Financial Resource Management and Decision-Making Analysis Report

This report provides a comprehensive analysis of financial resource management and decision-making, focusing on Care Tech plc. It begins by outlining the principles of costing and budget control systems, identifying the information necessary for managing financial resources, and detailing the relevant regulatory requirements. The report then explores different income sources, analyzes factors influencing financial resource availability, and reviews various budget expenditure types. Furthermore, it delves into methods for managing financial shortfalls, actions to prevent fraud, and budget monitoring arrangements. The report also examines the information needed for financial decisions, the relationship between delivery, cost, and expenditure, and the impact of financial considerations on service users, concluding with recommendations for improving care services. The report covers topics from regulatory bodies like HMRC to internal systems like budgeting and payment methods. It also explores different sources of income such as equity, debt and retained earnings.

MANAGING FINANCIAL
RESOURCES AND DECISION
MAKING

TABLE OF CONTENTS
Introduction ...............................................................................................................................3
Task 1.........................................................................................................................................3
1.1 Principles of costing and budget control system.............................................................3
1.2 Information needed to mange financial resources...........................................................4
1.3 Regulatory requirements for managing financial resources Care tech plc......................4
1.4 Systems for managing financial resources at Care tech plc............................................4
TASK 2......................................................................................................................................5
2.1 Different source of income for the firm...........................................................................5
2.2 Analysis of factors that may influence availability of financial resources .....................5
2.3 Review of different types of budget expenditure............................................................7
2.4 Chosen of right decisions on evaluate expenditure ........................................................7
TASK 3......................................................................................................................................8
3.1 Way to manage finance shortfall.....................................................................................8
3.2 Actions that I will take on estimation of occurrence of fraud in an organization...........8
3.3 Budget monitoring arrangements at Care tech plc..........................................................9
Task 4.........................................................................................................................................9
4.1 Identify required information to make financial decisions..............................................9
4.2 Analysis relationship among delivery, cost and expenditure........................................10
4.3 Evaluate financial considerations impact upon service user.........................................10
4.4 Recommendation for improve the care services............................................................10
Conclusion................................................................................................................................10
References..................................................................................................................................1

INDEX OF TABLES
Table 1: Calculation of budget...................................................................................................7

INTRODUCTION
Finance is essential for every business unit because it helps to extend business on
higher level. Funds are raised through various sources that are help to expansion of business.
It also supports to plan for new investments and short and long term financial planning. In the
context of research it explains principles of cost and budgetary control in brief. Then identify
relevant information and system to managing financial sources. In the middle content of case
it explains different income sources and analysis influences factor of financial sources.
Moreover, it defines budget monitoring arrangements and information regarding to take
financial decisions is discussed in this research.
TASK 1
1.1 Principles of costing and budget control system
Following are the principles of costing which are followed by each and every type of
business firm: Stakeholder engagement- Many times, it is assumed that costing is related to finance
department only. In healthcare organizations, non finance stakeholders are also
engaged in the activities of hospital and they have a contribution in the entire costing
of healthcare organization. Thus, as per this principle, while computing cost for Care
Tech holding plc that is generated by finance and non finance stakeholder must be
considered. Consistency- For costing purpose, it is inevitable to follow a consistent approach in
the accounting of transactions. This approach is required to be followed by Care Tech
holding plc in order to enable the cost comparisons. Internal consistency is needed to
do time series analysis which is used to measure firm’s performance in the past years.
Hence, costs must be recorded in the books of accounts on regular basis because it
helps managers in determining the cost benchmarks. Data accuracy- For estimating accurate cost of service, it is necessary to collect
accurate input data. These input data are recorded in different systems like accounting
system, patient administration system and theatre system. Cost of all these systems is
added together in the accounting system to compute the final cost of services. As per
this principle, coverage of input data and its quality helps in computing accurate cost
of services. Thus, Care Tech holding plc must simplify its accounting system so that
the entire input data at accurate value can be taken to calculate the cost of services of
business.

Principles of budget control system Be conservative not optimistic- As per this principle of budget control system, while
doing forecasting managers must be conservative not optimistic (Pahl-Wostl and
et.al., 2010). Before making any prediction, they must show resistance and after
having valid reasons they must make prediction.
 Allow plenty of time- Managers must take plenty of time while determining budget
values. By doing this, they can make sure that appropriate budget will be prepared for
the organization.
1.2 Information needed to mange financial resources
There are many types of information that are needed by the managers in order to
manager financial resources. Some of required information is as follows. Employee’s cost- In order to make best use of financial resources, it is necessary to
make appropriate estimation. HR is the important aspect for the firm and thus by
making estimation of employee cost firm can make best use of available funds
(Conway, 2013). Other expenses- It includes all expenses that do not fall in the category of employee
cost and CAPEX (Bate, Donaldson and Murtagh, 2007). On the basis of estimation of
other expenses, managers adopt cost control methods. By doing this, they mange
funds in a proper way. Finance cost- Care Tech holding plc takes loan at specific interest rate and it is
termed as finance expenses in the firm’s income statement. It is valued at 4,814,000 in
the firm’s income statement. Managers need this information in order to make sure
that its finance cost is in control and organization will be able to make payment of its
finance cost on time.
 Tax expenses - In the firm, income statement tax is divided into two parts, that is,
current tax and deferred tax. Managers, by analyzing these statements, identify the
type of tax that firm is paying at higher amount in the current fiscal year.
1.3 Regulatory requirements for managing financial resources Care tech plc
By conducting audit the company can determine that cash is safe and funds are
managed in a proper manner. There are codes of practice that help firm in making best use of
available resources. Code of practice determines the way in which funds must be used by the
managers. Hence, by using same funds can be managed in proper way.

Regulation is a set of rules and regulations that are followed by regulatory authorities
in order to make sure that all procedures determined by the government are accurately
performed by the government. Regulation is important because it ensures that in Health care
sector of UK, all financial and non financial activities are performed in an appropriate way by
the firms like Care tech plc (Bentz, 2007).. This makes sure that patients will be treated in a
proper way by the hospital system and its costing system will be efficient. This would help
the regulators in determining the costs of services provided by the healthcare firm which are
recorded in a legitimate way. Main purpose of regulation is to ascertain that good quality of
services is provided to the patients at hospital. Other main purpose of these regulations is to
check that there is no irregularities in firm’s accounts and government grants are used in an
effectual way by the managers.
Audit commission Roles- Audit commission plays an important role in ensuring that NHS and other
organizations accounts are correct and figures are not manipulated in their financial
statements.
 Responsibility – Its responsibility is to appoint its auditors in NHS who will time to
time conduct audit and check organization’s accounts. It is responsibility of auditors
to examine annual return of NHS and to combine the accounting statements in order
to give suggestions for improving the accounting system.
HMRC
It is known as Her Majesty revenue and customs and its roles as well as responsibility
are as follows: Role- It collect tax from people and firms and collected amount is used for UK public
services. Responsibility- It is responsible for administration and collection of direct tax like
income tax and corporate tax. It is responsible for administering anti money
laundering case related to organizations.
Company house Role- It is helpful in registering all newly opened firms in the UK. Responsibility- Its main responsibility is to make sure that all registered firms submit
their financial statements in their offices. It is also responsible to ascertain that all

registered firms provide information about company’s returns which are in public
records.
Financial reporting council Role- It play a crucial role in promoting high quality of corporate governance in UK
as well as it also laid reporting standards for publication of company’s information in
reports. Responsibility- It is responsible to bring changes in codes, standard setting and
relevant policies. It is also responsible to prepare new guidelines related to corporate
reporting of firms.
NHS litigation authority Roles- It proves to be helpful in managing all legal affairs of NHS and is important in
handling disputes between doctors. Responsibility- It is responsible for handling negligence claims that are made against
the NHS of England. It is also responsible for coordinating claims that are related to
equal pay in NHS.
CQC Role- It main role is to ensure that high quality of services is given to the patients in
the hospital. Responsibility- It is the responsibility to monitor and inspect all health care
organizations of the UK.
GMC Role- Plays an important role in maintaining the records of all registered doctors of
the UK. Responsibility- Major responsibility is to protect and to maintain health and safety of
public of UK. It is also responsible for suspending doctors from their post if they are
found culprit in any case.
NMC Role- Having important role in registering nurses and midwives in the UK healthcare
sector.

 Responsibility- Responsible to investigate allegations impaired fitness of practice in
the UK as well as to set and review the standards for education and training of nurses
and midlives in the UK.
Conclusion
On the basis of above discussion, it is concluded that there are many authorities in UK
that are playing an important role in ensuring that proper healthcare services are provided to
the people in UK. These bodies ensure that internal system of NHS is working perfectly and
all its services are managed effectually.
1.4 Systems for managing financial resources at Care tech plc
System is a group of things that are working together or are interrelated to each other.
System of UK healthcare sector includes regulatory authorities, hospitals, NHS and all those
who provide healthcare services in the UK (Anheier. and Winder, 2007). All these entities are
related to each other in the healthcare system of the UK. Budgets are prepared on the basis of
projected figures. Healthcare firms make anticipation about their earnings in upcoming years.
On the basis of this estimation, they envisage about the amount of expenses they can make in
the next fiscal year. On the basis of this estimation, firms prepare budget for a year which
breaks down month wise. Budget indicates the way in which various resources will be used
by the firm. In order to make sure that these resources will be used in a proper way,
responsibility of managers and subordinates is determined. This ensures the effective
utilization of available resources (Berwick, Nolan and Whittington, 2008). Firms normally
make payment by electronic fund transfer in order to ensure that transactions will be done
safely. Private firms centralize their payment system in order to delay the cash outflow from
bank account. By doing this, they manage their cash effectively.
TASK 2
2.1 Different source of income for the firm
Following are the sources of finance that are available to business and some of them
are as follows. Equity- Under this firms sale their shares to business entities or launch IPO in primary
market. In order to bring IPO companies needs to fulfil some criteria that are
determined by the recognized stock exchange. If firm pass these parameters then only
it can issue shares (Broadbent and Cullen, 2012). If it is not possible to bring IPO then

firm can sale shares to business firms that are interested in making investment in the
firm. Debt- In this source of finance, companies can take debt from the banks and other
financial institutions. These financial institutions offer loan at fixed and floating
interest rates. If Aqua takes a loan at flexible interest rate then its finance cost may
increase. Thus, it will be better to take loan at fixed interest rate. Retained earnings- It is a portion of company profit that remains with the firm after
deducting all expenses. There is no cost of capital of this source of finance and due to
this reason it is preferred as a source of finance for the business firms (Siano, Kitchen
and Giovanna Confetto, 2010).
 Lease finance-Aqua can also finance its needs by taking assets on lease. These assets
may be building or machinery etc. By selecting this source of finance firm can abstain
from making capital expenditures.
There are many factors that may influence the availability of loan to Care Tech plc.
Company’s performance is one of these factors. If performance of Care Tech plc will be good
then more banks will be prepared to give loan to the business firms. Country’s monetary
policy also affects the availability of loan. If it is preparing tight monetary policy then less
amount of loan will be offered to the business firms. Hence, it can be said that there are many
factors that affect the accessibility of loan to the business firm. Care Tech policy is entirely
dependent on business to earn revenue as there are no other sources of income from which it
can earn profit. Currently, firm is providing services related to the adult learning disabilities,
children and people service, mental health services, etc. From these services, it is earning
high amount of revenue from business.
2.2 Analysis of factors that may influence availability of financial resources
Following are the implications of sources of finance:
Legal Dilution of control Finance cost
Equity In order to launch IPO
in primary market
Aqua needs to file
some documents like
its income statement
etc. If performance of
In case of issue of
shares dilution of
control takes place.
Means that control of
existing shareholders
get diluted in the firm
Finance cost is very
high in case of equity
because rate of
dividend is always
higher then rate of
interest on loan.

these statements is not
good then regulatory
authority will not
allow firm to bring
IPO in the market
(Xanthopoulou and
et.al., 2009).
due to addition of new
shareholders in the
firm.
However, it depends
on the firm that in
which year declare
dividend for its
shareholders.
Debt In case of debt legal
implication is that
Aqua needs to submit
some of the documents
to the banks like
property documents
and bank statement.
If firm takes a loan in
order to finance its
operations then
dilution of existing
shareholders control
on the firm will not
takes place.
Finance cost is fixed
and flexible in nature
and it is necessary to
pay interest on time. In
case of default in
payment bank have
right to sue firm for
non payment of loan
amount.
Retained earnings It is necessary for the
firm to show retained
earnings in the liability
side of the balance
sheet under head
shareholder fund.
Retained earnings do
not dilute control of
existing shareholders
on the firm
(Kusumasari, BAlam
and Siddiqui, 2010).
There is no finance
cost of this source of
finance.
Lease finance Necessary to enter in
to agreement with
lessor whose asset is
taken on lease.
No dilution of control
takes place in the firm
due to lease
Finance cost is
moderate for lease.
Other factors that may influence the availability of loan are as follows:- Reputation of the firm- Banks normally give loan to the firms on the basis of their
industry. If reputation of organization is good then financial institutions would easily
give loan to the banks. Hence, it can be said that reputation affects the availability of
funds for the business firms.

 Sales revenue- Financial institutions evaluate the business firms by analyzing their
sales revenue. If same is increased consistently then it means that organization is
financially very strong. On the basis of this assumption, banks can easily give loan to
the business firms.
 Balance sheet assets and liability- Balance sheet indicates the financial position of
the firm at the end of financial year. By using ratio analysis method, managers
evaluate the organization’s performance and decide whether to give loan to business
firm or not. Hence, it can be said that assets and liabilities of balance sheet affects the
availability of funds for the business firms.
2.3 Review of different types of budget expenditure
Table 1: Cash budget of Care Tech plc
January February March April
Opening balance 3700 11400 12300
Sales 12000 17000 19000 23000
Total 12000 20700 30400 35300
Expense
Purchase 1600 1700 2000 1500
Investment 2000 2500 1000 3700
Salary 1700 1800 2000 2200
CAPEX (Technology) 1500 1800 1600 1900
Creditors 3500 4000 6500 6000
Total 10300 11800 13100 15300
Net balance 1700 5200 5900 7700
Interpretation
In this case, expenses under this budget covers purchase expenditure in which
company increases their expenses in most of the months but at the end it make decrease under
this, due to having sufficient customers. In the sales expenditures firm rise their sales in every
month because increase demands of customers. Moreover salary expenses also increase in
each of the month because sales raised as with employees are largely work in this process.
Capital expenditure are increase initially but in the mid of month it decrease due to reduction
in demands. In the last expenditure of budget format whereas creditors increase in 3 of month
but after that company reduce their creditors in the last of month. It can be seen in the table

that firm is making investment in securities and same is increased consistently but only in
month of April, it declined sharply to 1000. Cash flow of the firm has increased consistently
and it can be said that organization is expecting that its performance will be magnificent in
the fiscal year.
2.4 Ways in which decisions about expenditures can be made at Care Tech pl
There are several alternatives on the basis of company that can make helpful to take
right decisions over expenditures in Care tech plc. These define in brief below:
Priorities
Company's main priority is to expand business operation and in order to implement in
same firm and it will increase capital expenditure which will lead to enhancement in
production or sales ratio.
Expenditures
There are two types of expenditures in which one is revenue and other is capital
expenditure. In order to take decision related to the capital expenditure, firms need to
evaluate their long term business plan (Sonnenberg, 2008). On the basis of evaluation, it can
be decided that up to what amount of money, firm needs to incur in the current financial year
in order to implement its long term business plan. In order to take decision related to revenue
expenditure, Care Tech plc can evaluate its budget and can determine the amount up to which
it can make expenses in order to keep same in line to value of expenses that is determined in
the budget. For making investment decision, firm needs to identify extra cash that it may
have in its bank account after meeting working capital needs. On the basis of this estimation,
it can identify the amount of money that it can invest in shares, bonds and mutual fund. In
this way, Care Tech plc can take its decision related to the expenditures in its business.
TASK 3
3.1 Way to manage finance shortfall
Financial planning has a due importance for Aqua because it is going to open its
business and require performing lots of business operations. It needs to take asset on lease
and needs to fund marketing and production as well as distribution operations. By preparing
financial plan in proper manner Aqua can make best allocation of received funds among
different business activities and by doing so it can make best use of available funds (Sullivan,
2009). In order to manage shortfall of finance, firm may use reserved funds of business and
can finance its operations. It will use this option only when it is not getting required amount