Annual Financial Report - Accountability Now

The Annual Financial Report of Accountability Now includes a detailed analysis of financial performance, profit and loss statements for 2015 and 2016, summary, recommendations and conclusion. The report suggests that the firm should bundle up its products and services, advertise using pamphlets and notices, and form specialisation in a particular area to enhance brand image and increase revenue.

ANNUAL FINANCIAL REPORT 0
Annual Financial Report
Prepared for
Board Members
Accountability Now
Prepared by
Narelle Wheatley
(Senior Bookkeeper)
31 July 2016

ANNUAL FINANCIAL REPORT 1
Table of Contents
Overview............................................................................................................................................................2
Profit and Loss Statement 2016.........................................................................................................................3
Profit and Loss Statement 2015.........................................................................................................................5
Profit and Loss Summary...................................................................................................................................7
Recommendations..............................................................................................................................................9
Conclusion..........................................................................................................................................................9
Bibliography.....................................................................................................................................................10

ANNUAL FINANCIAL REPORT 2
Overview
Accountability. Now. one of the leading Chartered Accountancy Firm initiated a global mechanism to
deliver superior quality financial help such as accounting services, book keeping, compliances of tax and
other professional services to bring lucidness an strengthen the management of the public sector financially.
This initiative acts as a catalyst for the government to adopt changes. In this report a detailed analysis of
financial performance of the firm has been discussed. A proper profit and loss account for the financial year
2015 and 2016 have been prepared along with its projected summary (Bartlett & Beamish, 2018). A detailed
comparison on incomes, expenses and net profit have been done.

ANNUAL FINANCIAL REPORT 3
Below is the profit and loss statement of
the financial year 2016 and 2015. All
the incomes and expenses has been
accorded.
Profit and Loss Statement 2016
PARTICULARS TOTAL
INCOME
Revenues
Sales $ 100,000.00
Less sales returns $ 25,000.00
Service revenue $ 175,000.00
Less discounts given -
Net sales revenue $ 250,000.00
Gains
Gain from sale of River Way
Property
$ 30,000.00
Total Gains $ 30,000.00
Total Income $ 280,000.00
EXPENSES
Insurance $ 10,000.00
Depreciation $ 2,500.00
Loan repayments $ 20,000.00
Advertising/promotions $ 2,500.00
Legal fees $ 3,000.00
Accounting $ 10,000.00
Miscellaneous expenses $ 5,000.00
Supplies $ 6,000.00
Utilities $ 3,000.00
Subscriptions/fees $ 15,000.00
Salaries/wages $ 100,000.00
Superannuation $ 9,000.00
Inventory $ 1,500.00
Leasing $ 13,500.00

ANNUAL FINANCIAL REPORT 4
Profit and Loss Statement 2015
PARTICULARS TOTAL
INCOME
Revenues
Sales $ 75,000.00
Less sales returns $ -
Service revenue $ 160,000.00
Less discounts given $ 17,500.00
Net sales revenue $ 217,500.00
Gains
$ -
Total Gains $ -
Total Income $ 217,500.00
EXPENSES
Insurance $ 9,500.00
Depreciation $ 2,500.00
Loan repayments $ 15,000.00
Advertising/promotions $ 500.00
Legal fees $ 250.00
Accounting $ 7,500.00
Miscellaneous expenses $ 3,500.00
Supplies $ 8,000.00
Utilities $ 3,000.00
Subscriptions/fees $ 15,000.00
Salaries/wages $ 65,000.00
Superannuation $ 5,850.00
Inventory $ 1,000.00
Leasing $ 13,500.00
Vehicle maintenance expenses $ 2,000.00
Repairs and maintenance $ 1,500.00
Security $ 850.00

ANNUAL FINANCIAL REPORT 5
From the above readings and analyses it is observed that the overall net profit of the firm in the financial
year 2016 has been elevated from $64300 to $74975 creating a difference of $10675. This is because the
service revenue has been increased by $15000 in total and discount was not given. This year the RiverWay
Property has also been sold. The expenses like repair and maintenance gradually decreased from $1500 to
$475 which is minimal though but it implies that petty costs are being avoided.
Profit and Loss Summary
2015 2016 2017
(Projected)
Expense
s
$155,200.00 $205,025.00 $195,000.00
Income $217,500.00 $280,000.00 $260,000.00
Net
Profit
$62,300.00 $74,975.00 $65,000.00
The above profit and loss summary shows there is an increase in the expenses from the financial year 2015
to 2016 and then gradually decreased in the year 2017 approximately according to the projected data.
Although the sales have been increased yet the overall profit rate decreased in the year 2016 and eventually
lowest in 2017. In 2015 from 28% it decreased to 26.77% and in 2017 it is 25%. Also the operating
expenses of the firm multiplied. The fixed costs like salary expenses jumped up to $35000 the loan
repayments amounted to $20000 as compared to the previous year of 2015. Therefore, it can be assured that
though the revenues have increased the fixed costs against the revenue has increased more and the growth
rate is slow.

ANNUAL FINANCIAL REPORT 6
2016
$0.00
$50,000.00
$100,000.00
$150,000.00
$200,000.00
$250,000.00
$300,000.00
2016 Profit and Loss
Expenses Income Net Profit
Figure 1: 2016 Profit & Loss chart
2015 2016 2017 (Projected)
$0.00
$50,000.00
$100,000.00
$150,000.00
$200,000.00
$250,000.00
$300,000.00
Comparison Chart
Expenses Income Net Profit
Figure 2: Profit & Loss comparison chart
The profit and loss comparison chart is also prepared to ease the understanding for the investors and the
shareholders. These charts enable the shareholders to understand the strength and weakness of the firm and

ANNUAL FINANCIAL REPORT 7
after analysing helps in decision making process. The individual bars represent the expenses, income and net
profit of all the financial years. The possible reason for decrease in sales can be lower generation of revenue
because of inferior quality of services provided to the clients. The independency in the audit is not
maintained henceforth, the client network is reducing (Titman, Keown & Martin, 2017). The entire market is
down and similar firms also are not able to perform. There is lack of competition and motivation which
leads to low income from clients and other sources. The firm is located at such a place that the clients are not
able to contact and visit. This way the number of the clients is reducing.
Recommendations
 It is advised that the firm shall bundle up its products and services to target large market and clients.
 The firm can advertise using pamphlets and notice in ICAI organisation. This way the clients will
increase and the students will generate more employment (Brymer & Sirmon, 2018).
 The firm can also form some specialisation in a particular area like GST or service tax returns. This
would enhance the brand image and the firm can experience the flooding revenues (Kent & Zunker,
2017).
Conclusion
The financial analysis determines the company’s strength and weakness. It is a process to choose, analyse
and elucidate the financial data to scrutinize the financial performance of past, present and future. This helps
in answering various questions regarding the company. The debt repaying capacity, the financial mix,
returns available for shareholders, revenue generation capacity which will be suitable for future forecasts
and budget preparation. Hence, the firm should keep in mind all the factors and then devise some policies to
increase its sales and revenue. Ratio analysis can also be done to ensure the effectiveness of the firm.
Therefore it can be concluded that the updated financial statements is necessary and mandatory.

ANNUAL FINANCIAL REPORT 8
Bibliography
Bartlett, C. A., & Beamish, P. W. (2018). Transnational management. Cambridge: University Press.
Brymer, R. A., & Sirmon, D. G. (2018). Pre‐Exit Bundling, Turnover of Professionals, and Firm
Performance. Journal of Management Studies, 55(1), 146-173.
Kent, P., & Zunker, T. (2017). A stakeholder analysis of employee disclosures in annual reports. Accounting
& Finance, 57(2), 533-563.
Titman, S., Keown, A. J., & Martin, J. D. (2017). Financial management: Principles and applications.
California: Pearson.