Financial Control and Budgeting

Financial Control and Budgeting

Table of Contents
INTRODUCTION...........................................................................................................................3
Q 1) .................................................................................................................................................3
a.) Analysing legal, financial and regulatory environment of health and social care. ................3
b) Evaluate alternative funding options.......................................................................................4
c) Discuss agency theory. ...........................................................................................................6
Q 2) .................................................................................................................................................7
a) Impact of financial constraints on stakeholders.......................................................................7
b) Challenges of budgeting in public sector organizations..........................................................9
c) Discuss incremental and zero based budgeting.....................................................................10
Q 3) ...............................................................................................................................................12
a) Calculate break even point and margin of safety...................................................................12
b) Key assumptions related with break even model. ................................................................14
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
The term financial control refers to the system that are implemented to determine the
directed resources of the business with timely measurement and monitoring. These controls
specifically trace the accuracy of reporting that removes fraud thereby it protects the intangible
and physical resources of the organization (Batkovskiy and et.al, 2017). Whereas, budget means
a formal statement of estimated expenses and income that are based on objectives and future
plans. The Report will outline analysis of regulatory, legal environment, use of various funding
options, agency theory etc. It will also explain the impact of financial constraints on
stakeholders, challenges of budgeting in public sector firms and critical analysis of zero based
and incremental budgeting. Further, it will explain key assumptions related with break even
model.
Q 1)
a.) Analysing legal, financial and regulatory environment of health and social care.
Regulation tends to play one of the crucial role in health and social care company. The
regulatory bodies tend to focus on protecting the public from numerous programs which in turn
leads to higher sustainable growth and profitability (Rogulenko and et.al., 2016). Regulatory
agencies helps in protecting and regulating public health at every stage or level. Local and
federal regulatory agencies tend to focus on establishing rules and regulations. Some regulators
which are necessary for effectively managing the financial resources within health and social
care are:
Care quality commission: It is a non- departmental public body which mainly focuses on
regulating various health and social care services in order to ensure safety and quality of care in
England.
HM revenue and customs (HMRC): This non- ministerial arm of UK government is
responsible for collection of payment of income forms, regulatory regimes, national minimum
wages and collection of taxes.
Financial reporting council (FRC): This regulatory body is considered to be an effective
regulatory body which helps in promoting transparency, trust and integrity within business. This
is done by regulating auditors, accountants and actuaries.
The key purpose associated with the healthcare policies and procedure is very useful in
providing standardization in order to carry out day to day operations of the business. This is very

useful in understanding the roles and responsibilities of the employees within particular
organization. Health and social care act, 2012 mainly emphasize on mental and social health of
an individual. It mainly focuses on providing an extensive organizational structure of NHS in
England. It focuses on providing legal duties associated with health inequalities (Osadchy and
Akhmetshin, 2015). The legal laws and legislations helps people in the society to protect
themselves health and safety of an individual. Legislation in society helps everyone in the
society to effectively understand and accept the behaviours. Laws helps in protecting and
covering all aspects of life associated with health and safety.
Creating an effective financially sound and stable environment within the health and
social care helps in effectively carrying out the operations which leads to higher sustainable
growth, performance, productivity and profitability. Effective financial environment by accurate
financial control, maintaining timely financial reports and proper auditing in turn helps in
precisely understanding and interpreting the financial data in order to make informed decision.
Creating a financially sound environment helps in controlling and analysing the cash flows of the
business. It is very useful in predicting the financial accounting information with the help of
income statement, cash flow statement, balance sheet and shareholder equity statement
(Atanelishvili, Chikviladze and Silagadze, 2017). It also helps in critically analysing the cost
and operation of the business with the of management accounting tools like budgeting, pricing
data, variance analysis, etc. it also helps the management and stakeholders of the health and
social care to analyse current trend of the business, corporate governance, change in policies and
various competitive factors for the business.
b) Evaluate alternative funding options.
Private Finance Initiatives -
It is defined as the method of creating public-private partnerships in which private
companies are contracted to manage and complete the projects of public sector companies. It was
initially developed by UK and Australia and its variants have been adopted in various countries
as an element of the programme of financialization and privatization (Clark, Reed and
Sunderland, 2018). As per the critics, private finance initiative has been used simply to place a
great value of debt off balance sheet. In health and social care, this alternative of funding is used
as a way of procurement that uses private sector investment in order to offer infrastructure and