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This is the solution of financial report assignment help in which we discuss about financial system of various organization. There are different aspects or financial legislatives that need to be consider while operating a business in any country
This assignment is based on financial systems that are applicable on various organisations reoperating in New Zealand. There are different aspects or financial legislatives that need to be consider while operating a business in any country. Therefore this assignment or report key legislatives financial systems that needs to be addressed by the business organisation. For the purpose of this report, Star-ship Children’s Health and Pacific Edge Limited were taken into account for the purpose of analysing different legislative financial system requirements of these two organisations. This report highlights major differences of legislative financial system requirements of the selected business organisation. Another important aspect of this report is of making business plan that will be implemented on the health organisation for the purpose of its expansion. This business plan includes various budgets, various sub-plans and proposal that will be required to implement the business plan on the organisation.
Background of Selected Company
For the successful completion of this assignment Star ship Children's Health Foundation were selected and therefore all requirements will be implemented on its operations. Star ship Children's Health Foundation came into existence on November 18, 1991 and since then they are providing children and young people with health need(Starship, 2012). In 2003, they had undertaken business expansion in terms of Emergency department, new intensive care unit, cardiac investigations room, etc. therefore they had expanded business operations management. Star ship Children's Health Foundation is engaged in providing services of medical, cardiac and mental health service to their patients. During the year 2012-2013, they had treated 120,520 patients and most of the patients were children (Starship, 2012). They are committed to provide various services to its patients and for this purpose they need expansion plan for the business expansion in terms. They need to comply with various legislative financial system requirements applicable for not for profit organisation in New Zealand so as to ensure appropriate application of various legislatives or rules.
Portfolio of finance project
1. Compare and contrast legislative financial system requirements in New Zealand for business and not for profit organisation. Following are some basis that tells that for profit and not for profit organisations are different on the basis of legislative financial system in New Zealand:
Major Legislative Financial System Requirements
Goods and Service Tax or Taxation Matters
For profit Organisation (Pacific Edge Limited) -They are required to charge and pay GST on the goods and services they provide in business operations. Pacific Edge Limited is required to compulsory register in the GST. For the purpose of taxation, income tax act is also applicable on for profit organisation (Schwalbe, 2012). Not for Profit Organisation(Starship Children's Health Foundation) -They are not required to charge and pay GST on the goods and services provided by them. They are not required to register on compulsory basis under GST. There are various provisions in income tax act that are not applicable on not for profit organisation.
For profit Organisation (Pacific Edge Limited) -Pacific Edge Limited i.e. for profit organisation needs pay income tax on the income that is earned during the year from the business operations. There is no minimum deduction from the income earned during the year but there will be exemption of business expenses made during the year. Forms for filing the income tax return by Pacific Edge Limited is IR3, IR4, IR6, IR7 or IR9. Pacific Edge Limited shall be registered with the Companies Act 2006 and then they will be available for the exemption from business income. They can indulge in not for profit making activities but these will not be available for tax exemption. Not for Profit Organisation(Starship Children's Health Foundation) -Starship Children's Health Foundation shall be registered with Ministry of Economic Growth- Business and Registries Branch and not with Companies Act 2006. Unlike for profit organisation, they are available with exemption limit of $ 1000 from the net income earned during the year from its business operations. Starship Children's Health Foundation can indulge in for profit business activities but they will not be available with deduction from the same.
For profit Organisation (Pacific Edge Limited) –Pacific Edge Limited need to register its each and every employee under payroll or PAYE. PAYE means Pay As You Go therefore Pacific Edge Limited is responsible for deducting PAYE tax from employees emoluments. PAYE is deductable from the fringe benefits provided to employee and this also becomes payroll implication for Pacific Edge Limited. Not for Profit Organisation(Starship Children's Health Foundation) -Starship Children's Health Foundation are not required to deduced PAYE from every emoluments provided to employee. Since they belongs to not for profit sectors therefore there are many exemption in terms of not to deduct PAYE are available.
Kiwi Saver is the initiative taken by government of New Zealand i.e. in this sachem both employer and employee will be registered and then makes contribution in the Kiwi Saver account as their contribution from the gross pay of the employee. For profit Organisation (Pacific Edge Limited) –In this case, this scheme becomes compulsory to be applied on every employees and employers i.e. they need to make contribution of minimum 3 percent of gross pay that employee receives. There will be registration requirement of new employees within seven days otherwise this scheme starts automatically. Not for Profit Organisation(Starship Children's Health Foundation) –In this case of Starship Children's Health Foundation Kiwi Saver scheme is also compulsory to be applied but there is change in the rates of contribution that is to be made by both employer and employee.
Addressing following issues:
For profit Organisation
Not for Profit Organisation
Goods and Service Tax or Taxation Matters
In this case, employer is responsible in terms of statutory compliances that needto be done.Health and safety issues needs measures need to be undertaken. Not for profit organisations are to be more transparent in terms oftheir business operations and decisions(KPMG, 2014).
On the other hand in case of not-for profit organisation there are less responsibility in terms of employers. Provisions of health and safety in Starship Children's Health Foundation shall be major compliances that are to be complied with. On the other hand confidentiality in terms of patients and other revenues shall be kept.
Employers are responsible for the registration of the organisation on which Income Tax Act is to be applied. Expenditure made on the health and safety measures adopted by the organisation shall be expensed from tax liabilities. On the other hand tax information is not confidential therefore it can be disclosed.
Owners or employer is responsible to get registered under income tax act and Ministry of Economic Development so that provision can be applied. Health and safety measures shall be allowed as eligible deduction from the gross income earned during the year for income tax purposes. It not confidential information.
Employer is responsible for preparing the payroll of the employees. Employer is responsible for deducting PAYE on the pay and other benefits provided to employees. On the other hand confidentiality shall be maintained since it includes information of pays or salaries of employees. PAYE tax is also deducted on the expenses made on health and safety measures by employee.
For preparing and maintaining payroll of employees, employer is responsible and for deducting PAYE employer shall be responsible. Expenditure made on health and safety does not require deduction of PAYE. Confidentiality in terms of information of payroll of employee shall be maintained.
In this case, employers are responsible to identify and analyse eligibility of the employees to be included in this scheme. Provide information about change in the employment, minimum contribution of employer shall be 3% of the gross pay of employee, etc. These are confidential information i.e. it includes personal details about employees therefore shall be kept confidential.
In this case, employer is responsible for the registration or checking eligibility of the employees but employer is not responsible for making minimum contribution to Kiwi Saver account of employee. Confidentiality shall be maintained.
2. Using the selected business / organisation or health programme create a business plan that will meet or improve the following objectives. Aid the growth of the organisation / increase profit/ improve sustainability of the organisation.
Business expansion plan can be define as the plan that is used in the development or expansion of business operations of the organisation. Business plan includes many aspects that can help business organisation to grow in its competitive environment. For the purpose of expansion plan of Star ship Children's Health Foundation they need to consider many aspects of business like management of financial resources, management of other resources like material, customer service, revenue from customers and other aspects of the business(Hull, 2013). On the other hand in order to increase revenue and profitability of the Star ship Children's Health Foundation, planning in terms of risk, purpose of expansion, etc. Business expansion plan also includes management and procurement of various resources that is required for the purpose of implementation and control of business plan of Star ship Children's Health Foundation(Green, 2012). Following is the business plan that is made for Star ship Children's Health Foundation so as to increase their revenues, improve their growth and provide sustainable growth to the Star ship Children's Health Foundation:
Functions: Budget can be defined as technique that reflects future course of action that will be implemented in the near future on the business operations of the company or in this case of Star ship Children's Health Foundation.
Purpose:Budgets provides many capabilities to the Star ship Children's Health Foundation in terms effective plan, risk management, control aspects, operational aspect and for managing other divisions of Star ship Children's Health Foundation. Following budgets will be prepared for the effective management of business expansion plan of Star ship Children's Health Foundation:
- Customers revenue budget (monetary and no. of customers)
- Cash Budget that will assist management or financial manager of Star ship Children's Health Foundation in management of its cash resource in the organisation(ACCA, 2016).
- Administrative expenses or cost budget will be prepared so that effective management of expense can be achieved and this will increase profitability of the Starship Children's Health Foundation.
- Other budgets that is required in the business expansion plan.
Output in Business Plan:In present case, budget will serve the purpose for Star ship Children's Health Foundation in terms of effective management expansion plan. Budgets can improve the operational efficiency of Star ship Children's Health Foundation and helps management in achieving their target of successful implementation of expansion plan. After preparation and implementation of budgets there will be clear direction on all aspects of business in terms of its management (Schwalbe, 2012)t.
Functions: Financial plan can be define as the process in which many different plans will be formulated for the effective management of future business operations. Business operations include provision of service, management of customers, etc. therefore function of financial plan is to manager these activities in effective manner for successful implementation of financial plan (Marks, 2012).
Purpose:Purpose of financial plan is to make management or managers of Star ship Children's Health Foundation available with relating plan related to business operations. Therefore Star ship Children's Health Foundation shall create financial in following manner:
Risk management plan: For the success implementation and during the conduct of business operations risk in business activities shall be managed. Risk management plan includes identification of various risks like business risk(in planning and controlling process of Star ship Children's Health Foundation), operational risk (in conducting business activities by Star ship Children's Health Foundation) and in other activities risk shall be managed by preparing risk management plan(Truex, 2012).
Sources of Finance: Financial plan of Star ship Children's Health Foundation also includes identification of sources of finance that will be required to implement business plan on the Star ship Children Health Foundation’ business expansion plan. For this purpose, bank loan and issued of debenture shall be utilised for the same. Many banks have come across for providing loan to them and rate of interest will be in between 5% to 8%.Many banks have shown their interest in providing loan to Star ship Children's Health Foundation and proposal for loan shall be submitted(Truex, 2012).
Clear direction:Since financial planning requires consideration of many resources that Star ship Children's Health Foundation has and have to reach. Therefore financial plan make a blue print of various financial, operational, control, etc. resources that will manage implementation and control aspect of business plan or expansion plan of Star ship Children's Health Foundation.
Since financial plan includes many aspects of business activities and of control activities that are required by Star ship Children's Health Foundation for business expansion. Therefore financial plan in terms of management of various resources in business operations will provide adequate supporting base. Financial plan will support decision making process of Star ship Children's Health Foundation in terms of expansion plan.
Function:Various proposals will be made so that material, labours, employees, finance and other resources can be arranged. These proposals will be sent to different managers of Star ship Children Health Foundation’s division or different operational areas so that they can arrange all the resources required for the business expansion plan. Following are different departments of Star ship Children's Health Foundation and their requirements in terms of business expansion plan are as follows:
Purpose: Human resource managers will prepare proposal for the requirement of human resource required for the successful implementation of business expansion plan.This proposal will include no of employees, their roles and responsibility, educational qualification, selection process, etc. will be required for the purpose of better management (Edward, 2011).
Financial manager of Star ship Children's Health Foundation will make proposal in which he/ she will specify about funds required, target rate of interest or cost of capital, sources of funds, plan for application of funds and other related aspects of financial management.
Proposal for procuring or purchasing different assets hat will be required in the business expansion programme of the Star ship Children's Health Foundation. Therefore proposal shall be provided to management and proposals for the operations and procurement shall be taken from various external sources.
Clear direction: Various proposals provided by different managers of Star ship Children's Health Foundation and from external parties or stakeholders will provide their requirements from the business expansion plan. Therefore this activity will provide clear direction to management and different manager of the Star ship Children's Health Foundation for better implementation of expansion plan i.e. with adequate resources.
From the above three requirements of the business expansion plan, their evaluation is required for the purpose of measuring their effectiveness in terms of achieving and successfully implementing the business expansion plan. Following are indicators that are used to justify use of above resources or use of different aspects of business plan in successful achievement of growth in business organisations, developing sustainability of Star ship Children's Health Foundation and increasing their profit margins:
- Business development plan will increase capacity of the Star ship Children's Health Foundation in terms of operational capacity therefore their revenues will be increased.
- Implemented business expansion plan will make Star ship Children's Health Foundation more capable in terms of sustains ability in growth rate (Hull, 2013).
- Another advantage that business plan will provide to Star ship Children's Health Foundation is of increase of gross and operating profits because now Star ship Children's Health Foundation are now available with more capacity and new areas of operations.
From the above report it can be analysed that there are many difference between for profit organisation and not for profit organisation in many areas. This enables use of this report to analyse the difference aspects of financial system legislatives applicable pennon-profit and for profit organisation. Differences have been made on the basis of tax implications, disclosure requirements, statutory compliances and difference in financial statement of for profit and not for profit organisation. Business plan is the most important plan that is required for the purpose of making business expansion plan and documents it. Business plan is used to document each and every activity that business organization will undertake for the effective management of expansion facility. Business expansion pal includes important aspects like budgets, business plan, risk plan and other plans that are used in the process of business expansion of business organisation.
- ACCA. (2016, Februry 29). Cash Budgets. Retrieved March 10, 2016, from ACCA: http://www.accaglobal.com/sg/en/student/exam-support-resources/fundamentals-exams-study-resources/f2/technical-articles/cash-budgets.html
- Edward, L. E. (2011, November 30). Human Resources - It's Time for a Reset. Retrieved March 15, 2016, from forbes.com: http://www.forbes.com/sites/edwardlawler/2011/11/30/human-resources-its-time-for-a-reset/#533e61ab4d8b
- Green, J. (2012, March 01). The Major Accounting Differences Between Profit & Non Profit Organizations. Retrieved March 15, 2016, from Chron: http://smallbusiness.chron.com/major-accounting-differences-between-profit-non-profit-organizations-26257.html
- Hodgkins, D. (2015). Financial Reporting bu non-for-profit entities in New Zealand. Delitte , 20-26.
- Hull, P. (2013, February 28). 5 Tips for a Great Business Plan. Retrieved February 25, 2016, from Patrick Hull: http://www.forbes.com/sites/patrickhull/2013/02/28/5-tips-for-a-great-business-plan/#b1f3deb7b1ef
- KPMG. (2014). New Zealanf Financial reporting Framework. Accounting Advisory Services , 9-20.