Comprehensive Financial Management, Budgeting, and Debtor Project

This financial management project comprises several assessment tasks, beginning with questions on taxation, GST, cash accounting, and ABN. It proceeds to a financial management project centered on Grow Management Consultants, involving a business plan review, analysis of organizational goals, ...Read More

Assessment Tasks
1

Contents
Introduction:..........................................................................................................................................3
Assessment Task 1 – Written Questions................................................................................................4
Assessment task 2: Financial Management Planning Project................................................................7
Assessment Task 3 – Budget Review Project.......................................................................................11
Assessment Task 4 – Debtor management Project..............................................................................17
Conclusion...........................................................................................................................................21
References...........................................................................................................................................22
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Introduction:
The project has a number of assessments tasks. It starts with questions relating to accounting
regarding tax rate, GST, cash accounting and ABN. Further, the next task is a financial
management project which is based on Grow management consultants which include
reviewing the business plan, analysis of goals and priorities of the organization and analyzing
the profit and loss statement and its cash flow. The third task is about the budget review in
which variances with budgeted figured has been calculated and gross and net profit margin
for the Grow Company has been calculated. Finally, recommendations for making the future
conferences profitable have been made. The last task four is about debtor management in
which debtor report has been analyzed and best practice debtor management has been
explained. Further, the recommendations for using this practice are made for the company.
3

Assessment Task 1 – Written Questions
1. List the four main taxation and superannuation obligations for a business. Briefly
discuss it.
For an employee the employer will withhold tax from their wages, pay super that is
superannuation for the employees, fringe benefits tax that is if the employer provides certain
benefits to the employee and payroll tax that is if an employer pays more than $ 21153 in a
week then it has registered in the group only for Queensland.
2. What is the current company tax rate for both smaller and larger businesses?
For small businesses tax rate is 28.5% if their turnover is up to $2 million. This is planned to
be reduced further. For larger businesses it is 30%
3. Explain the principle of cash accounting
Cash accounting is based on recording transactions for incomes and expenses when they are
settled in cash.
4. List one advantage and one disadvantage of cash accounting
The advantage is that this system is easy to understand as transactions are only recorded
when they are settled in cash
The disadvantage is that system relies on single-entry system and according to the accrual
principle double entry system is necessary
5. Explain the principle of accrual accounting
This principle says that accounting transactions should be recorded in the period in which
they occur not in the period in which they are settled in cash.
6. List one advantage and one disadvantage of cash accounting
The advantage is that this system is easy to understand as transactions are only recorded
when they are settled in cash
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The disadvantage is that system relies on single-entry system and according to the accrual
principle double entry system is necessary
7. What is the process by which a business would report GST to the Australian tax
office?
If the company has sales of more than $20 million than it would report and pay every month.
If it is less than that then it has the same process quarterly, unless otherwise told. Annually if
its turnover is below $75000 and it’s a voluntary registration (Ato.gov.au, 2018).
8. What is the penalty rate to be applied if a supplier does not provide an ABN?
If the entire sum of goods and services exceed $75 (excluding GST) and supplier has not
provided ABN, then the highest rate of tax from the amount to pay will be held (Ato.gov.au,
2018).
9. A non-profit organization needs to register for GST after it has a turnover of more
than how much?
If the turnover of the non- profit exceeds $150000 then it has registered for GST (Ato.gov.au,
2018).
10. Who must have their financial report audited?
A company (not a small proprietary company), disclosing entity or a registered scheme
should get its financial reports prepared yearly audited and get a report from the auditor
(Asic.gov.au, 2018).
11. What is the purpose of an audit and auditor’s report?
According to the company’s act, certain companies are under obligation to get their accounts
audited. Its purpose is to verify the accuracy of the financial statements and auditor’s report
certifies that the accounting information provided by the company is accurate.
12. Provide four examples of what would be considered fraudulent behavior in regard
to company finances.
The following activities would be considered fraudulent –
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 Check forgery
 Check Tampering
 Theft of Cash
 Expense account fraud
6

Assessment task 2: Financial Management Planning Project
Part A:
1 Review the business plan and the organisation’s operational priorities for the
upcoming year.
Grow consultancy business plan is to run a conference annually each year starting in 2016.
The business plan and the operational priorities for the upcoming year are to replace
workshop with the annual reference. The company’s business plan is to generate sales for the
e- books and to increase the profit over the time.
2 Review the estimated income and costs for the reference and e-book to be
implemented in 2016
The estimated income and cost for e-book is to generate the $10000. It is estimated that the
cost of the conference is have been set up by principal consultant. The cost is $750 per person
and it is aimed that 100 people will attend the conference. So the total cost which will
implement in 2016 is $75000 (Annual report, 2015).
3 Prepare a report for the principal consultants using the template provided by your
assessor that includes:
P&L Statement:
The manager has generated the revenue in the previous year 2014 with the amount of
5376733 which has increased in the year 2015 with the amount of 5474972. In year 2014 the
company has incurred loss with the amount of 152447 and in year 2015, the company again
incurred a loss with the amount of 336414. All the revenues and incomes arrived by
rendering a services to the customers. Interest rate, donation, no reciprocal grant revenue, etc.
is recognised in generating the revenue. The company is facing a loss because it has to pay
all expenses such as advertising, depreciation, staff, telephone, etc. which is more than the
revenue (Annual report, 2015).
Organisational goals and strategic business plan and financial resources:
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The companies organisational goal and business plan is to have an annual conference in the
next financial year and to replace the workshop because people doesn’t attend that. The
company’s financial position is good as companies have more assets than its liabilities. The
company’s total asset in year 2015 is 4409488 and the company total liabilities are 1477895
so the company’s net asset is 2931593 (Annual report, 2015).
Cash flow statement trends:
Grow consultancy cash flow statements contains operating, investing and financing activity.
In year 2014, the operating activities have negative balance of 113121 and in year 2015, it
has a positive balance of 42245. The investing activities of the company in year 2014 are
68420 which have increased in year 2015 with 78862. The financing activities of the
company in year 2014 are 3202919 which have decreased in the year 2015 with 3166302.
The major change has occurred in the operating activities in receipts of the customers and
donation (Annual report, 2015).
Advantages and disadvantages of MYOB Software:
MYOB is an accounting software program which is mainly used for the small and medium
business. MYOB is a program which is accessible over the internet. It is the necessary
function for the business. Computerise accounting helps the users to do a lot of transactions at
the same time. This software helps in saving the time and money. Maintaining this kind of
software helps in the reliability and accuracy in the business. There are disadvantages also
there can be a loss of data through failure of power, viruses, through hackers. MYOB is a
cloud based accounting which enhances their financial and operational working for the
efficient organisation. It helps in reducing the time waste on the processes which cause
inaccuracies and also manage the cash flow, payroll, etc. (Arcega, 2014)
4 Develop budget forecast
Budget is the estimation of the future plan. The general manager of the company will review
the budget of allocating funds. It is assumed that the 5% increase in the general cost as well
as 10% increase in income for consulting and executive services will lead to overall growth
of the business. It is estimated that conference will be attended by 100 people paying $750
each. Budget forecasting helps in analysing the financial performance and also measure the
actual performance with the budgeted data.
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Part B:
1 Report on the business key financial requirement:
GST: The Company has paid GST in the year 2014 with the amount of 1908 and in year
2015, the company with the amount of 215. The company has to fulfil the GST requirement
quarterly. (Annual report, 2015)
PAYG obligation: The general manager of the company has the duty to withholding the rules
to collect tax and to meet with their tax liability. The company has paid income tax in the
year 2014 is 152447 and it has increased in the year 2015 is 336414. (Annual report, 2015)
PAYG instalment: The Company has paid income tax instalment quarterly. To pay income
tax timely is very essential for the company otherwise it would have negative impact on the
company.
Payroll tax obligation: Payroll obligation is the tax responsibility of the employers who has to
pay the taxes such as medical taxes, social security, etc.
Frequency of payment: The Company has to do the payments on time with the requirement to
comply with the legislation. The payment of tax, payroll should be made according to law. To
report the staff regarding the details of the company, expenses, and revenues is all important.
Resources should be allocated properly and choices of funds should be made wisely. (Philo,
2016)
2 Requirements to manager:
The meeting should be attended only when there will 100 people presenting over there. In the
meeting the company will also explain about the financial delegations. The company has to
comply with the policy and procedures for the effective working. The manager needs to
discuss the functioning of the company and also to make a budget which forecast the future.
3 Discuss in the meetings:
The budget which has made earlier is discussed in the meeting. The budget is made to replace
the workshops with the annual reference. The budget is made to increase the sales. It is
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discussed in the meeting that there will be no more workshop will be created as it is not
attended by people. The manager has also discussed about generating the sales of worth
$10000. The company has generated conference cost $750 each. The company has to fulfil
the entire requirement along with the policies and procedures of finance. The company has a
liability to pay a tax of amount 336414 in the year 2015. (Annual report, 2015)
4 Communication skills:
In the meeting the communication skills of the manager should be proper so that it could be
understand by the other people of the meeting. He should speak properly and have a good
communication so that it can easily accessible by everyone. He should response to the
questions which has asked to him. He should listen properly to answer the accurate answer of
the question and also he has a knowledge regarding the information. He should give the
information regarding the budget and the have a complete knowledge about the financial
position of the company (Fujimori, 2014).
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Assessment Task 3 – Budget Review Project
1. Analyse the information
Overall performance and Gross/Net margins
Gross Profit margins (Revenue-COGS) / Revenue
COGS 1709014
Gross profit margin 0.698169357
Net Loss margin Net Loss/ Revenue
0.046076393
After seeing the gross and net profits of the company it can be said that the company has
higher revenues when compared with its operating expenses. This gives the company gross
profits but when it comes to net profits the company has higher non-operating expenses
which push the company into losses. It can be said that company has to increase its revenues
to meet the rising costs and at the same time to develop cost control measures (Knight, 2012).
As the company is in losses the Net loss margin has been calculated.
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Variations in Actual vs. Budgeted amounts for income and costs:
Particulars
2016
(Actual)
2016
(Budgeted) Difference Variance
Income
Grants (recurrent) 4801036 4679766 -121270
-
2.52591315
7
Grants (non-recurrent) 45781 3479 -42302
-
92.4007776
2
Other grants 1699 11550 9851
579.811653
9
Fundraising 61243 55220 -6023
-
9.83459334
1
Donations 108402 95835 -12567
-
11.5929595
4
Interest received 99003 115062 16059
16.2207205
8
Other income 286406 250722 -35684 -
12.4592361
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9
Board and lodging income 258592 263338 4746
1.83532359
9
Revenue 5662162 5474972 -187190
-
3.30598100
2
Expenses
Advertising -82912 -114151 -31239
27.3663831
2
Employee benefits expense -3877471 -3748469 129002
-
3.44145836
6
Depreciation and amortisation
expense -132697 -191970 -59273
30.8761785
7
Caveat expense -6000 -6047 -47
0.77724491
5
Computer expenses -170944 -119194 51750
-
43.4166149
3
Consultancy fees -101918 -50505 51413
-
101.797841
8
13

Insurance -36241 -42390 -6149
14.5057796
7
Motor vehicle expenses -154800 -216299 -61499
28.4324014
4
Printing and stationary -75247 -63539 11708
-
18.4264782
3
Repairs and maintenance -73484 -68675 4809
-
7.00254823
4
Respite expenses -70603 -75351 -4748
6.30117715
8
Staff amenities -41766 -53270 -11504
21.5956448
3
S & W worker's compensation -84719 -82280 2439
-
2.96426835
2
Telephone expenses -82088 -88645 -6557 7.3969203
Travel expenses -232299 -225185 7114 -3.15918023
Other operating expenses -699865 -665416 34449
-
5.17706216
9
14

Total -5923054 -5811386 111668
-
1.92153816
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15

Calculation for Conference Costs
Conference Costs (100) Amount For 1
Increase
in 10% For 70
Profit
@ 20%
Hall Expenses 250000 250000 275000 275000 330000
Food 30000 300 330 23100 27720
Staff 54000 540 594 23100 27720
Other expenses 39000 390 429 23100 27720
Total 373000 251230 276353 344300 413160
After seeing the conference costs for the previous year over which the business wants to earn
a profit of 20% the following recommendations can be made. As the hall is fixed expanse
which will be same even if a single individual attends the event the costs cannot be
subdivided and increased accordingly. On the other hand, food, staff, and other expenses
have been subdivided to calculate individual expenses and a profit margin of 20% is included
in the cost, which will be charged from the 70 attendees of the conference. The company
needs to increase the costs accordingly to meet the profit margin targets. The
recommendations of the amount to be increased are given in the table (Drury, 2013).
.
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2. Develop a short report based on the profit and loss account analysis
To
The Principal Consultant
Subject – Report on Grow management consultant’s profit and loss account
After analyzing the profit and loss statement of the Grow management consultants it can be
said that the company is making more revenue which is able to cover its operating expenses
but when it comes to non- operating expenses the company’s revenue falls short. This gives
the company gross profit but at the same time company has a net loss. Inventory of the firm
has reduced over the past year. The company has a faced a loss there is not income tax
liability for the year. Additionally, the company needs to improve its profit-making capacity
to meet these costs and it needs to ensure that it starts using other cost control mechanisms to
keep the costs in control. The company is not making any profits so the managers have to
make sure that the company is profitable again as the company needs to be profitable to raise
finances for expansion. The variances of the company point towards the increasing expenses
than the budgeted targets (Arora, 2016). It further shows that the company’s revenue has also
risen. In number terms, the rise in income is higher than the expenses. Finally, the company’s
plan to make the conference more profitable will help to reduce costs and increase profits but
more efforts are required to make the company profitable.
Thank you
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Assessment Task 4 – Debtor management Project
Review of the aged debtor report
Aged Debtor Report
Customer
Orde
r Date
Amoun
t Due
Days
outstandin
g
Up to
10
days
11
to
30
30
to
60
More
than
60
Mathew
Ltd.
1500
2
01/05/201
5 500 177 0 0 0 500
David Ltd.
1500
5
01/06/201
5 700 184 0 0 0 700
Sam’s
Corp.
1501
0
08/06/201
5 1000 0 1000 0 0 0
Rely on us
Ltd.
1550
0
08/06/201
5 980 113 0 0 0 980
Sharpsters
1560
0
15/06/201
5 129 33 0 0 129 0
Sam’s
Corp.
1580
0
30/06/201
5 650 25 0 650 0 0
Mathew
Ltd.
1600
0
15/07/201
5 1800 100 0 0 0 1800
Colosseum 1610 12/08/201 450
0 450 0 0 0
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Ltd. 8 5
Sharpsters
1612
8
19/08/201
5 1600 60 0 0
160
0 0
Tucson
Group
1625
6
31/08/201
5 1800 75 0 0 0 1800
G&B Ltd.
1635
0
09/09/201
5 2500 0 2500 0 0 0
AT&T
1642
2
29/09/201
5 2200 25 0
220
0 0 0
Sprint
1680
0
10/11/201
5 120 0 120 0 0 0
Ericson
Ltd.
1681
2
11/12/201
5 1300 35 0 0
130
0 0
Johnson
Ltd.
1686
0
21/12/201
5 15729 4070
285
0
302
9 5780
After reviewing the aged debtor report it can be concluded that most of the debtors of the
company do not make their payments on time. This is a problem for the company. If the
debtors do not pay their debts on time this raises the chances of bad debts and also creates the
problem of cash flows as most of the cash is with the debtors. To meet this firm has to raise
finances from other sources which are also costly. This is also a deviation from the
company’s principles which says that the company’s usual terms of payment are 10 days
from invoice. To correct this problem, the company has to use best practice debtor
management and manage its debts properly.
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Best practice debtor management
The best practice debtor management means a collection of debts on time which helps the
firm to maintain a healthy flow of cash in the business. The firm has to set credit limits and
payment terms for its debtors to ensure better debt management. Further, it has to make credit
application and credit checks, enforce a clear credit policy and also consider debtor finance.
By following the above policies, the company’s management can apply the best practice
debtor management in the company (Clarke, et. al., 2012)
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A report based on the analysis of the information
To
The CEO
Subject – Inefficient debt collection and recommendations for solving the problem
After analyzing the aged debtor report it can be said that the company is not effectively
collecting its debts. This is problematic as the company will not have enough money to meet
its working capital needs. Most of the debtors are not paying their dues and it seems that the
company has not taken any action against them. This further adds that the company is not
serious about collecting debts and the employees responsible for the work are not doing their
duties properly. The company is also not taking actions of their employees who have failed to
fulfill their duties. To ensure that the debtors pay their dues on time the company needs to
adopt the best practice debtor management system. The company has to follow the following
recommendations to ensure that its debtors pay on time. It needs to set credit limits for its
debtors based on their past performance, it should further ensure that each debtor knows what
the terms of payment are and failure to meet them will impair their future credit needs, it
needs to prepare a debtor grading system and grade debtors based on their performance and
how quickly they pay their debts, the company before extending credit to anyone should
check their credit worthiness and ensure that the individual will be able to make payment on
time, further the company should build credit application that will have to be filled by a
debtor in advance and finally company can train its employees who will remind the debtors
about their payment debts and ensure that the debts don’t go bad (Bullivant, 2016)
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Conclusion
In this project, there were a number of assessments tasks that ranged from basic accounting
questions to financial management projects, from budget review to debt management. This
project offered deep insights into a number of areas including the payment to the supplier in
case of not providing ABN, tax rates, business plan, analyzing the profit and loss account,
cash flow statements, new information about the financial software, calculation of variances
and its effect on the profitability, including how to make an event such as a conference
profitable and how better debt management is necessary for a company. The information
learned helped in understanding new information about financial records and debt
management.
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References
 Arora, M.N., 2016. Accounting for management. Himalaya publishing house.
 Asic.gov.au. 2018. Users of financial reports | ASIC - Australian Securities and
Investments Commission. [online] Available at: https://asic.gov.au/regulatory-
resources/financial-reporting-and-audit/users-of-financial-reports/#7 [Accessed 7 Jun.
2018].
 Ato.gov.au. 2018. Options for reporting and paying GST. [online] Available at:
https://www.ato.gov.au/Business/GST/Lodging-your-BAS-or-annual-GST-return/
Options-for-reporting-and-paying-GST/ [Accessed 7 Jun. 2018].
 Ato.gov.au. 2018. Registering for GST. [online] Available at:
https://www.ato.gov.au/Business/GST/Registering-for-GST/ [Accessed 7 Jun. 2018].
 Ato.gov.au. 2018. Withholding if ABN not provided. [online] Available at:
https://www.ato.gov.au/Business/PAYG-withholding/Payments-you-need-to-
withhold-from/Withholding-from-suppliers/Withholding-if-ABN-not-provided/
[Accessed 7 Jun. 2018].
 Bullivant, G., 2016. Introduction. In Credit Management (pp. 13-18). Routledge.
 Clarke, M., Boden, P. and McDonald, A., 2012. DEBTOR: debt evaluation, bench‐
marking and tracking–a water debt management tool to address UK water debt. Water
and Environment Journal, 26(3), pp.292-300.
 DRURY, C.M., 2013. Management and cost accounting. Springer.
 I-sight.com. 2018. 41 Types of Employee Fraud and How to Detect and Prevent Them
| i-Sight. [online] Available at: https://i-sight.com/resources/41-types-of-fraud-and-
how-to-detect-and-prevent-them/ [Accessed 7 Jun. 2018].
 Knight, F.H., 2012. Risk, uncertainty and profit. Courier Corporation.
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