What methods would you use to plan for financial management?

For a company to achieve sustainable development, it is vital to monitor and assess its organizational and operational budgets. Financial management involves planning, monitoring, controlling, organizing and evaluating financial resources in an organization to achieve its set objectives. Statements conveying different financial information are often prepared and analyzed during the financial management process. A profit and loss statement is usually prepared to analyze the performance of an organization. Through the profit and loss statement, one can assess previous losses or profits an organization has made by analyzing past transactions and monitoring the cash flow.

Using profit and loss statements for set duration, an organization can identify times when it has higher and lower expense and revenues. With this information, a company can effectively make rational plans. An organization’s expense are often recorded in the cash flow statement which includes money it spends and where the money originates from. A company is obligated by the state to file its income tax returns annually which is contained in the business activity statement (BAS), often issued by the relevant government tax office. To effectively plan for financial management, there are several accounting software that can be used. For instance, Freshbooks is accounting software which enables a company to track its sales cycle through customers invoices.

Discuss the steps involved in creating a budget

To establish an efficient financial plan one needs to have a sound budget. To create a realistic budget, there are certain steps on needs to follow. First, it is essential for an organization to calculate its expenses using relevant financial statements to assess its performance and get a report on daily spending to help formulate a workable budget. Secondly, once the organization’s spending is calculated one has to determine the actual income. This step involves the addition of extra funds used in by an organization. Thirdly, it is vital for an organization to set a savings plan which involves paying off its debts while cutting costs in its operations. With an established savings plan, the next step is recording and tracking all organizational income and expenses, this will make one be careful in one’s spending to achieve the savings target. The final step mandates an organization to stick to the budget to reach its financial goals. Slacking off in adhering to requirements such as saving less can make the entire budget futile in the long run.

Budget sample of a restaurant

From the above diagram, the restaurant seeks to cut down on its labor, electricity, stationery and miscellaneous in next year’s budget. By cutting down its expenses, the company will have more to spend on food. According to the diagram, the additional spending on food is aimed at increasing the company’s output, while maximizing its sales. If this budget is observed it is bound to increase the company’s profits.

Discuss steps (methods) one may follow when implementing a budget

Once a company has created a realistic budget, it is the responsibility of organizational managers to stipulate ways to apply it. For starters, an organization should have a plan which will aid in mitigating risks that may happen during the set business period; this can be done using risk assessment procedures by independent assessors. After the risks have been calculated and mitigating measures are put in place, an organization needs to establish policies which will aid in achieving the set budget objectives. At this stage, all parties in an organization are mandated to comply with the laid out plans about the fixed budget.

Identify business financial reports, give a brief explanation and how each is structured based on the organizational or statutory requirements.

A balance sheet- This report provides detailed information on an organization’s shareholder’s equity, assets, and liabilities(Investor publications, 2007). A balance sheet gives a detailed description at the end of a reporting period and does not provide an account of cash flows in and out of business during the stipulated time.An income statement- This statement shows the total earnings of a company over a duration of time. It shows the total costs and expenses incurred by a company about revenue earned. The income statement can be used to calculate profit or losses in a company.Cash flow statement- This is a report which shows an organization’s outflow and inflow of cash. A cash flow statement is vital in that unlike the income statement which shows profits or losses made by a company; this report shows where the money generated from.

In what ways do budgets aids the effectiveness of financial management processes?

Budgeting entails strategic implementation of a proposed business plan. To achieve set organizational goals it is vital for a company to plan efficiently on how it needs to spend its money, using a budget. Budgeting has various advantages when applied in financial management processes. First, budgeting helps bring into perspective the idea that conditions may change during a business period and thus, relevant officials can find strategies ideas on how to combat any obstacles. Secondly, a budget enhances coordination of activities and resources by managers in a company to cut costs and maximize on savings. Thirdly, budgeting motivates organizational workers to put on more effort into allocated tasks to achieve set budget objectives. By doing so, an organization is strong foster sustainable development. Lastly, budgeting can aid an organization in controlling extensive financial spending in organizational activities.

Identify the requirements for financial probity

An organization can qualify for fiscal integrity if all relevant financial reports have no errors. Integrity can only be achieved if an organization uses proper accounting and financial systems which eliminate errors such as the omission of transactions in the balance sheet. The use of advanced accounting software in a company enhances good record keeping, tracking of sales in the market and monitoring of all organizational operations. With proper financial statements, an organization qualifies for financial integrity.

Describe the principles of accounting and financial systems

It is vital for an organization to keep relevant business records while tracking and monitoring its activities in the economic market. Accounting processes are often established to help in efficient and effective record keeping and calculation of financial expenditure of a company. Without proper accounting techniques, an organization is bound to have issues of misappropriation of funds, an error that can have adverse consequences to a company. Accounting and financial systems are vital in controlling organizational expenditure to ensure a company has future economic sustainability.

Outline the requirements of the Australian Tax Office, including Goods and Services Tax, Company Tax, Pay As You Go.

In Australia, the financial year concerning tax collection starts in 1^st July to 30^th June. The Australian Tax Office (ATO) mandates businesses to present a Business Activity Statement (BAS) at different time intervals that are either monthly, quarterly or yearly depending on the terms agreed on. The BAS report is used to account and pay services and goods tax (GST), pay as you go (PAYG) installments and other charges. When registering an Australian business number (ABN) and GST, the taxation office will spontaneously send an organization a BAS when lodging time approaches. All businesses listed for GST are mandated to lodge a BAS before the due date.

References

Investor publications, 2007. Beginners’ Guide to Financial Statements. [Online]
Available at: https://www.sec.gov/reportspubs/investor-publications/investorpubsbegfinstmtguidehtm.html

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