Delivery in day(s): 4
Finance and Accounting Principal OZ Assignments
1. Series Of Questions
a. Current statutory requirements for tax compliance
Various current statutory requirements are identified for tax compliance are improvement in efficiency and minimising the risk, enhance the monitoring and control over the procedure, centralized procedure for compliance along with the integrated service provider, increased focus on the core business and growth stages.
Under tax legislations, the following is the list of tax liabilities for Houzit Pty Ltd are:
1. Sales tax payables.
2. Employer provided health insurance payable.
3.Current monthly bills like insurance, rent, other utilities etc.
4. Accrued income and franchise tax payables.
5.Customer deposits or unearned income.
6. Employee state income taxes withheld.
7.Accrued local taxes payable.
Under the legislations of taxes, Different calculation methods of tax liabilities for Houzit Pty Ltd are as follows:
1.Deferred method:This method depends on the rates of assessments that are a result of the differences in the recognition of income between the methods of accounting and tax laws. It is not accepted by GAAP.
2. Asset-liability method: this method is used to account for the tax to be payable on the income for the current year and thereby recording liabilities and asset of deferred tax for the tax outcome for the future. This method is accepted by GAAP only.
3.Deferred tax liability treatment: this method account for the balance sheet of the company that is a result in the difference that is temporary between the accounting of the company and carrying values of tax.
b. Current compliance requirements and liabilities for the organisation under the Corporations Act 2001.
The current compliance requirements and liabilities for the organization are divided into two categories that are internal and external.
Internal compliance requirements:
LLCsare not necessarily required but recommendation is needed to be given on redesigning of working declaration, recording all the investment premium trades, issuing enrolment offers and hold annual gatherings for the people, executives, if the LLC is principal regulated.
Corporationsare the associations of both the C organizations and S endeavours are the prime internal requirements that include holding annual official and shareholders social gatherings, being updated with the current laws, recording each and every stock in trade, and issuing stock to shareholders.
Compliance kitare the different visionaries of the small businesses use this consistence unit to organize record. This is the consolidation of various things like neighbourhood laws, stock or cooperation interest confirmations, LLC seal and recording test meeting minutes.
External compliance requirements:
Franchise taxes are some of the states that have an obligation like the cost or expense paid to the state so as to receive the advantage of acting as a LLC or an association in the given state. Various formulas are used by the state so as to establish the salary of business or affirmed shares for registering this evaluation.
Annual reportsis the requirement of various associations and LLCs by most states to record the annual report so as to allow the states to monitor the qualified organization and LLCs. Biennial enunciation is required by the distinct states where there ordinarily need a charge to be paid at the time of clarification is recorded.
Identify the obligation costsare the monetary arrangements needed to be organized thereby scrutinizing the consistent necessities. Constant requirements are needed to be addressed which is annual clarifications and foundation charges.
c. Review commercially available financial management software which will be most suitable software for Houzit Pty Ltd.
Selection of the most suitable software needs to be done for Houzit Pty Ltd through the below given methods from commercially available financial management software’s
Determination of most appropriate financial management software for Houzit Pty Ltd
1.For managing the finances of the small business or a portfolio of large investment, it is essential to choose the program that is commercially licensed.
2.For managing a budget for the family or monitoring personal savings and investments, selection of shareware program is necessary.
3.For managing the personal scrutiny and savings account a freeware program is to be selected.
Evaluation of a financial management program that is commercially licensed:
Determination of the features is needed to evaluate the financial managementprogram that is commercially licensed.
Comparison of two commercially available financial management software’s is given below:
Ariba Discount Professional:
Working capital is needed to be managed which is an effective way to put the best utilization of short-term assets. Working capital includes accounts receivable, inventory and cash and other short term liabilities and assets. It is the required by the financial managers to ensure that their short term goals are met by the company. Software packages is offered by Ariba a SAP company that helps in managing the association between the vendor and customer through electronic medium to calculate and prorate discounts to the suppliers who are targeted thereby maximising the profits. It is essential for the supplier to have the software and be on the Ariba Network which is the largest trading partner community of the world.
Quorum Capital budgeting tracking:
In order to manage the capital a long term financial goal is effective. Monitoring the capital projects is essential to make sure that initial projections are fulfilled by business managers. ‘actual-to-forecast’ analysis is maintained by the Quorum Capital Budgeting where the client can customise its benchmarks. The user can enrol and find the reports through various criteria like vendor and profit centre.
d. Principles of accounting in developing the budgets required for the task
In order to develop the budget requirements for the given tasks, following principles of accounting are applied
Some of the hidden guidelines of the accounting include the organizing principles. Organization is supported by the planning standards so as to report an expense on the pay decree in the same time period allotted as the related wages. Arrangement specialists obtain 10 per cent of the commission by making the arrangements for associations for plotting planning standards. Commission is paid to the arrangement specialists after the fifteenth day of the month followed for the arrangements made for each logbook months. The organizing standards are linked with the get-together methods for the entries of accounting and adjusting.
Time Period Principle
The money related delayed outcome of the actions is to be reported through the day and age rule which is commonly monthly, quarterly and annually. The trades are recorded by using the principles of GAAP or international financial Reporting standards. The header of budgetary articulation is to be secured by the declaration through day and age.
Full Disclosure Principle
This participle communicates all the related information of cash that might impact the perception of the followers. As the measure of information is possibly exaggerated, exceedingly judgemental is interpreted in this standard. Some examples of the principles of full disclosure are the encumbered assets amount, a description of any asset retirement obligations, nature non-monetary transaction etc.
e. Explain and discuss the implications of probity when preparing and revising budgets.
Cash related declaration is one of the outcomes of substances so as to correct and prepare spending arrangements. It consist the protection so as to have full accountabilities with the benefits for the organization thereby paying attention to the trade related or any other direction. Basically, when cash related commitment is concerned, every part of it is considered to meet the integrity respectively.
f. List the critical dates and initiatives that will require or generate resources for Houzit Pty Ltd in the next financial cycle.
The critical dates and initiatives that will require or generate resources for Houzit Pty Ltd are given in a list below:
1.Loan amounted comprising $ 100000 on December 31st.
2. Increment in the budget of advertisement by $ 70000 over the year 2010-11.
3. Rise in salaries and wages of $ 172500 in the year 2010-2011.
g. List the items you would recommend for inclusion in the budgets for Houzit Pty Ltd.
The items are listed below that recommends for inclusion in the budgets for Houzit Pty Ltd are office expenses, transportation, and water bill and staff amenities.
h. List the new or modified internal controls that could improve risk management for Houzit Pty Ltd including the maintenance of audit trails.
The lists is given on the modified internal controls that could improve the risk management for Houzit Pty Ltd are
1.It is essential to follow the rules, laws and regulations.
2. Various procedures and actions are to be applied and implemented.
3. Noting and recoding the time sheets and operating hours.
2. Prepare Budets
a. Develop Budget
Refer to excel workbook Finance Sheet 4
Refer to excel workbook Finance Sheet 3
GST Cash flow Budget
Refer to excel workbook Finance Sheet 4
Debtor ageing summary
Refer to excel workbook Finance Sheet 5
b. Budget Notes
i. Identification of reasons for previous profits and losses
The profit margin of the Houzit Pty Ltd. in the previous year i.e. in 2010-11 has increased by approx. 20%. This can be due to the changes in the income and expenditure of the company such as increase in wages with decrease in the interest expense and constant expense rates. The changes and adoption of new techniques in the organisation programming lead increase in the sales of the Houzit Pty Ltd. The evaluation and mark up of the uncertainties or say pre expense estimation makes the company to identify the possible reason that may impact the profit and loss of the company. Such as the budgeted estimation of the increase in the inflation by 4% led the company to identify their increase in expenditure. The other identified assumption is in regards to the gross profit margin i.e. estimated at a decreased by 1%. The said estimation made the profit and loss identification of the firm appropriately and has diminished the costing and other expenses of the firm. The profit and loss is also based on the firm’s norms of providing superior after-sales service to their clients or customers for making a loyal customers base which ultimately results in the increased profitability of the company.
ii. Comment on the effectiveness of existing financial management approaches
The existing approaches used by the Houzit Pty Ltd. for financial management is not deliberately delivering effective services and results to the company and its decision. The accounting software used by the company is not sufficient to handle all the major transactions of cash, revenue and expenditures within the company. The financial management involves many diversified transactions which involve legal guidance as well which is not possible with the current accounting software used by the Houzit Pty Ltd. The main reason for the ineffectiveness of the financial management of the company is due to its current approach of management which does not guide the financial resources at a directed area; such as the unavailability of adequate financial resources and information related to it; lack of market research and insufficient marketing resources and platforms with excessive expenditure like on luxury car. All this approaches termed as the reasons for hampering the financial management of the Houzit Pty Ltd.
iii. All assumptions and basis that have been made or used to form budgets
The assumptions and basis that are made by the Houzit Pty Ltd. for preparing the budget are as follows:
1.Debtors are assumed to be treated as 20% of the sales for each quarter
2.Inflation rate to be assumed as 4% and increase all the expenses accordingly
3.Anticipated sales breakup for sales budget are bathroom fittings 30%, bedroom fittings 25%, mirrors 15% and decorative items 10% and lighting fixtures 20%
4.Reduce gross profit margin by 1%
The assumptions made can be observed in the budgets prepared and their impact also. The increase in sales increases the debtors period and their each quarter has been impacted by thereof. This also made the company to modify its norms and policies for the debtors and make changes in the credit policies accordingly.
iv. Relevant notes regarding implementation and monitoring of budget expenditure
While implementation of the budget following things can be noted:
1.Activities involved with revenue and expenses
2.Mobilisation and issue of funds or cash
3.Contracts and specified policies of the company
4.Project requirements and financial aspects for different departments
5.Legal implications and laws
6. Accounting generals and standards
7.Government rules and policies like taxations norms
While monitoring or evaluating budget following points can be noted:
1.Determining the physical and monetary valuation
2.Verifying the statements with other supported documents for preventing any chances of fraud and losses
3.Assessing various laws and processes in the preparation of the budget
4.Proper compliance of legal norms and procedures
5.Following different standards for verifying accounts and other financial statements like Auditor General, GAAP etc.
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