BSBFIM601 - Finance Report: Budget Analysis, Management Practices

This report presents a comprehensive analysis of financial management practices. It includes an examination of a company's balance sheet, cash flow statements, and budgeting processes. The report highlights key financial data such as liabilities, assets, and revenue, and evaluates the company's financial viability and performance. It explores the circulation of budgets within an organization and the necessary steps to meet reporting requirements. The report also provides recommendations for improving financial management practices, including cost control, sales enhancement, and the implementation of budgeting and standard costing techniques. Furthermore, it discusses financial reporting frameworks and communication strategies for stakeholders. The report is based on the BSBFIM601 Manage finances unit and includes financial data, budget analysis, and financial practices.

Running head: MANAGE FINANCES
Manage Finances
Name of the Student:
Name of the University:
Author’s Note

1
MANAGE FINANCES
Table of Contents
Section 2..........................................................................................................................................2
Section 3..........................................................................................................................................5
Section 5..........................................................................................................................................6
Reference.......................................................................................................................................10

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MANAGE FINANCES
Section 2
Group tax clearing 66
Superannuation clearing 1240
Long service lease greater than 1 year 19,844
Total non-current liabilities 935
Total liabilities 20829
Figure 2: (Table showing list of liabilities)
Source: (Created by the Author)
Balance sheet as at Feb 2019
2017/18
Actual as 30 June
2018
2018/201
9
Actual
2018/2019
budgeted
variance
Cash & cash deposits 53,515 66000 58008 -2659
Recievables 3520 3892 3000 292
inventories 23660 32120 25000 5520

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Other current assets 2400 2608 2500 198
Total current assets 83183 94749 90398 4351
Non-current
inventories
145696 158123 152000 6123
Plant and equipment 32000 26982 38000 -1028
Intangible assets 8900 9000 9000 0
Total-noncurrent
assets
136,598 204105 199000 5105
Total assets 269731 298854 269398 9456
Current liabilities 10584 10844 18500 1344
Non-current liabilities 897 955 960 5
Total liabilities 17481 20829 19480 1349
Net assets 252,300 278,025 209.918 8107
Net assets 292,300 278,025 209918 8107
Total equity 252,300 278,025 269,918 8107
Figure 1: (Table showing Budgeted Balance sheet Items)

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Source: (Created by the Author)
Statement of cashflows as at 28 February 2018 and forecast to June 2018
FY
2013/
14
FY
2014/
15
FY
2015/
16
FY
2016/
17
YTD
2017/
18
Actual
Feb
2018
Forecast
Ma
rch Apr Ma
y
Jun
e
201
7/1
8
($
’000)
($
’000)
($
’000)
($
’000)
($
’000) ($ ’000)
($
’00
0)
($
’00
0)
($
’00
0)
($
’00
0)
($
’000
)
Receipts 111,8
31
117,7
16
132,9
13
134,3
49
102,35
4 11,296 7,9
35
6,8
01
7,9
35
9,0
69
145,
390
Total
receipts
111,8
31
117,7
16
132,9
13
134,3
49
102,35
4 11,296 7,9
35
6,8
01
7,9
35
9,0
69
145,
390
Payments to
suppliers
60,18
0
63,34
8
66,68
2
70,19
2 57,682 4,923 3,9
21
2,7
55
3,6
67
3,8
39
76,7
87
Payment to
employees
34,10
2
35,89
7
37,78
6
39,77
6 23,581 5,295 3,3
76
3,5
15
3,6
48
4,5
22
43,9
37
Capital
purchases
14,96
5
15,89
8
18,59
1
13,89
1 18,567 103 989 96 45 121 19,9
21
Total
payments
109,2
47
115,1
43
123,0
59
123,8
59 99,830 10,321 8,2
86
6,3
66
7,3
60
8,4
82
140,
645
Cash
inc/(dec) 2,584 2,573 9,854 10,49
0 2,524 975 -
351 435 575 587 4,74
5
Cash at the
beginning
28,01
4
30,59
8
33,17
1
43,02
5 53,515 56,039 57,
014
56,
663
57,
098
57,
673
53,5
15
Cash held 30,59
8
33,17
1
43,02
5
53,51
5 56,039 57,014 56,
663
57,
098
57,
673
58,
260
58,2
60
The budget which is shown in the above figure effectively represents the figures which
are represented in the balance sheet of the company and the cash inflows and outflows of the
business. The budget also reflects the targets which was set by the management of the company
and the variances which have taken place due to difference between actual estimates and the
budgeted estimates of the business.
Section 3
Circulating the Budgets

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The budget which is prepared by the management of the company needs to be circulated
to the managers, supervisors and the other departments of the business (McLellan and Sherine
2013). The management of the company needs to ensure that the targets which are set by the
management of the company are appropriately distributed among the employees of the
organization so that the plans of the senior managers regarding the targets of the business are
effectively communicated.
The budgets can be effectively circulated among the employees by conducting a meeting
or with the help of an official mail. The best way available to the senior manager is to call a
meeting and present different aspects of the budgets to the employees and various other
departments (Bragg 2013). The budgets are prepared in such a way that they indicate the target
of the business and a discussion can be taken how different departments would work accordingly
to achieve this goal. In order to meet the reporting requirements of the business the following
steps needs to be followed:
 The budgets need to be presented first to the senior management of the business for their
approval.
 Any addition or revision can be suggested by the senior management considering the
long-term goals and objectives of the business.
 After the budget is approved by the senior management of the company, the same can be
forwarded to the departmental heads with the help of an official email or can be presented
to the departmental heads in a meeting.
 The supervisors would be responsible to ensure that the employees are sticking to the
budget and in case of a variances, the same should be reported to the management along
with appropriate causes.

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The budget also contains certain financial obligations which may be due to any new venture
which the management is considering or any financial obligations which the business needs to
undertake. This should be considered by the management before taking any vital decisions and
appropriate incorporated the effects of the same on the budgets which is prepared by the
management of the company.
Section 5
Recommendation on Financial Management Practices
This part discusses about the various steps which can be taken by the management of the
company for the purpose of ensuring that overall business structure can be made more efficient
in nature. The management should always aim at improving the financial management practices
of the business
Structuring and Formatting of Report
The financial statements which are prepared by the management of the company are not
prepared in an effective manner as the segregation for current assets and liabilities are not
appropriately in the annual reports which is prepared by the management of the company. The
management has included all information which effectively represent the financial position of the
business.
Issues in Financial Reporting framework
The annual reports which is prepared by the management of the company is not showing
appropriately the segregation between current and non-current assets of the business. Therefore,
it can be said that the financial information which are shown in the financial statements needs to

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be presented in a better manner following the accounting regulations and generally accepted
conceptual framework. The same would enhance the creditability of the information which are
presented in the financial statement and ensure that the information which are shown in the
annual reports are appropriate and clearly understandable by the stakeholders of the business.
The information which are presented in the financial statements are used in decision
making process regarding the costing and revenue issues of the business. Therefore, appropriate
presentation is an key element which can benefit both the management of the company and the
stakeholders of the business.
Financial Viability of the Business
The financial information which are presented in the financial statements depicts the
financial performance of the business during the period which are shown. The results which are
depicted for revenue generated by the business shows that the management has been able to
increase the revenue year by year basis which suggest that the management is in growth phase.
However, it is also to be noted that the total costs which is incurred by the business is also
increasing significantly which can be regarded as the main reason for the lower level of
profitability for the business (Jain, Singh and Yadav 2013). In order to ensure that the business
remain stable and can operate for a long time, the management of the company needs to control
the costs of the business so that the profitability of the business can be enhanced (Ball 2013). The
increase in the profitability would also attract investors to the businesses and therefore the
management can have access to funds as and when they require (Hawkesworth and Klepsvik
2013). The recommendations which can be suggested to the management of the company are
listed below:

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 The management needs to enhance the sales of the business but also reduce the costs of
the business so that the overall profitability of the business can be increased.
 The management needs to adopt budgeting techniques and standards costing techniques
so that proper supervision can be implemented for ensuring the no unproductive costs are
undertaken by the company (Kieschnick, Laplante and Moussawi 2013).
 The management of the company needs to enhance the assets of the business which can
also improve the working capital of the business and also contribute to the financial
strength of the business (Lee 2014).
 The management also needs to ensure that the liquidity of the business so that the
business has access to appropriate funds.
Financial Management Practices
The management can also adopt financial management practices for the purpose of
improving the business structure. The management can implement budgetary control practices
for the purpose of planning, forecasting and controlling the activities of the business. The
management of company also can adopt standard costing techniques for the purpose of ensuring
that proper supervision can be maintained (Kaplan and Atkinson 2015). The management of the
company plans to implement accounting information system for better presentation of financial
information. The management can conduct audit for the purpose of ensuring that the financial
statements which are showing true and fair view.
Communication
The management can communicate the plans for improving the business structure to the
stakeholders with the help of the annual report of the business. The management of the company

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can also communicate the plans in Annual general meetings with the shareholders and other
stakeholders.

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Reference
Ball, R., 2013. Accounting informs investors and earnings management is rife: Two questionable
beliefs. Accounting Horizons, 27(4), pp.847-853.
Bragg, S.M., 2013. Accounting best practices. John Wiley & Sons.
Hawkesworth, I. and Klepsvik, K., 2013. Budgeting levers, strategic agility and the use of
performance budgeting in 2011/12. OECD Journal on Budgeting, 13(1), pp.105-140.
Jain, P.K., Singh, S. and Yadav, S.S., 2013. Financial management practices. India Studies in
Business and Economics ReDIF-Book.
Kaplan, R.S. and Atkinson, A.A., 2015. Advanced management accounting. PHI Learning.
Kieschnick, R., Laplante, M. and Moussawi, R., 2013. Working capital management and
shareholders’ wealth. Review of Finance, 17(5), pp.1827-1852.
Lee, T.A., 2014. Cash Flow Reporting (RLE Accounting): A Recent History of an Accounting
Practice. Routledge.
McLellan, J.D. and Sherine, F.A.A., 2013. Strategy and management accounting practices
alignment and its effect on organizational performance. Journal of Accounting–Business &
Management, 20(1), pp.1-27.