Detailed Analysis of Financial Management: Assessment Task 2

This report presents an analysis of financial management practices, addressing key aspects such as financial reporting, budget management, and internal controls. The report begins by outlining the organizational structure and financial processes, including the roles of different departments and the use of software applications for financial reporting. It then delves into the specifics of variance analysis, providing calculations and interpretations of account overruns and variances. The report also explores contingency planning, outlining the steps involved in identifying resources, monitoring activities, and making necessary modifications to achieve financial objectives. Furthermore, it examines the importance of financial accounting, source documents, and data analysis techniques using spreadsheets. Finally, the report suggests improvements in financial management, focusing on areas such as occupancy costs and water bill reduction, and outlines the steps involved in implementing these changes, including obtaining necessary resources and coordinating activities to maximize profits.

Running head: ASSESSMENT TASK 2 1
Assessment Task 2
Student’s name
Institution
Date

ASSESSMENT TASK 2 2
QUESTION ONE
A
Financial reports are prepared every 30th of June for each year which show the financial
position of the organization. Furthermore, the manager for each department are responsible for
all expenditures that are within their departments and they accomplish this by signing on all the
paperwork necessary. In addition, software applications are used to prepare the annual reports.
B
The business plan for this organization is used to set all the parameters for the financial
budgeting. All the variations in the business plan are only approved by the CEO not any other
person regardless of their position and authority in the organization. Allocations to cost centres
are only made after the master budget has been completed which contains the profit projections.
The overheads are apportioned equally across all cost control centres and their exceptions are
negotiable with those in authority.
C
The first step in monitoring a contigency plan is to identify as well as prioritizing all the
available resources, this is followed by close supervision of all the activities that are taking place
to make sure that the secondary plan does not fall apart (Hughes, 2018). Other managers also file
up daily reports which help them to check on the progress of the project as planned before.
After detecting that the plan is not working as planned earlier, modification are necessary
in order to achieve the task that had been set. In the first step, identify the cause of the challenge

ASSESSMENT TASK 2 3
or problem at hand. Under this section, clearly state all the root causes of that disaster. Next
assess the situation at hand, through the assessment process, the impacts that might result are
noted. Furthermore go into details of the problem as well its scope and finally determine whether
there are any resources available so as to implement the second plan.
D
The manager for each department is responsible for approving by signing the paperwork
involved that all expenses within his or her area is his or her responsibility. To add on, all the
expenditures fall within the guidelines of the budget for each department
E
The first step is feeding in the spread sheet the different information in it say for example
expenses within a given month that are not of the same amount and arranged in either a column
or row (Cheusheva, 2019). Then enter a formula for calculating the variance foe example var.p
(B1:B10) and the variance is displayed in the cell.
QUESTION TWO
A
Account Overruns
Sales 30,000,000 instead of 3,000,000
Water costs written as 300,000 instead 30,000
Advertising 2,000,000 instead of 200,000
Telephone 100,000 instead of 10,000

ASSESSMENT TASK 2 4
Bank charges 6,000 instead of 600
Account variances
Electricity 4,000 instead of 40,000
Wages and salaries 50,000 instead of 500,000
Waste removal 5,000 instead of 50,000
B
Sales account
Electricity account
Waste removal account
Bank charges account
Wages and salaries account
Advertising account
Water account
Telephone account
Calculations for the variances
Electricity account
Variance = 40,000 – 4000 = 36000
Percentage variance =100* (40,000 – 4,000)/40,000 = 90%

ASSESSMENT TASK 2 5
Wages and salaries account
Variance = 500,000 – 50,000 = 450,000
Percentage variance = 450,000*1000/500,000 = 90%
Waste removal account
Variance = 50,000 – 5000 = 45,000
Percentage variance = 45000*100/50,000 = 90%
C
The contigency adjustments that can be made are preparing the accounts afresh in order
to correct the errors made as well as to meet the financial objectives. The new entries made will
show the original value which can be used to estimate the profit projections.
D
The only monitoring process that can be undertaken is crosschecking if corrected values
match with the original values in the budget in the specific accounts where overruns and
variances had been made. Therefore the new entries are corrected basing on the original
transactions but not just assuming that you know where the mistakes were made.
E
The reporting process must start with the accountants submitting their corrected entries to
the heads of departments who submit these documents to highest ranking personnel, for this case
who is the Chief Executive Officer (CEO)

ASSESSMENT TASK 2 6
QUESTION THREE
A
The effectiveness as well reliability of all financial activities can be improved by putting
into practice the idea of financial accounting which helps an organization to have a track on all
of its financial activities as well as the financial transactions. This process involves recording and
reporting finance related data that comes in or goes out of the business (Investopedia, 2019).
These transactions are recorded in financial statements which consist of an income statement,
balance sheet and a cash flow statement.
Internal controls are also used to manage financial activities within an organization. The
process involves control of the working environment, assessment of risks, information and
communication as well as reviewing and monitoring the internal system of the organization
(University of Washington, 2019). When all activities are controlled internally, the risks such as
mismanagement of funds are prevented, all tasks are executed as planned thus the employees
work in accordance to the rules and regulations which improves finance management.
B
Each time an organizations makes a financial transaction, its details are recorded in a
specific document. The details of transactions include amount of money, date and an authorized
signature (Bragg, 2019). These source documents are bank statements, invoices, deposit slips,
cash register receipts and employee time cards (Peavler, 2019).

ASSESSMENT TASK 2 7
C
The data gathered can be analyzed using the spread sheet. I have chosen a spread sheet
because it not so complicated to use and also it contains formulas that are easy to use while
analyzing the data
D
The areas of improvement for financial management process are quite many, first on the
list are the occupancy costs. The expenses incurred under this section are a lot and there is need
to reduce on these costs if the company is to make more profits. The rent expense can be
improved or eliminated by acquiring land and then constructing buildings that belong to the
company. The water bill can be reduced by taking shorter showers but not too short, rather
moderate ones and also check for the leaks that might be in existence (Huffstetler, 2019). By
doing so, the meter reading within a specific time period will be low.
E
The steps involved under this section include notifying the people in authority about the
changes that can be made so as to reduce on the expenses, by doing so, the leaders get to know of
the changes thus can either abandon or recommend them. The next step is acquiring all the
necessary resources that are important during the course of implementation of the changes.
Finally coordinate all the activities involved so as better results are yielded, the coordination
process must involve accurate and timely plans as well as effective communication to make sure
that the people executing the tasks are aware of what they are doing.

ASSESSMENT TASK 2 8
F
The first process is the refinement of the agreed improvements. After the improvements
have been certified by the city council, details regarding what needs to be done, people
responsible and by what time the improvements have to be completed are essential before
starting to work on the improvements (The integrated management System for local and regional
sustainability, n.d). Then the improvements have to be compared with the initial set goals if they
can lead to their attainment.
G
The main objective is to maximize profits which can be done through reduction of the
expenses incurred during the course of operation of the organization. Since the new
improvements are about reducing on some expenses, thus the improvements are in line with the
financial objective.

ASSESSMENT TASK 2 9
References
Bragg, S. (2019). Source documents. Retrieved from
https://www.accountingtools.com/articles/what-are-source-documents-in-accounting.html
Cheusheva, S. (2019). How to calculate variance in Excel - VAR, VAR.S, VAR.P and other
functions. Retrieved from
https://www.ablebits.com/office-addins-blog/2019/05/22/calculate-variance-excel-
sample-population-formula/
Huffstetler, E. (2019). Save Money on Your Water Bill. Retrieved from
https://www.thespruce.com/save-money-on-your-water-bill-1388747
Hughes, K. (2018). How to Make a Contingency Plan. Retrieved from
https://www.projectmanager.com/blog/contingency-plan
Investopedia. (2019). How Does Financial Accounting Help Decision-Making? Retrieved from
https://www.investopedia.com/ask/answers/041515/how-does-financial-accounting-help-
decision-making.asp
Peavler, R. (2019). Source Document Role in an Accounting Transaction. Retrieved from
https://www.thebalancesmb.com/the-source-document-in-an-accounting-transaction-
393005
The integrated management System for local and regional sustainability. (n.d). Introduction to
Implementation and Monitoring. Retrieved from
http://www.localmanagement.eu/index.php/mue25:mue_implementation

ASSESSMENT TASK 2 10
University of Washington. (2019). Financial reporting. Retrieved from
https://finance.uw.edu/fr/internal-controls