taxpayers and they don’t have any right to hoard it or higher. It also mentioned that in effect law has changed from retrograde then the taxpayer ones should be pursue modifications and should recompence with astronomical jinx

Transformation slashes taxpayer Jinx-

A projected commandment change would lessen your burden, you should personally gauge under the old law. If taxpayer personally assess revisions by antedating existing law, we may not compel defiance with prevailing law but we thwart indecorous reimbursements. We have the supremacy to plump whether or not it would be a professional, operational and virtuous enervation of the ATO’s possessions to urge acquiescence in effect edict where a taxpayer chooses to self-assess by foreseeing an announced law swap.

The one exemption accustomed canon to this general regime applies if both the ensuing musts are met:

  • Letting taxpayers to forestall a heralded law modify would be likely, in some cases at least, to result in a recompense of tax.
  • The Commissioner can, before a disbursement is made, reasonably identify fussy taxpayers to whom a disbursement would be made who have applied the law incorrectly.

© International legislation and pacts:

The international law is hallowed in concords, truces and canons. Many of the agreements brought about by the United Nations form the root of the law that reigns kin among realms.

Some   of   these   concord   form the very underpinning of the law dominant relations among states. Examples include:

  • the pact on the Non-course plotting Uses of global Watercourses, adopted by the General Assembly in 1997, which validates the fair and astute misuse of rivulets pooled by two or more countries;
  • the concord on the Law of Truces between federations and transnational officialdoms or between International Organizations, adopted at a conference in Vienna in 1986;
  • the Caucus on the progression of States in Respect of State Property, Annals and arrears, espoused at a symposium in Vienna in 1983;

Question 4. Outline the requirements of the Australian Tax Office (ATO), including: a. Goods and services tax (GST) b. Company tax c. Pay as you go (PAYG) tax.

Australian tax office (ATO) is a revenue collecting body of govt. It collects income tax, goods and service tax,etc. The gst on goods, services, and other items sold is 10%.

Australian tax office is used to report and pay GST (goods and service tax) , PAYG (pay as you go) and other taxes. All businesses register for GST must required to fill business activity statement before the date of lodge.

Question 5. What legislation applies to fraud and the misappropriation of funds?

Misappropriation of funds is the use of other persons money in illeagal or unauthorized work without knowing them. It can be done by any trustable instituted, public officers or any person who is responsible for the safety of another person’s property,money etc. It is type of unlawfull activity, for this activity that person is punishable.

 Firstly government give a chance to victim of missapropiation to recover his loss and after the legal and civil process starts. In that every person who is involve in fraud and misappropriation will comes in guilty. American court adopt a practical, logical approach while investigating of frauds and The maximum punishment for this offence is imprisonment for seven years.

Question 6. Explain the need for financial due diligence and outline what actions may be included in a financial due diligence review.

Financial due diligence involves an investigative analyse of business which is used for maintanable of profit and cash flow. it helps in identify financial risk for company. 

It helps in identyfing targeted company financial position and also helps in knowling hidden libility of company such as contingent liability which is not included in financial statement.

This not only use for knowing current position in market but also for knowing future position and stability of company.

Question 7

Explain how you use Profit and Loss statement, Cash Flow and ageing summaries to manage issues that will affect the organization’s ability to meet objectives?

A profit and loss statement (P&L), or income statement or statement of operations, is a financial report that provides a summary of a company’s incomes, outlays, and profits/losses over a given period of time. The P&L proclamation shows a company’s knack to spawn vending, muddle thru overheads, and crafts gates.

Example Profit and Loss Statement (P&L)

Beneath is a paragon of Amazon’s 2015-2017 P&L assertion, which they sojourn the fused avowal of Maneuver

Beholding at the o’er paradigm, we drift that Amazon announced a yield of $596 million in 2015, a return of $2.4 billion in 2016, and a revenue of $3.0 billion in 2017.

 Analyzing the Cash Flow Statement

The proclamation of cash flows cabarets how much dough a camaraderie spawned and frenzied over a epoch of stint.

 It entails of three chunks:

 cash from maneuverings,

 cash luxuriated in arming, and

 cash from bankrolling. This avowal is weighty for finning:

  • The companionships kneck to spawn cash from tactics 
  • Gratis doughs roll cohort
  • How copious dosh has been fostered (debt and or equity)
  • The lattice revolution in cash stance over the interlude
  • The boon and remnant of dot cash offset.

Question 8 Explain how forecast analyses and analyses related to budget preparation will enable you to contribute to financial bids and estimates?

There are four typographies of conjecturing logics that pecuniary predictor luxuriates to prophesy forthcoming returns, disbursements, and hub harms for a business.

(1) straight-line, (2) moving average, (3) simple linear regression, and (4) multiple linear regression.

STRAIGHT LINE

Zenith budget (orthodox streak) modus

Under the crucial suffering modus (also known as the purist stripe mode), asset cast-iron volume per capita year based on the following formula:

Asset’s cost × (days held ÷ 365) × (100% ÷ asset’s effective life)

Note: ‘Livings detained’ is the number of days you alleged the endowment in the pay packet year in which you cast-off it or had it instated inclined for service for any intent. Days held can be 366 for a leap year.

Example 1: First-Rate price-tag approach

If the boon disburse $80,000 (later omitting GST if dubbed to prerogative it) and has an useful vivacity of five years, you can contention stab 20% of its endeavor, or $16,000, in each of the five years.

The expense embraces the amount you paid for the asset as well as any additional amounts paid for transport, installation or making it ready to use.

The calculation is:

$80,000 × (365 ÷ 365) × 20% = $16,000

The detriment includes the amount you paid for the asset as well as any additional amounts paid for transport, installation or making it ready to use.

The calculation is:

$80,000 × (365 ÷ 365) × 20% = $16,000

Assessment 2 

Task 2

Variance budget:

Variance budget quarter 1     
PROFIT BUDGETQtr 1Actual- Qxvariancevariance %Favourable or unfavourable
Revenue20%100%   
Sales33,94,247337120023,0470.679001852U
– Cost of Goods Sold                      19,00,779 19,55,296-54,517-2.868139852U
Gross Profit                      14,93,468 14,15,90477,5645.19354951U
Gross Profit %44%42%04.545454545U
Expenses  0#DIV/0! 
– Accounting Fees                            10,000 2,5007,50075F
– Interest Expense                            21,127 28,150-7,023-33.24182326U
– Bank Charges                                  400 380205F
– Depreciation                            42,500 42,50000 
– Insurance                              3,348 3,348-1-0.01493652U
– Store Supplies                                  750 790-40-5.361429715U
– Advertising                        2,00,000 1,50,00050,00025F
– Cleaning                              4,006 3,32568117.00364435F
– Repairs & Maintenance                            16,068 16,150-82-0.510331093U
– Rent                        6,60,127 6,60,12700 
– Telephone                              2,999 3,100-101-3.367789263U
– Electricity Expense                              5,366 5,2451212.254938502F
– Luxury Car Tax                              12000 12,00000
– Fringe Benefits Tax                              7,000 7,00000 
– Superannuation                            37,404 37,40400 
– Wages & Salaries                        4,15,600 4,10,5005,1001.227141482F
– Payroll Tax                            19,741 19,74100 
– Workers’ Compensation                              8,312 8,31200 
Total Expenses                      14,57,848 14,10,57247,2763.242828897F
Net Profit (Before Tax)                            26,721 5,33321,38880.0419146U
Income Tax                              8,016 1,6006,41680.04066714F
Net Profit                            18,705 3,73314,97280.04244922U

GST cash flow variance analyse:

GST Cash flow variance analysis
CASH FLOW ANALYSIS – GSTbudgetedactualvariancevariance %
GST Collected33,9433,37,120-3,03,178-893.209104
Less GST Paid902662,79,988-1,89,722-210.181021
GST Payable-56,32457,132809-1.43545767

Executive Summary

The given case study recognizes the differences between the controlling mechanism of budgetary statements that needs to be taken care of while considering the actual results. However, the apportionment has been made that reflects the feasible deviations between the two. Hence, Houzit Pty portrays the outcomes and evaluation on the basis of the quarter estimations. It will give a clear insight to the company regarding the performance and significant areas where it is lacking.

Introduction

Variance budget for quarter 1 of Houzit Pty has been prepared on the basis of necessary articulation along with the results obtained from the past records of the company. Hence, evaluation has been made which assist in finding out the deviations and hence comparison can be made between the standard and the actual one. In addition to this, the report incorporates the results of the financial performance so as to demonstrate application of the budgetary statements.

Issues

The issues that were evidenced in the given case study information incorporates with the reflection of financial probity; it has been marked the bonus element that has immensely laid emphasize on the profits of the entity. However, this combines with the performance of the company by inculcating better pay- outs. The given table shows the issue analysis highlighting the level of priorities in ascending level:

ISSUESDETAILSREASONPRIORITY
Economic RecessionReduction in salesIncrease in the interest rates1
Advertising BudgetFollow- up neededAllocation of extra cost.2
Financial probity: Bonus sharing schemeCombined with performanceRise in the profits will be able to meet the significant pay- outs by the company.3
Financial probity: Performance reviewCombined with budgetary statementsPerformance laid emphasize on the efficiency in reporting.4
Price DiscountsSignificant for bringing more customersIt will increase the revenue of the company.5
Increase in interest rateRecession Laid emphasis on interest pay- out.6

Variances

The variances that have been identified by considering the variance report commenced with the proportion of revenue that the company actually earns and the standard the company sets, however there is a variation of 80 % which ultimately distorted the figures. This is because the company was not able to make the sales which is expected due to increase in the advertisement cost and other expenses.

The issues that were evidenced in the given case study information incorporates with the it includes the projection of the liability of the company in terms of income tax. This is because there is a vast variation between the estimated figure and the budgeted figure (5 times). In addition to this, the expenses which includes the accounting fees, there has been identified a budgeted figure which has a difference of 4 times the actual value. This is because the company had not expected greater incurring on the relevant expense.

Performance

The financial performance of the company portrays decrease in the profit margin which is majorly due to rise in the expenditure level of the firm. Moreover, there is a economic recission which weakens the foundational structure of the company because the cost of the operations of the company are significantly increasing which leads to mismanagement in the company.

Debtor ageing ratio

Debtor Analysis
Particulars2009/102010/112011/12
Trade Debtors850,000975,0001053000
Sales14,550,10015,714,10816971237
Debtor Days212323

The trend in the debtors days in increasing due to rise in both the amount of trade debtors as well as sales of the company for the year 2009- 10, 2010- 11 and 2011- 12. However, it will increase the operating cycle of the firm which will eventually create difficulty in meeting its operations.

Recommendations

After reviewing the operations and outcomes on the basis of the budgetary as well as actual statements, it is recommended that the company must take into consideration the impact of economic slowdown that triggers the operations of the firm. In addition to this, the company must incorporate a limit on its advertisement cost so that cash flows can be sustained. Moreover, the company could also introduce a new accounting software which will be able to minimize most of the workload and brings accuracy in the results.

Evaluation

The financial management process of Houzit Pty shows that the company can go into losses permanently because the company has more cash outflows instead of cash inflows which leads to hindrances in the operations of the firm. This is due to increase in expenses and falsely consequences of budgeted figures.

Role Play

Jim Schnieder: Hello everyone!

Finance Manager: Hello Sir.

Jim Schnieder: Tell me about the outcomes of the financial reporting of the company.

Finance Manager: Sir, financial reporting consists of some favourable as well as some unfavourable results.

Jim Schnieder: How can we improve in terms of cost?

Finance Manager: Sir, we tried to control the cost incurring towards the production so as to increase the profits of the company.

Jim Schnieder: Any other recommendation?

Finance Manager: The advertisement cost of the company has increased substantially, due to which there are not enough or expected sales. However, this is because of the economic slowdown due to which the desired outcomes cannot be attained. 

Also, the cash flow analysis incorporates that there is low cash inflow as compared to previous year due to discount pricing in order to attract more customers, hence pricing policy has been made which depicts the price of the products.

Finance Manager: Okay, implement these effectively.

Jim Schnieder: Sure sir.

Conclusion

The company has established various techniques in order to accommodate with pricing structure of the firm. However, the comparison reflects the areas where the company are significantly lacking so that apportionment can be made effectively. Hence, the given report covers all these aspects that essentially formulates the pricing criteria for the company in judicious manner.

Task 4

Scenario

Solution 3

(a)

Variance budget quarter 1     
PROFIT BUDGETQtr 1Actual- Qxvariancevariance %Favourable or unfavourable
Revenue20%100%   
Sales33,94,247337120023,0470.679001852U
– Cost of Goods Sold                      19,00,779 19,55,296-54,517-2.868139852U
Gross Profit                      14,93,468 14,15,90477,5645.19354951U
Gross Profit %44%42%04.545454545U
Expenses  0#DIV/0! 
– Accounting Fees                            10,000 2,5007,50075F
– Interest Expense                            21,127 28,150-7,023-33.24182326U
– Bank Charges                                  400 380205F
– Depreciation                            42,500 42,50000 
– Insurance                              3,348 3,348-1-0.01493652U
– Store Supplies                                  750 790-40-5.361429715U
– Advertising                        2,00,000 1,50,00050,00025F
– Cleaning                              4,006 3,32568117.00364435F
– Repairs & Maintenance                            16,068 16,150-82-0.510331093U
– Rent                        6,60,127 6,60,12700 
– Telephone                              2,999 3,100-101-3.367789263U
– Electricity Expense                              5,366 5,2451212.254938502F
– Luxury Car Tax                              12000 12,00000
– Fringe Benefits Tax                              7,000 7,00000 
– Superannuation                            37,404 37,40400 
– Wages & Salaries                        4,15,600 4,10,5005,1001.227141482F
– Payroll Tax                            19,741 19,74100 
– Workers’ Compensation                              8,312 8,31200 
Total Expenses                      14,57,848 14,10,57247,2763.242828897F
Net Profit (Before Tax)                            26,721 5,33321,38880.0419146U
Income Tax                              8,016 1,6006,41680.04066714F
Net Profit                            18,705 3,73314,97280.04244922U

(b)

The contingencies in order to meet the business plan reflects a substantial rise in the advertisement cost of the company which is not expected from the budgetary allocation of the company. In addition to this, due to shortage of enough cash flows which are necessary to meet the operations of the business. Moreover, in terms of organizational policy, it corresponds with the depicting the futuristic policies of the firm such as to respond with the prevailing condition due to fall in the profits and repayment of long- term finance (Granlund, 2017). In terms of compliance, it demonstrates an unclear exposure, however shareholders must know the worth of the business and how it is functioning.

(c)

Significant issues incorporate with the sustaining of the firm in the times of economic recession which impacts the sales of the firm adversely. In addition to this, it will create diminishing profits. Moreover, there is an issue which is concerned with the interest rate which has become a burden for the company for the purpose of repayment of the obligation of the company (Hiebl, 2018). These issues are essentially responsible for diminishing the value as well as the profits of the company.

(d)

It is recommended that the firm must incorporate new accounting software because it will specifically organize the financial data in a judicious manner. However, it will also be equipped with inventory management system which would assist in determining the relevant levels as compared to the traditional accounting software. It will determine the resource allocation which compiles with every component in the accounting structure (Ameen, et al., 2018). Hence, it will support the operations to adhere with the business plan of the firm.

Solution 6

(a)

The budgeting report demonstrates a clear picture of where the company is lacking by determining the differences in the budgeted figures and the actual figures represented in the financial statements of Houzit Pty Ltd. It depicts that majorly all the components have a very less or negligible difference in the standards set and the actual figures. However, the company has invested substantially on the advertisement budget which comprehend with greater cost to the company, however undermines the profit margin (Hoppe, 2015). Along with that, due to vast difference in the revenue percentage, it also impacts on cost of goods sold and gross profit margin of the company which ultimately affects the net profit margin of the company. 

(b)

Calculation of ratios

RATIOSFORMULACALCULATION  
Gross profit margin(Revenue – cost of goods sold) 14159040.42
  Revenue3371200 

As per the provided information, the calculation of given ratio has been portrayed above.

(c)

The horizontal analysis explains that there has been increase of 8 % from the previous year which has been calculated on the basis of the total sales of $ 16971237 for the year. While on the other hand, by taking into consideration, the profit budget, it shows that the expenses of the company have risen by 4 % as compared to the previous year which could leads to reduction in the profits by 1 %. However, this is primarily due to increment in the advertisement expenditure of the firm which was of the value of $ 70000. While, talking about the GST cash inflows, it can be said that the computation of the tax liability has been made on the basis of sales of the financial year of the company. As in the previous year, it has been ciphered on the basis of the expenses incurred by the company (Sundararajan, 2017).

Significant issues

The significant issue commences with a huge increase in the advertisement expenditure which ultimately consumes the profit margin of the company, which is also due to the result of inflation. In addition to this, debtors are also highlighted by way of articulating by reflecting a proportionate amount for the same.

Recommendations 

The significant issues that have been identified in the performance analysis due to increase in the advertisement cost, the company must laid emphasize on the marketing strategy so as to increase the revenue from operations. Moreover, since there is an increase in the inflation rate, however the company has to increase the prices which will eventually lead to low profit margin. Also, the parameters must be same while computing the tax liability of the firm.

Evaluation 

The financial performance of the company is good, it is just that the company need to focus more on controlling its expenditure rather than excessively investing the cash in one area only. However, in order to bring efficiency and effectiveness in the financial management process, there is an immediate need to modify the business plan by incorporating the effect provided by the budgetary statements. It will give a clear insight regarding the value given to the company and its stakeholders as well. Hence, it articulates the solution for the significant issues that have been identified.

References 
  • Ameen, A.M., Ahmed, M.F. and Abd Hafez, M.A., 2018. The Impact of Management Accounting and How It Can Be Implemented into the Organizational Culture. Dutch Journal of Finance and Management2(1), p.02.
    • Ameen, A.M., Ahmed, M.F. and Abd Hafez, M.A., 2018. The Impact of Management Accounting and How It Can Be Implemented into the Organizational Culture. Dutch Journal of Finance and Management2(1), p.02.
    • Darma, J., Susanto, A., Mulyani, S. and Suprijadi, J., 2018. The Role of Top Management Support in the Quality of Financial Accounting Information Systems. Journal of Applied Economic Sciences13(4).
  • Granlund, M. and Lukka, K., 2017. Investigating highly established research paradigms: Reviving contextuality in contingency theory based management accounting research. Critical Perspectives on Accounting45, pp.63-80.
  • Hiebl, M.R. and Richter, J.F., 2018. Response rates in management accounting survey research. Journal of Management Accounting Research30(2), pp.59-79.
  • Hoppe, M., & Henderson, B. (2015). Strategic inter-organizational management accounting-A case study at Lantmännen Maskin.
  • Stockenstrand, A.K. and Nilsson, F. eds., 2017. Bank Regulation: Effects on Strategy, Financial Accounting and Management Control. Taylor & Francis.

Sundararajan, S.K. and Tseng, C.L., 2017. Managing project performance risks under uncertainty: Using a dynamic capital structure approach in infrastructure project financing. Journal of Construction Engineering and Management143(8), p.04017046.