Manage Financial Resources - Part A

Prepare for the task by completing the following steps to forecast the future financial resource needs:

  1. Search and take account of the current financial systems and documents of the entity

(choose any one of the below listed financial systems (1-5) or refer to the website listed at the end of Q1 & choose your own financial system. Copy the information listed below or from the website)

The current financial system used by name of your organisation is name of your chosen financial system

  1. MYOB Advanced
  • MYOB ADVANCED financial system can be used for small, medium & large sized organisations.
  • It is a cloud-based enterprise resource planning (ERP) solution that enables businesses to streamline processes related to sales, inventory management, payroll, customers, accounting and more. Professionals can utilize the platform to create projects using in-built templates, generate invoices and handle weekly, monthly, quarterly and custom billing processes.
  • Key features of MYOB Advanced include workflow management, audit trail, drag-and drop interface, timecards and personalized dashboards. Administrators can manage marketing campaigns, track equipment, set up maintenance schedules and utilize an application programming interface (API) to connect the software with several third-party platforms. Additionally, it lets supervisors gain visibility into business activities via reports, data visualization capabilities and more.
  • MYOB Advanced provides mobile applications for Android and iOS devices, which helps professionals create tasks, enter expense claims/receipts and review documents, even from remote locations. Pricing is available on request and support is extended via phone, documentation and other online measures.
  1. ERPAG
  • ERPAG financial system can be used for small & medium sized organisations.
  • It is a cloud-based enterprise resource planning (ERP) solution. It is suitable for small and midsize businesses in various industries, including automobile, retail, education, information technology and more. Primary features include sales management, purchasing, manufacturing management, accounting and finance, inventory management, reporting and analytics.
  • ERPAG allows users to manage business processes including selling, ordering, receiving and delivery. Other features include payroll, service management, shipping management, user-access management, point of sale and barcode scanning.
  • ERPAG offers integration with Google Mail, Google Calendar, Google Drive, Microsoft, Magento, WooCommerce, Shopify, QuickBooks, Square, Stripe and more. It supports 40+ shippers globally including UPS, FedEx and USPS.
    • It is available in three editions: Basic, Standard and Premium in subscription pricing. It is compatible with Windows, Mac and Linux operating systems. Support is offered via email, over the phone and by video tutorials.
  1. MICROSOFT DYNAMICS AX
  • MICROSOFT DYNAMICS AX financial system can be used for small, medium & large sized organisations.
  • It is an ERP system suitable for midsize to large enterprises. The solution has particular strengths in manufacturing and distribution but is also capable of serving buyers across multiple industry verticals. The solution can be installed on-premises or be hosted in the cloud for remote accessibility over the web.
  • In addition to core accounting, Microsoft Dynamics AX offers functionalities for inventory control, warehouse management, transportation management, demand and supply chain planning, material requirements planning, production management, quality assurance, product lifecycle management, asset management, and business intelligence. Multi-language and multi-currency are the additional features which make MS Dynamics AX a suitable option for companies operating globally.
  • The solution supports repetitive, make-to-order, make-to-stock, light assembly and engineer-to-order manufacturing process, among others. The industry-specific functionality meets the needs of discrete manufacturers in the high-tech, electronics, metals, industrial machinery, aerospace, consumer products, and medical devices industries.
  1. ERP 9
  • ERP 9 AX financial system can be used for small, medium & large sized organisations.
  • It is a Windows-based solution, which helps businesses manage inventory, accounting, orders and tax filing across multiple branches. Features include multiple billing formats, job costing, demand forecasting, aging analysis and reporting.
  • The application enables users to create and print custom invoices, manage sales or purchase orders, and handle debit or credit notes. Businesses can use the inventory management module to categorize and quantify stock items, record the entire manufacturing activity, create Bill of Material (BoM) and monitor stock levels for replenishment. It also allows professionals to manage multiple price lists for products and prepare different cost levels for retailers, wholesalers and customers.
  • Using Tally.ERP 9, accountants can monitor account payable/receivable, track outstanding payments and view the status of cash flow and funds. The solution is available on a one-time license and support is provided via chat, email and phone.
  1. ERPNext
  • ERPNext financial system can be used for small sized organisations.
  • It is an enterprise resource planning (ERP) solution that offers financial accounting, project management, human resources and inventory management. The software is available both in cloud-based and on-premise deployment options.
  • ERPNext features human resource management which allows users to create employee records, record expense claims, manage performance appraisals and payroll. The software also offers project management which allows users to create project tasks and assign them to employees.
  • Users can track project progress using a real-time Gantt Chart interface. ERPNext also features sales management tools, which allow users to track leads and opportunities and create price quotes. Users can send targeted emails to their leads and prospects.

Name of your organisation uses the name of your chosen financial system financial management system to process information through strategic and tactical management to develop actual operating procedures. These include,

(paraphrase below points & write it as 2-3 paragraphs)

Activity dashboard - A centralized location within the software where users can come to get a broad overview of all financial activity. Often, dashboards will include easily digestible graphs of data, yearly, monthly, or daily breakdowns of income and expenses, year-over-year comparisons etc.

Invoicing - Managing receivables. Often made up of both invoice management—controlling things such as invoice workflow and tracking—and invoice processing—actually processing the invoices when they come in.

Expense tracking - Track, process, pay and record all expenses incurred in the course of business.

Profit tracking - Keep tabs on income and determine what products or services are bringing in the majority of profit. Can also help assess return on investment for purchases you may be considering.

Cost analysis - Usually comes hand-in-hand with profit tracking. This feature takes a close look at where you're spending money, analyzing procurement etc.

Investment tracking - Sometimes tied into asset tracking, this feature keeps track of ROI and investment performance. Also helps you determine what new investments you may need to make.

Projections - Looks at past performance and external market factors to build a forecast of potential revenue and expenses.

Real-time data - Helps create reports, consolidate financial data into one place, maintain compliance and easily present information related to the financial status of your company.

Accounting integration - Removes the need for a separate accounting system to record things such as general ledger entries, accounts receivable and accounts payable.

https://www.softwareadvice.com/au/erp/financial-management-system-comparison/

  1. Do a forecast and prepare an analysis on current financial data, systems requirements and write a short report

Question needs to be answered in 2 parts

Part 1 :

  • Reports prepared by the business – describe each of them – paraphrase your answer for each of the below listed documents.

The following reports are prepared by Name of your organization.

Balance Sheet

This is a document that reports on a company’s assets, liabilities and owners’ equity at a given point in time. It is a summary of the financial balances of the organisation and provides a snapshot of the company’s financial condition. The most common balance sheet usually lists the assets first and typically in the order of liquidity. Then the liabilities are listed, and the difference between the assets and the liabilities is known as equity of the net worth or capital of the company

Income Statement

This document reports on a company’s income, expenses and profits over a period of time and is sometimes referred to as a profit and loss statement. The statement reveals how a company’s revenue (money received from the sale of products and services before expenses are taken out) is transformed into the net income (the result after all revenues and expenses are accounted for). It displays write-offs such as depreciation and amortisation of assets as well as taxation obligation. Over this statement shows whether the company made or lost money during the period being reported

Statement of Changes in Equity

These document reports of the changes in equity of the company during the prescribed period. It breaks down changes in an owners interest in the company and the application of retained profit or surplus from one accounting period to the next. It commonly includes line items such as profit or losses from operations; dividends paid, issue or redemption of shares, revaluation reserve and other items charged or credited to comprehensive income

Cash Flow Statement

This document shows how changes in balance sheet accounts and income affect cash and cash equivalents and break down the figures to operating investing and financial activities. It includes cash that flows from operations, financing and investment and reflects what is known as liquidity

Cash flow is the measure of money flowing in and out of your business at any given time. In an organisation, there are 2 ways that cash flows – Inflows and Outflows. In an ideal business cycle, you should always have more inflow than outflow.

Cash inflows are any receipts of cash to a business and can include:

  • Payment for goods or services
  • Receipt of a bank loan
  • Interest on savings and investments
  • Shareholder investments
  • Tax returns

Cash outflows are any cash outgoings and can include:

  • Purchase of stock, raw materials or equipment
  • Wages, rents and daily operating expenses
  • Loan repayments
  • Income tax, payroll tax and other taxes
  • Asset purchases

Benchmarking

The practice of comparing business processes and performance metrics to industry bests and best practices from other companies. Dimensions typically measured are quality, time and cost. ... In project management benchmarking can also support the selection, planning and delivery of projects.

Gain an independent perspective about how well you perform compared to other companies. Drill down into performance gaps to identify areas for improvement. Develop a standardized set of processes and metrics. Enable a mindset and culture of continuous improvement.

There are two primary types of benchmarking:

Internal benchmarking: comparison of practices and performance between teams, individuals or groups within an organization.

External benchmarking: comparison of organizational performance to industry peers or across industries.

Trend Analysis 

It is a technique used in technical analysis that attempts to predict the future stock price movements based on recently observed trend data. Trend analysis is based on the idea that what has happened in the past gives traders an idea of what will happen in the future Trend analysis can improve your business by helping you identify areas with your organisation that are doing well, as well as areas that are not doing well. In this way it provides valuable evidence to help inform better decision making around your longer-term strategy as well as ways to futureproof your business

Budget Variance 

It is the difference between the budgeted or baseline amount of expense or revenue, and the actual amount. The budget variance is favorable when the actual revenue is higher than the budget or when the actual expense is less than the budget. Variance analysis helps in managing the annual budgets by monitoring the budgeted figures and comparing it with the actual revenue/cost.

Budgets and Forecasts

Budgeting quantifies the expectation of revenues that a business wants to achieve for a future period, whereas financial forecasting estimates the amount of revenue or income that will be achieved in a future period. Budgeting and forecasting is important to your business success because you set targets for income and expenditure and then you can hold yourself accountable to those targets as the year progresses

Profit and Loss Reports

A profit and loss report, also known as an income statement, shows the profitability of your business over a specific period. It can cover any period of time, but is most commonly produced monthly, quarterly, or annually. A profit and loss report is a useful tool for monitoring business activity. For business owners, it highlights where their business is succeeding and where it is struggling. Investors will use profit and loss reports to gauge the financial health of a potential investment, or to see what kind of return they are getting on an existing investment.

Receipts & Expenditures

These statements summarises a company's revenues and expenses over the entire reporting period. The company need to generate revenue to stay in business. They use revenues to pay expenses, interest payments on debt, and taxes owed to the government.

Part 2 :

  • Use the Business Budget Template 2020-21 & create your own forecasted budget. Ensure your net income listed at the end of the table is between $85,000 – $100, 000.
  • Provide an analysis of your business budget for 2020-21.

Business Budget 2020-21 for (Name of your organisation)

Copy paste your Excel Business Budget 2020-21.

Note : Paste your excel sheet as a picture (use paste special) in order to get all the information correctly onto your word document.

Analysis of Proposed Budget (2020-21) for (name of Your Organization)

(create your own analysis based on your business budget 2020-21. Below information is for your reference only and will need to be modified)

  • Operating income from the sales achieved from categories (1-4) is $720,000
  • Non-operating income from interest and rental is $103,000
  • Total proposed income is $823,000
  • Total operating expenses is $666,600. Majority of expenses has been budgeted for rent, salaries & wages, travel, and insurance.
  • Total non-recurring expenses is $25,500
  • Total proposed expenses is $692,100
  • Net income before taxes is $130,900 ($823,000 – 692,100)
  • Income tax payable is $39,270 (30% of net income)
  • Budgeted net income or profit is $91,630
  • Net profit margin is 11.13% {(91,630/823,000) x 100}
  1. Following the analysis prepare a complete financial plan which include budget forecasts following the organisational and statutory requirements

(paraphrase your answer based on information provided)

Strong financial management is the responsibility of every employee at (name of your organization). The level of responsibility will vary depending on the department and employee’s position at (name of your organization). The delegated authority document clarifies who has the responsibility to make decisions, commit expenditure and sign legal undertakings, so there is no confusion about responsibility. The delegated authority document usually explains who has the authority to carry out duties, such as:

  • Placing and authorizing orders for goods and services
  • Signing cheques
  • Authorizing staff expenses
  • Access to the safe and petty cash
  • Handling incoming cash and cheques
  • Signing legal undertakings
  • Checking and authorizing accounting records

The format of the delegated authority document at (name of your organization) defines the lowest level of authority. Managers will automatically have at least the same financial authority as their team members and may have more if this is stated in the document. It outlines deputizing arrangements to cover when key staff are absent. It prevents anyone from authorizing a transaction from which they will personally benefit. It prevents staff authorizing payments to their managers. It sets out limits and conditions for the authority. It will specify a maximum limit for authorization or define the category of expenditure which can be authorized for each staff or role. The table below provides the delegated authority document for (name of your organization).

Choose designated persons for your company & use the same designations for all areas of authority in the table below.

A - Chief Executive officer (CEO) or Managing Director (MD) or President or Chairman

B - Finance Director or Financial Controller or Finance Manager

C - Line Manager or Department Manager or Supervisor

AREA OF AUTHORITY

LIMITS APPLIED

(change limits based on your organisation)

DESIGNATED PERSONS

(list designated persons based on your organisation)

Legal documents

 

A

Leases on property & equipment

Up to $50,000

Above $50,000

B

A

Bank account

Up to $10,000

Above $10,000

B

A

Staff advances / loans

Maximum $3,000

A + B

Staff expenses

As defined by the budget

C

Order for goods & services

Up to $5,000

 $5,000 - $10,000

Above $10,000

C

C + B

C + B + A

Petty Cash

Up to $500

$500 - $1000

C

C + B

Safe keys

 

B

Employment contracts

 

A

Reporting Periods (choose any one for each of the listed statements)

  • Balance sheet – monthly or quarterly
  • Income statement – monthly or quarterly
  • Statement of changes in equity – half yearly or annually
  • Cash flow statement – monthly or quarterly
  • Trend analysis – quarterly or half yearly
  • Budget variance – monthly or quarterly
  • Profit and loss reports – monthly or quarterly
  • Receipts & expenditures – monthly or quarterly

Taxation Payment Timings (choose any one from below)

  • Tax pre-payment or
  • Pay-as-you-go (PAYG) instalment system or
  • quarterly payments towards you tax bill

https://fmdprostarter.org/delegation-of-authority/

  1. Prepare a brief report to the management making recommendations on budgeted expenses or any changes which need to be made to the budgeted projections.
  • Copy paste your Excel Business Budget 2020-21 & Business Budget 2019-20

Note : Paste your excel sheet as a picture (use paste special) in order to get all the information correctly onto your word document.

  • Compare Budgets 2020-21 v/s Budget 2019-20 & document your analysis

The budgets of (Name of your organisation) for 2020-21 have been compared with the actuals for 2019-20 & a detailed analysis is listed below.

  • The proposed budgets for (name of your organisation) for the financial year July 2020 – June 2021 have been carefully studied and evaluated
  • Advertising expenses have been increased or decreased by (calculate %) over the previous financial year. This is attributed to an increase or decrease of regular advertising mediums like newspaper advertisements, billboards, road signages, radio, magazines, telephone books and public transport advertising (choose any 4 advertising mediums)
  • Increased focus on using digital media including online advertising, search engines, social media, video streaming services, and websites.
  • Insurance costs have increased or decreased by (calculate %) due to across-the-board rate hikes or previous insurance claims or change in insurance provider (choose any one reason)
  • Annual rents have increased or decreased by (calculate % ) after renewal of rental agreements.
  • Salaries and wages costs have increased or decreased by (calculate %) due to hike in wages or annual increments or special incentives/bonuses (choose any one)
  • Cost of travel has increased or decreased by (calculate %) due to increased sales coverage to regional areas or interstate travel or overseas budgeted travel (choose any one)
  • After careful review or analysis or evaluation (choose any one) of each item within the budgeted expenses, all costs have been correctly or accurately or precisely (choose any one) listed & no further changes or adjustments or modifications (choose any one) are required.

Manage Financial Resources - Part B

Analyse the current asset performance and capacity by performing the following steps:

  1. Using standard accounting techniques, conduct a balance sheet analysis analyse the costs of assets and liabilities, and the returns from them, to identify and document the extent of debt and equity financing
  • Copy paste the Balance Sheet 2019-20 for your organisation

Note : Paste your excel sheet as a picture (use paste special) in order to get all the information correctly onto your word document.

  • Based on the company Balance sheet each item of Asset, Liability and owners’ equity will need to be analysed.
  • Debt and Equity amounts will have to be compared and commented on the type of financing used for the business.

An analysis of the balance sheet for (Name of your organisation) for the financial period July2019 – June 2020 revealed or showed or divulged (choose any one) the following information:

  • The total current assets or holdings (choose any one) are $447,000 & the company has a working capital or investment (choose any one) of $410,300
  • Net value of fixed assets after depreciation which includes ownership or proprietorship (choose any one) of land and a warehouse is $275,000
  • List your own analysis point
  • List your own analysis point
  • List your own analysis point
  • List your own analysis point
  • List your own analysis point
  • List your own analysis point
  • List your own analysis point
  • List your own analysis point
  • List your own analysis point
  • (Name of your organisation) is thus managing or controlling or handling (choose any one) its current business by essentially using its own equity 73% & only 27% is through borrowed capital – bank loans.
  • Budgeted profit for the year 2019-20 was $177,770 & these earnings or revenue or income (choose any one)  have been retained or held or taken (choose any one)  by the owners & not reinvested in the business.
  1. Consult your organisation staff or trainer and students if done as a simulated workplace task to find out the responsibilities of the management and legal requirements for financial reporting. (Briefly explain the below statements)

AASB 1001 “Accounting Policies” (copy paste)

To prescribe the concepts that guide the selection, application, and disclosure of accounting policies and to require specific disclosures to be made in relation to the accounting policies adopted in the preparation and presentation of the financial report

Statements of Accounting Standards

SAC 1 - Definition of the Reporting Entity (copy paste)

The purpose of this Statement is to define and explain the concept of a reporting entity and to establish a benchmark for the minimum required quality of financial reporting for such an entity. This statement outlines the circumstances in which an entity or economic entity should be identified as a recording entity. It also outlines the criterion for determining, for financial reporting purposes, the boundaries of a reporting entity.

SAC 2 - Objective of General Purpose Financial Reporting (copy paste)

The purpose of this Statement is to establish the objective of general purpose financial reporting by reporting entities in the private and public sectors. The Statement identifies the users of general purpose financial reports, the common information needs of such users and the broad types of information, consistent with those needs, that general purpose financial reports should provide.

SAC 3 - Qualitative Characteristics of Financial Information (copy paste)

Statement of Accounting Concepts SAC 2 "Objective of General Purpose Financial Reporting" identifies the objective of general purpose financial reporting as the disclosure of information useful to users for making and evaluating decisions about the allocation of scarce resources. When general purpose financial reports meet this objective they will also be the means by which preparers of such reports discharge their accountability to those users. The purpose of this Statement is to identify those attributes that financial information should possess if it is to serve the specified objective.

SAC 4 - Definition and Recognition of the Elements of Financial Statements (copy paste)

This Statement establishes definitions of the elements of financial statements and specifies criteria for their recognition that are consistent with the objective of general purpose financial reporting set out in SAC 2. These definitions and recognition criteria are also consistent with the qualitative characteristics set out in Statement of Accounting Concepts SAC 3 "Qualitative Characteristics of Financial Information".

Corporations Act 2001 (paraphrase)

The Corporations Act 2001) is an Act of the Commonwealth of Australia which sets out the laws dealing with business entities in Australia at federal and interstate level. It deals primarily with companies but also with other entities, such as partnerships and managed investment schemes. The Act is the primary basis of Australian corporations law. The Corporations Act is the principal legislation regulating companies in Australia. It regulates matters such as the formation and operation of companies (in conjunction with a constitution that may be adopted by a company), duties of officers, takeovers and fundraising.

GST - Goods And Services Tax (paraphrase)

The goods and services tax (GST) in Australia is a value added tax of 10% on most goods and services sales, with some exemptions (such as for certain food, healthcare and housing items and concessions (including qualifying long term accommodation which is taxed at an effective rate of 5.5%. GST is levied on most transactions in the production process but is in many cases refunded to all parties in the chain of production other than the final consumer.

Income Tax Reporting (paraphrase)

In Australia, the financial year for tax purposes runs from 1 July to 30 June. Businesses are required to lodge an income tax return for this period. The full company tax rate is 30% and the lower company tax rate is 27.5%.

  1. Carry out an analysis on the financial reports and supporting notes, then write a short report on the findings.
  • Copy paste the Balance Sheet 2019-20 for your organisation

Note : Paste your excel sheet as a picture (use paste special) in order to get all the information correctly onto your word document.

  • Analyse & explain the main information such as profit, revenue, expenses, staff wages etc.

The performance of (name of your organisation) for the year 2019-20 has been carefully analysed & it revealed or showed or divulged (choose any one) the following details.

  • Operating income for the year 2019-20 from sales of categories (1-4) was $803,384 against a budgeted figure of $800,000 & a 0.42% increase
  • List your own analysis point
  • List your own analysis point
  • Highest expense was wages & salaries - $164,762 & it contributed to 26% (164,762 / 622,477 x 100) of total operating expenses.
  • List your own analysis point
  • List your own analysis point
  • List your own analysis point
  • List your own analysis point
  • List your own analysis point
  • List your own analysis point
  • List your own analysis point
  • (Name of your organisation) has not only achieved but also exceeded its forecasted net income for the year 2019-20. This performance is particularly noteworthy as in the last quarter (April’20 -June ’20) of the financial year, the country experienced the Covid-19 pandemic & there was a rapid decline in sales due to lockdown measures, job losses, travel restrictions and state and country border closures. (paraphrase this point, providing your own explanation)
  1. Do an evaluation and present in a report on the impact that financial decisions made by the management will have on the organisation’s ability to meet its planned goals and objectives.
  • Copy paste your Excel Business Budget 2020-21 & Business Budget 2019-20

Note : Paste your excel sheet as a picture (use paste special) in order to get all the information correctly onto your word document.

  • Copy your answer listed in Task 2 – Part A - Q4. Note: Last point should not be copied.
  • Check if the budgeted profit for 2020-21 is higher or lower than 2019-20 & explain briefly why?

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Accounting and Finance Assignment Help

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