Your All-in-One AI-Powered Toolkit for Academic Success.

+13062052269

info@desklib.com

Available 24*7 on WhatsApp / Email

Company

Tools

Support

Hospitality SET 2 - BSBFIM601: Financial Management in Hospitality

Verified

Added on 2024/07/02

AI Summary

This document explores the concepts of financial probity, accounting principles, and effective financial systems within the hospitality industry. It delves into Australian and international legislation relevant to hospitality businesses, including the Australian Consumer Law (ACL), International Commercial Terms (INCOTERMS), and the Warsaw Convention. The document also examines taxation regulations in Australia, specifically income tax and Goods and Services Tax (GST). Furthermore, it analyzes a budget scenario for a hotel, comparing actual figures with budgeted figures and identifying areas for investigation. The document concludes by discussing the implementation of a Wasp inventory control system to enhance efficiency and security within the hotel.

Contribute Materials

Your contribution can guide someone’s learning journey. Share your documents today.

Hospitality SET 2 - BSBFIM601
1

Secure Best Marks with AI Grader

Need help grading? Try our AI Grader for instant feedback on your assignments.

💎 Get Pro

Table of Contents
TASK 1:...........................................................................................................................................3
TASK 2:...........................................................................................................................................9
Task 4:........................................................................................................................................... 10
Task 5:........................................................................................................................................... 12
References:.................................................................................................................................... 14
2

TASK 1:
1: Financial probity
It can be defined as the set of practices that are applied to ensure the integrity, honesty and
ethical behaviour in financing activities. In other words, it refers to the presence of ethical and
legal values in each financial action of an entity. Financial probity works on the concept of
overall development and refers that each business should work to ensure enough honesty and
compliance of ethical principles in each financing activity like loan, grant and more. A check of
financial probity is helped to create a healthy competitive environment (Australian government,
2018). For example, as an employee, financial probity demands honesty in each activity which is
related with finance of the company. As an entity, it demands the ethical acts in the tender
process and stops to take any unethical action to get the tender.
2: Concepts and principles of accounting
a): Accounting Entity Concept
The concept of an entity says that an entity is different from its owners and transactions of
business must be recorded separately from its owners. According to this concept, owners are
creditors of business and they are entitled to receive profits due to their capital investment. For
example, if an asset of the business is taken by the owner for his personal use, it will be assumed
as drawings and will be reduced from the owner’s capital (Grigg, 2018).
b): The Reliability Principle
This concept says that only reliable and verifiable data is recorded in financial accounts to ensure
the correct accounting. For example, the purchase should be recorded with the evidence of
purchase invoice, receipted of payment should be recorded with the evidence bank entry or cash
receipt (Grigg, 2018).
c): The Going Concern Principle
The concept of going concern refers to the business continuity ability of entity. In other words,
each business should interrogate going concern ability and financial statements should be
prepared by assuming that business will be able to meet its future obligations and there is no
probability of liquidation (Grigg, 2018).
3

3: Principles and provisions for effective financial systems
The effective financial system requires compliance with several financial principles like proper
financial management, expense control, risk control, and profit maximisation. Some common
procedures are as below:
a): Transaction recording
It says that each financial transaction should be recorded properly and timely. For example,
transactions of sale and purchase are financial transactions and required to be recorded correctly.
For the recording of the sale transaction, a cash book system or a computer-based system can be
adopted. Additionally, to correctly record the purchase transactions, a manual computer system
can be adopted which will automatically create journal entries of the related transaction.
b): Reconciliation Processes
Reconciliation is a process which is applied in financial accounting to find out the missed
transactions. A reconciliation statement can be made to reconcile any two interlinked accounts.
For example, reconciliation between bank and cash account to find that missed transactions
which are creating discrepancy among the balances.
c): Invoicing:
Invoicing is the process used to generate the bills of sells activities and it refers that appropriate
bill should be issued for each sell transactions to ensure the recording of all sales. Each bill
should be issued with the step of right authority and must contain ABN number of business.
d): Accounts payable
It presents the amount of obligation which is required to be paid to suppliers at the due date.
Availability of good credit reduces the need for working capital and each business should
interrogate its credit availability and payment process to ensure that timely payment is made to
creditors. It improves market goodwill and opens new doors for credit.
4

Paraphrase This Document

Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser

💎 Try AI Paraphraser

e): Account receivable
It is outstanding out of sells which is yet to be received from the customers. A correct and
efficient credit policy is required to be adopted by each business to ensure the timely receipt of
credit sells. Timely receipt of payment reduces the need for additional finance and helps to
efficiently run the business.
f): Cash management
Correct management of cash asset is a key factor to make the business successful. Practices of
cash management cover all tractions which are related with cash in or out or affect the cash
assets of a business. Cash management says that suitable management of cash assets reduces the
need for finance and enhances the liquidity and solvency and ultimately profits.
g): Security measures
Security measures are related to each aspect of the business but here it will be discussed
regarding financial management. Proper security and authority system should be applied during
the banking procedures to ensure the systematic operation of banking activities.
h): Banking procedures
Banking is a most essential process of each business and the suitability of banking procedures
ensures the correct operations of funds. There are several steps in banking procedures like cash
deposit, cheque deposit, reconciliation with cash book etc. it is also noted that
i): Revenue systems
Correct classification and recording of revenue items are necessary for each business. For a hotel
business, revenue of food, room and additional services should be classified and recorded
separately with unique code series to ensure that proper expenses are charged to relevant income.
j): Financial management systems
To manage the financial matters there are several systems available and a business can select the
best system as per the needs of business, nature of business and size of business. A small
business can adopt a basic accounting system with a software facility to manage the financial
5

issues. A medium size business can adopt closed based ERP system, to handle the issues and a
business with several departments can use customised financial management system which
comes with special facilities to ensure the correct management of financial assets.
4: Australian and international legislations
a): Australian Consumer Law (ACL)
These regulations were issued under the competition and consumer cat 2010 to regulate the
issues of consumer safety and fair competition. These regulations step the corporate companies
to take unethical steps to attract the consumers. It refers to enforcement of penalties on those
companies which gives offers a false guarantee, sells unsafe products or takes unfair action to get
a competitive advantage (ACL, 2018).
b): International Commercial Terms (INCOTERMS)
It is the terms of business which is created by the international commerce chamber to facilitate
the `business among different counties and territories. These rules are adopted by the government
of different countries and it works to remove the threat of misleading or misunderstanding in
business relationships.
c): Warsaw Convention
This convention was signed in 1923 and effective from 1933 and issued to regulate the security
issues of passengers, luggage and other items. Regulations of this convention make the airlines
more responsible for the security during the air services and ensure proper compensation if any
loss occurs due to the consumer.
d) Trade Agreements
A trade agreement can be defined as a deed between two or more countries which is made to
facilitate the trade activities. This deed involves information about the relief of taxes, list of
allowed items, and security guarantees. Trade agreements improve the trade among two counties
and ensure the barrier-free flow of business (Britannica, 2018).
6

e): World Trade Organization determinations
WTO is an international organisation which regulates the trade issues of different counties and
works to ensure the balanced and barrier-free trade activities at the international level.
Determination of WTO informs about the different legal rules which are applicable to the trade
activities of different countries (world hunger, 2018).
5: Regulations of TAX:
Different taxation acts are applicable in Australia to regulate the taxation system and following
taxation rules are applicable to a company in Australia:
a): Income Tax:
Income tax is imposed on the income earned by an individual, company, corporation or any other
entity. For the companies, the rate of 30% is applicable. For the individuals, the rate of income
tax is varying according to the income level. Income tax act 1997 defies the rate, provisions and
due dates for the payment of tax obligations. Each individual person should obtain TFN number
from ATO and file the income tax return with required tax payment (Federal Legislation, 2018).
Some advance tax payment rules are also issued by ATO and these are required to be followed
by each person.
Criteria 2014/15 Individual Tax Rates
Residents
$0 – $18,200 0%
$18,201 – $37,000 19%
$37,001 – $80,000 32.5%
$80,001 – $180,000 37%
$180,001+ 47%
b): Goods and Services Tax
7

Secure Best Marks with AI Grader

Need help grading? Try our AI Grader for instant feedback on your assignments.

💎 Get Pro

GST was introduced to rectify the issues regarding the cascading taxation and after its adoption
in 2000, it is regulating the tax assessment on sales of services and goods. Several rules and acts
were replaced by the GST to establish an integrated taxation system. It is a multi-level tax which
provides the facility of input credit and imposes a tax on the only an additional amount. Different
rates are applicable on different goods and services and some items of basic need are exempted
from tax to control the inflation (ATO, 2018).
8

TASK 2:
From Spreadsheet Activity 1
Net Cash Flow from Operations: 147900
Net Cash Flow from Investing Activities: (48600)
Net Cash Flow from Financing Activities: (97000)
Net Increase in Cash: 2300
Cash at End of Year: 25200
9

Task 4:
A:
a): How do the figures compare overall?
The comparison of actual figures for 2014/15 and budgeted figures of 2015/16 is proving that the
company is expecting an increase in total revenue and if budgeted targets will be archived it will
be a great success for the business. It is also found that the total cost of staff is reduced by
approx. 4 % due to the adoption of a new maintenance system in the room service department.
Cost of food is also showing a nominal reduction which is possible due to low rates of raw food
items. Other expenses of the business are showing a significant improvement and it is advised to
the financial managers to interrogate the other expenses to ensure the suitable control on
operational costs.
b): Areas of investigation:
According to the analysis of the budget, the following areas requires additional investigation:
Other expenses: term other expense is covering several associated expenses like paid for
electricity, gas, water, corporation taxes etc. and these expenses require the additional attention
of management because a significant increase is shown by these expenses.
Room service system: a new system for room service activities was adopted by the business and
it is found that it is reducing the staff expenses by 30%. Adoption of this system will require
additional efforts and investment and a regular monitoring process to make it successful.
New equipment at the banquet: adoption of new equipment at the banquet will require additional
funds and effective monitoring to make the adoption successful. As this adoption is improving
revenues significantly, it should be investigated properly to find the new opportunities and
threats of chances.
10

Paraphrase This Document

Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser

💎 Try AI Paraphraser

B:
Future Potential comparison:
In new condition, only room revenues will be affected so a comparison of this department is
given below:
Particulars 2015/16 % 2016/17 % Change %
Overall Turnover $13,829,196.5
2 100.00% $14,886,966.52 100.00%
Departmental
Turnover $8,868,405.00 64.13% $9,926,175.00 66.68% 2.55%
COGS $1,152,892.65 13.00% $1,290,402.75 13.00%
Cost of staff $1,951,049.10 22.00% $2,183,758.50 22.00%
Other Expense $798,156.45 9.00% $1,389,664.50 14.00% 5%
Total Expenditure $3,902,098.20 $4,863,825.75
Gross Profit $4,966,306.80 $5,062,349.25 $96,042.45
By the improvement in occupancy, revenue will be improved by approx. 2.5% and associated
costs will be reporting significant improvement. Here, other expenses are showing 5%
improvement which is a crucial matter and additional attention to these expenses is necessary to
ensure the effective control of costs.
11

Task 5:
1:
As several changes are proposed by the Hotel Futura, it is necessary to pay additional attention
to some terms to maintain the business options at planned efficiency and productivity.
Following aspects are requiring extra attention:
 Financing cost: the hotel is thinking to adopt new equipment and the cost of these equipment
items is a crucial matter because it will generate additional outflow of funds. Proper
arrangement of funds should be made by the hotel management to suitably maintain the
liquidity and solvency.
 Revenue: the budget of the hotel is showing a significant improvement and the different
aspects of this revenue are required to be checked to attain this budgeted target.
 New adoption of equipment: adoption of new equipment which is proposed in the new
budget will enhance the revenue of banquet but it should be interrogated that does staff
requirements will also reduce due to more efficient technology.
 In 2015/16 occupancy will reduce due to renovation activities and it should be interrogated
that how staff needs will be reduced due to this low occupancy. The hotel can use the extra
workforce in other productive areas.
2:
In 2016/17, when Futura Hotel will reach 100% occupancy, some factors will require additional
attention:
 Extra courtesy to operational expenses will require checked the change percentage. Some
supportive expenses like light consumption, laundry services, regular maintenance will
improve. Attention to these factors will help to reduce the operational expenditure and
improve profitability.
 More staff will be required to handle the enhanced occupancy and HR department should be
aware of this fact so that operations can be continued without a barrier.
 Some additional supportive items like bed-sheets will require to be purchased and needs
regarding this should be interrogated at the initial stage to ensure the timely availability.
12

3:
To apply the changes of modernisation and enhance the efficiency with security from theft,
Wasp inventory control system is most suitable for the hotel. It is a perpetual system of stock
management which makes a regular update of stock in and out to ensure that each transaction of
inventory is recorded (Technosource, 2018). It is customised software which comes with several
specific features and some of them are as below:
 Perpetual inventory system which makes a regular update and eliminates the chances of
human error in recording.
 It is customised software so additional features can be added according to the nature of the
business.
 It is a clouded memory based system so inventory at different places can be tracked and
managed at centre level (Technosource, 2018).
 It generates different types of inventory management reports automatically which helps to
enhance the comparison ability of inventory consumption at different stages and reduce the
abnormal loss.
An advance wasp inventory control system is required an initial investment of $ 4447 plus GST.
Cost of system changes according to the size of the business and needed customisations. The
system will require timely update and maintenance and, cost of maintenance changes according
to the customisation and business size (Technosource, 2018).
13

Secure Best Marks with AI Grader

Need help grading? Try our AI Grader for instant feedback on your assignments.

💎 Get Pro

References:
1. ACL (2018). The Australian Consumer Law – Australian Consumer Law. [online]
Consumerlaw.gov.au. Available at: http://consumerlaw.gov.au/the-australian-consumer-
law/ [Accessed on 12 Sep. 2018].
2. ATO (2018). GST. [online] Ato.gov.au. Available at:
https://www.ato.gov.au/Business/GST/ [Accessed 12 Sep. 2018].
3. Australian government (2018). Ethics and Probity in Procurement | Department of
Finance. [online] Edit.finance.gov.au. Available at:
http://edit.finance.gov.au/procurement/procurement-policy-and-guidance/buying/
accountability-and-transparency/ethics-and-probity/principles.html [Accessed on 12 Sep.
2018].
4. britannica (2018). Trade agreement. [online] Encyclopedia Britannica. Available at:
https://www.britannica.com/topic/trade-agreement [Accessed on 12 Sep. 2018].
5. Federal Legislation (2018). Income Tax Assessment Act 1997. [online]
Legislation.gov.au. Available at: https://www.legislation.gov.au/Details/C2017C00282
[Accessed 12 Sep. 2018].
6. Grigg, B. (2018). The 10 Basic Accounting Principles Every Small Business Owner Must
Know. [online] Fundera Ledger. Available at: https://www.fundera.com/blog/the-10-
basic-accounting-principles-every-small-business-owner-must-know [Accessed on 12
Sep. 2018].
7. technosource (2018). Inventory and Stock Control System – TechnoSource Australia.
[online] Technosource.com.au. Available at:
https://www.technosource.com.au/inventory-control-solution/ [Accessed on 12 Sep.
2018].
8. worldhunger (2018). What is the World Trade Organization?. [online] Worldhunger.org.
Available at: https://www.worldhunger.org/articles/global/Trade/wtomeets.htm
[Accessed 12 Sep. 2018].
14

1 out of 14

+13062052269

info@desklib.com

Hospitality SET 2 - BSBFIM601: Financial Management in Hospitality

Contribute Materials

Secure Best Marks with AI Grader

Paraphrase This Document

Secure Best Marks with AI Grader

Paraphrase This Document

Secure Best Marks with AI Grader

Related Documents

Manage Finance

Diploma of Leadership Variances Report 2022

The Hospitality Business Toolkit

Financial Accounting: Record Transactions and Prepare Final Accounts

Financial Accounting: A Comprehensive Guide to Bookkeeping, Financial Statements, and Bank Reconciliation

Managing Hospitality Organisations - Desklib